Texas Parks and Wildlife Commission
Ad Hoc Infrastructure Committee
November 5, 2003Commission Hearing Room
Texas Parks & Wildlife Department Headquarters Complex
4200 Smith School Road
Austin, TX 78744
BE IT REMEMBERED, that heretofore on the 5th day of November, 2003, there came on to be heard matters under the regulatory authority of the Parks and Wildlife Commission of Texas, in the Commission Hearing Room of the Texas Parks and Wildlife Department Headquarters Complex, beginning at 2:30 p.m. to wit:
THE TEXAS PARKS AND WILDLIFE COMMISSION:
- Ernest Angelo, Jr., Midland, Texas, Vice-Chairman
- Joseph B.C. Fitzsimons, San Antonio, Texas
- Ned S. Holmes, Houston, Texas
- Alvin L. Henry, Houston, Texas
- Peter M. Holt, San Antonio, Texas
- Philip Montgomery, Dallas, Texas (not present)
- Donato D. Ramos, Laredo, Texas
- Kelly W. Rising, M.D., Beaumont, Texas
- Mark E. Watson, Jr., San Antonio, Texas
THE TEXAS PARKS AND WILDLIFE DEPARTMENT:
Robert L. Cook, Executive Director, and other personnel of the Texas Parks and Wildlife Department
P R O C E E D I N G S
MR. ANGELO: There being no acting chairman of the Infrastructure Committee, I will conduct that meeting and ask if there's any corrections or additions to the minutes or, if not, a motion that they be approved as presented.
MR. WATSON: So move.
MR. FITZSIMONS: Second.
MR. ANGELO: All in favor say aye.
(A chorus of ayes.)
MR. ANGELO: Opposed?
MR. ANGELO: All right.
We'll move to the Agenda Item Number 2, which is the Capital Program update.
Steve, if you'll give us the facts?
MR. WHISTON: Yes, sir. Thank you, Mr. Vice Chairman.
Good afternoon, Commissioners. For the record, my name is Steve Whiston; I'm the Director of Infrastructure Division.
The Committee this afternoon will focus on first just the status of our current bond issues. I'd like to share some information and some background on how projects are identified, the process by ‑‑ which we go through to identify projects, to be put on the capital program list, and, lastly, some information about our FY '03 GO bond project list and some changes that we've made to that list recently.
Carol has just passed out to you handouts that include some of the key slides that I've included in the presentation. My thought was that it would help you a little bit, rather than having to refer to the monitor, to pick up some of the detail, some of the numbers, if you're interested in the information that I'm about to share.
I'd like to begin with our bond programs and, for the sake of the new Commissioners, a little bit of background. In 1997, if you'll recall, the 75th Legislature authorized $60 million in bond authority and revenue bonds to be provided over four years in separate issued, beginning in FY '98, through FY 2001. The intent of this bond program was to enable our Agency to address our backlog of deferred maintenance and repair needs that was statewide.
This slide illustrates our expenditure strategy for those revenue bonds, four separate issues, beginning in FY '98, through 2001. Please note that the first two issues, those provided us in '98 and '99, are fully expended as of this past July. And we're now well on our way to completing the last two installments of those revenue bonds that were provided us.
Just to summarize our status on the combined four issues of those revenue bonds ‑‑ and this is the first page in your handout ‑‑ we've completed 367 of the total 414 projects that make up that bond issue. We've expended $59.8 million of the $64.4 million of proceeds that was made available to us.
That $4.4 million difference between the $60 million authority we received and the actual proceeds, or cash that was provided us, represents $4.4 million of interest earnings that accrued over the life of those bonds that we've been able to leverage or apply against additional projects. So we've made, you know, great strides in increasing and expanding that program to do more.
We're scheduled to complete the revenue bond program and fully expend all the remaining bond funds in about a year from now or in the late fall of 2004.
As you'll recall, moving on to our GO bond issue, the 77th Legislature in 2001 approved $101.5 million in a general obligation bond package to Parks and Wildlife. This was to support our capital program ‑‑ our capital repair and construction program. This was part of an $850 million bond package that the legislature passed for about 13 state agencies. We were fortunate to receive our first installment of that $101.5 million, that being 36.68 million, of this authority last January.
Since our last Committee meeting in May, we've completed now an additional ten projects, for a total of 16 projects that are completed now since January, expended $2.3 million and have about $5.7 million encumbered right now in design and construction contracts. I'm really pleased with our progress and pleased to report that, you know, with a few exceptions, all of these projects are being completed on time and within the budget.
We, likewise, are moving steadily toward spending down our revenues provided by our park development bonds, or Connally Bonds; this was a $16.3 million authority that was approved in 1999 to fund conservation and education projects. We've so far expended about $8.2 million, and the remaining portion of that, about 8.1 million, is scheduled or obligated to appropriate projects.
We're happy, also, to report that ‑‑ on our success in meeting our expenditure goals, our Agency expenditure goals, for this past fiscal year, FY '03. Our total capital program in FY '03 included 348 active, funded projects budgeted at $72.14 million. Our goal for last year was to reduce that budget over the course of the year by $20 million, and our actual year-end expenditure as of August 31 was just shy under 22 million in expenditure.
Moving on, and, again, for the sake of the new Commissioners, I'd like to share some detail with you regarding the process that we go through as an Agency to identify and select projects for the capital program. In order to better explain, you know, how those projects are identified, I think it's important for you to recall or understand the process that we go through to obtain funding, you know, to gain approval and then to execute a bond project.
If you'll note at the top of the slide, typically, the legislature provides state agencies with appropriation authority for a bond issue based on some pre-determined or demonstrated capital need. In our case, in Parks and Wildlife's case, we're fortunate now to be able to rely on our facilities management system to help us forecast that need, to help us predict what our repair needs and construction cost are going to be in out-years.
We then go through the process of scoping and prioritizing to select and identify a list of projects that will eventually make up a capital program that is then presented to our Executive Director and then to the Commission for approval. That usually takes place in August along with the approval of our operating budget for the upcoming fiscal year.
As this slide indicates, it takes approximately six months ‑‑ depending on the size of the project and the scope of the bond request, six months to gain approval of the Texas Public Finance Authority, the bond review board and then for those bonds to be approved and issued and sold and for us to begin receiving proceeds from those bonds.
Finally, with money in hand, our final planning and scheduling is accomplished. This takes on average, again, depending on the size of the project, from two to four months. This usually includes and the length of time is based on our need to obtain both cultural and natural resource clearances for properties that we are proposing to build on or do repairs on.
We then arrange, as the next step, for the testing and survey that's necessary and all the pre-design activities that are necessary to start the formal design of a project. Then, in order to meet the state requirements that we have to adhere to to advertise, to bid and to make contract awards, it usually takes about 90 days in order to complete.
Of course, construction varies; it depends on, obviously, the size and scope of the project. The average project takes about three to eight months to complete, but, certainly, larger ones can take upwards of 12 to 15 months depending, again, on the size.
And then, finally, it takes about 30 days once construction is completed to collect all the as-builts, to receive the final pay vouchers and pay requests and pay off our debts and be able to close the project. So on average, just to give you some perspective, an average project can take up to 20 to 30 months from the time the Commission ‑‑ legislative approval is obtained to be able to cut the ribbon and complete a project like that.
To focus a little bit more in detail on the project identification step or phase of that, this next slide illustrates a real crucial step in that process. As I mentioned before, project needs are identified by ‑‑ through FMS by the sites, by the facility managers, by the site managers, themselves and our division customers. Our division then compiles that list of needs and turns that back to the divisions for confirmation and prioritization.
As soon as the priorities are established by our customer divisions for our upcoming capital program, we begin the process of accurately scoping those projects and developing more accurate project costs for implementing those project needs. Then each division's priority list of projects is put in the hands of all the division directors of the Agency, who get together and determine or put together a statewide priority list of projects for the upcoming year.
That final list is then submitted to Bob, our Executive Director, for approval, and then, ultimately, to the Commission, to you, for final approval.
I'd also like to follow up this afternoon a little bit on some of the discussion we had last May in our Infrastructure Committee meeting and explain some of the adjustments that we've made to our GO bond program, the Prop. 8 program.
This matrix which you'll find on page 4 of your handout is the original six-year funding strategy for the expenditure of that $101.5 million of Prop. 8 funds obviously intended to be received and expended over three biennia, beginning in '02/'03. Again, in '04/'05, we were to receive funds, as well as, lastly, in '06/'07.
The funding included funding to complete our critical repair backlog. That's the $15 million in the upper top of the second column ‑‑ first column. And additional funding for repair ‑‑ for scheduled repairs was provided in annual installments that were going to extend through the life of those bonds.
And finally, bond funds were going to be provided with this package for five specific park construction projects: At San Jacinto Battleground, at the Battleship Texas, at the Admiral Nimitz Museum, at Sheldon Lake Environmental Learning Center and the Levi-Jordan Plantation State Historic Site.
If you'll notice, under the first column in FY '02/'03, that column reflects the proposed distribution of that first $36.68 million as we envisioned it when we received those funds. But because of the statewide shortfall, as you all know, the legislature this past spring did not approve the debt service for the '04/'05 installment of our bond program.
So that $34.255 million was postponed, and we will not be in line to receive those funds until the next biennium. That 34.4 million is ‑‑ the distribution of those funds, is also indicated in that second column.
With the postponement of the '04/'05 issue or installment, we've revised the strategies reflected in this next slide. And if you look to that fourth page in the handout, I think you'll be better able, if you're interested, to kind of get a side-by-side comparison of the changes and what was originally proposed and what we're proposing now to be our funding strategy.
Essentially, what we've done and what we're proposing is to push the '04/'05 installment into '06/'07. The third installment of the scheduled repair funds has now been pushed to FY '08/'09, all keeping the final total of 101.355 million.
Next, because our progress is going to be delayed in four of the five park construction projects listed at the bottom of the strategy and because there are no funds in '04/'05 to continue that work, we've chosen to and are proposing to reduce and redirect a portion of the funding that was allocated to those four projects and redirect those monies to scheduled repairs; that will enable us to accomplish more critical projects that otherwise would not have gotten done in '04/'05.
An example of that, if you'll look at San Jacinto Monument ‑‑ San Jacinto Battleground, is: In our original strategy, we proposed to allocate to San Jacinto 2 million out of that 36.68; we're adjusting that amount to $900,000 and redirecting that 1.1 million back up to scheduled repairs or to our repair program in order for us to be able to expand and act upon some needs there.
Another change reflected in this slide that will require approval of the legislature: If you'll look under the last column, marked, "Total," in the proposed eight-year strategy, we've proposed to shift $1 million from the San Jacinto Battleground project to the Battleship Texas. And, again, as I pointed out, this will require approval of the leadership of the legislature and, certainly, your endorsement. The proposed change will require, you know, that kind of approval before we can move forward with that.
But the intent is ‑‑ after we've initiated the projects, we've realized that in order to accomplish the scope at San Jacinto, we don't need quite as much of the money that was ear-marked for that project. And we've also at the same time identified a shortfall in order to accomplish our scope at the battleship.
Probably the most significant changes to this issue were the adjustments that we made or propose to make to the repair project list for how we're going to spend that now-combined 15 million and $17.59 million of repair money. And if I could refer you to the project list that follows in your handout, I'll share with you what our intentions are there if you'd like to look at that kind of detail.
Our first step in trying to address this issue was to really carefully and thoroughly re-evaluate that list of projects and to identify what projects on that list were not really truly critical, which ones are maybe unnecessary or projects that we felt like we could delay to a later date. That project or ‑‑ that process, rather, allowed us to redirect funds to a lot of new projects, as I said earlier, that otherwise we would not have been able to get to or accomplish until '06/'07.
So looking at that last piece in your handout, this list identifies by project the changes that we propose to make. The spread sheet identifies the project, the original budget, the amount and type of change that we are proposing to make to the project and then the revised or resulting budget.
The first group of projects that ‑‑ are highlighted in light blue. In hoping to help this ‑‑ make it a little bit easier to understand, the first projects, highlighted in light blue, were determined to be less critical and have been postponed or taken off the list. The second group of projects, in the tan or buckskin or kind of golden background, have had their budgets reduced after we took a serious look at them and found ways to modify the scope or reduce the scope or delay a portion of that project that we considered to be less critical.
The resulting savings that we incurred by postponing those projects or delaying those projects and reducing the scope of others allowed us to have, you know, funds available to substitute new critical projects, which are grouped in that next listing, that are highlighted in light purple. Those monies were combined with, as well, as I mentioned before, the savings that we were able to incur from those construction projects that we reduced the scope for.
We've also supplemented projects where we've found or increased the budgets, where we've found projects that needed additional money to address critical components that weren't planned for this year or where we had an opportunity to complete a construction phase of a project where, before, we were only just going to go through design.
So we took a real long, comprehensive look at this project list. And the resulting program is the one that I lay before you this afternoon. Obviously, then the projects in the white background that follow are projects that have no change.
This is the program that we feel like is in the best interest of all the divisions. It has been approved and well supported by the divisions; they've been involved in those decisions to make those adjustments. And we feel like we've got a good program now to carry us over for these next two years until we're in a position legislatively to apply for our next installment of our '03 bonds.
With that, that concludes my presentation for this afternoon, and I'd be happy to answer any questions.
MR. ANGELO: Commissioner Fitzsimons?
MR. FITZSIMONS: Steve ‑‑
MR. WHISTON: Yes, sir?
MR. FITZSIMONS: ‑‑ give me a quick review here. I notice that the biggest ‑‑ the largest single increase that's on the new projects and those that required an increase in the original budget are all wastewater.
MR. WHISTON: Yes, sir.
MR. FITZSIMONS: Is that to meet requirements? Is that because they were out of compliance, or whatever the proper term is?
MR. WHISTON: No ‑‑ yes, sir ‑‑ well, actually a combination of reasons. Not only because yes, a number of our sites still remain out of compliance with, you know, new, updated TCEQ regulations, but, as well, as we learned, you know, over the last four or five years, from looking at our infrastructure as a whole, probably where we suffer the most or where we have the greatest need is in our utility system, our infrastructure systems, our water/wastewater plants, still many of which are 20 to 30 years old and still in need of repair. That is our ‑‑ represents really our greatest need in terms of ‑‑
MR. FITZSIMONS: So we don't have the option to postpone or ‑‑
MR. WHISTON: No. Not only in terms of regulation, but in terms of operationally, you know, these systems need our help. They're about to shut down.
MR. FITZSIMONS: So we'll close it in order to fix it?
MR. WHISTON: Correct.
VOICE: Or risk it blowing up in the middle of the high tourist season.
MR. WHISTON: Yes.
MR. FITZSIMONS: Well, the one at Caprock Canyon ‑‑ you know, it's not a real high visitation park. With a million-four ‑‑ what was it ‑‑ or was it a million-one-four? That new project ‑‑ that's for ‑‑
MR. WHISTON: That was an addition that was identified ‑‑ a new project that was identified over the course of our evaluation of this. As you well know, I think, we've shared some detail with you in prior meetings.
Caprock Canyon is right now currently without water. The Lake Theo, which was their water supply in that park, has literally dried up, we are now trucking water into that park in order to provide potable water for, you know, drinking water for the guests or for the visitors, as well as water for our park staff there.
We are looking at options to bring water from the city of Quitaque through new distribution lines about five miles into the park and then treat that water, because currently Quitaque's water supply does not meet the standards that are necessary for us to meet through TCEQ, to then do some reverse-osmosis treatment on that water and make it drinkable, you know, or usable for the public.
So that's, yes, a new project that we've added and, certainly, one of our higher-priority projects, given the circumstances that we're facing there in the park.
MR. ANGELO: Any other comments or questions?
MR. HENRY: It's not on his agenda, but I know he knows I have to ask this question.
Where's our Sheldon water deal?
MR. WHISTON: A good question, Mr. Henry.
Mr. Henry's referring to our effort to try to secure a long-term commitment from the city of Houston to ensure that we have water to enable us to replace our water supply for Lake Sheldon. The city is still working on that ‑‑ those two contracts. They continue to assure us ‑‑
We spoke with them just this last week, Commissioner.
Both Jeff Taylor and Director Van Den Bosch assure us that those two contracts will be resolved before the end of the calendar year. We've not yet ‑‑
MR. HENRY: That's ‑‑
MR. WHISTON: And we keep pressing, yes, sir, but we have not yet got those contracts in hand. And we're hoping to get them shortly and be able to act on them.
Still an unresolved issue: The water is not going to come to us at no cost. And so the city is still ‑‑ we're still in kind of a negotiation phase with the city in terms of what some of that water supply may cost us. And we don't know what those numbers are going to look like yet.
We're somewhat apprehensive; the preliminary numbers that they have provided us look pretty expensive. We're looking at around $23,000 a year perhaps in out-of-pocket expense, you know, or cost to the Agency to provide water there. And that's something we're going to have to address. We're going to have to look at whether or not that is a reasonable investment to make or is prudent for us, you know, to do if we're not able to negotiate better terms with them.
MR. ANGELO: Any other comments?
MR. ANGELO: Thank you, Steve.
MR. WHISTON: Thank you.
MR. ANGELO: Bob, do we have anything else to come before this Committee?
MR. COOK: I don't think so.
MR. ANGELO: That being the case, this Committee is adjourned. And we're through for today.
(Whereupon, at 2:55 p.m., this Ad Hoc Infrastructure Committee meeting was concluded.)
C E R T I F I C A T E
MEETING OF: Texas Parks
and Wildlife Commission
Ad Hoc Infrastructure Committee
LOCATION: Austin, Texas
DATE: November 5, 2003
I do hereby certify that the foregoing pages, numbers 1 through 19, inclusive, are the true, accurate, and complete transcript prepared from the verbal recording made by electronic recording by Ben Bynum before the Texas Parks and Wildlife Commission.
On the Record Reporting, Inc.
3307 Northland, Suite 315
Austin, Texas 78731