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Mohawk Valley Water Authority – April 20, 2015

Chairman DeLia called the meeting to order at 5:00 PM and opened with the Pledge of Allegiance.

Roll Call: Present: Rocco Arucri, Dennis Bova, Bruce Brodsky, Vincent Coyne, Elis DeLia, Mark Ford, Mitch Ford, Scott Mahardy, Frank Mutolo, Bette Szesny and Steve Zywiak. Absent: Scott Williams. Also Present: Richard Goodney, Jim Korfonta, Scott Gorgas, Anne Milograno and Ken Bobrow, Esq.

Chairman DeLia presided and Suzanne Harmon took the minutes.

Presentation and Review of the Audit
Mr. Brodsky stated that the Audit is for the fiscal year ending March 31, 2014. The MVWA has changed its fiscal year and will have a second audit, which will end 12/31/2014. Mr. Brodsky introduced Karl F. Newton, CPA with Marvin and Company, who is on the phone and will make a brief presentation on the Audit. Mr. Newton stated that there is an independent Auditor’s Report on page 31 of the report. It contains the introduction section, financial section, the statistical section and compliance report on government auditing standards. The Audit report is a clean report and there is no management letter with significant deficiencies that would be required to be recorded. Highlights for the year would be the that the organization had excess revenue over expenditures of approximately $2.6 million dollars, included in that number the municipality donated water infrastructure of about $542,000.00. Overall total net assets decreased by $333,000.00, liability decreased by the same amount. It is a clean audit report and we issued a report on the investment procedure policies of the MVWA and those investments were in accordance with the Investment Policy and also with the NY State Public Authorities Law. Lastly, they looked at the financial statements and there were no new auditing procedures or to the accounting procedures adopted through the year so they were consistent with the current prior year. The statements include estimates and they looked at the underlying estimates and found no issues with that. There were no unadjusted auditing entries that were identified and there were no disagreements with management over the conducting of the audit.

Mr. Brodsky stated that prior to the conclusion of the Audit the Audit Committee met and discussed the lack of timeliness of the annual audit for the fiscal year ending March 31, 2014. Although the comprehensive financial report was complete and has been posted on the website and is being prepared for distribution; the independent auditors responsibilities were not completed in the required timeline. Currently due to the change in the fiscal year the next annual audit is currently underway for fiscal year ending 12/31/14. Our current independent auditor is Marvin and Company operating in the third year of a three year contract. The timely transparency that we pride ourselves on and other communications with key stakeholders of the Authority the Audit Committee has requested a change in the lead partner specifically responsible for our current Audit by Marvin and Company. We have informed Karl Newton, CPA of our wishes. We directed the Controller, Jim Korfonta to inform the managing partner of Marvin and Company of our decision and we expect a new engagement letter indicating the new responsible party. Considering much work has been completed we hope that changing parties will not impact the ability to complete the audit process. The new partner is Frank S. Venezia, CPA. The second Audit is essentially complete expect for the actuarial report. Mr. Korfonta stated that he just received the actuarial report and now needs to put in the estimated retiree insurance in that report and forward it to the Auditors.

Approval of the February 23, 2015 Minutes
Motion made by Mr. Brodsky to approve the minutes. Seconded by: Mr. Mutolo
Vote: (11) Ayes (0) Nays (0) Abstain (1) Absent Motion Carried.

Resolution: Award of Construction Contract for Hanger Road Pump Station Improvements
The general construction scope for this contract involves removal and replacement of two of the original pumps and motors, the motor starters, piping, valves, electrical and control systems. Bids were received from five general contractors, of which Stephen Miller General Contractor, Inc., of Mayfield, NY was low bidder in the amount of $91,800.00, which is within the project budget. Stephen Miller General Contractor, Inc. has not previously worked for the MVWA, therefore references were verified and found satisfactory. They will complete the work under this contract within 120 days from contract award.
Motion made by Mr. Arcuri to approve the resolution. Seconded by: Mr. Zywiak
Vote: (11) Ayes (0) Nays (0) Abstain (1) Absent Motion Carried.

Committee Reports
Finance: Mr. Korfonta stated that consumption is down and they are taking a look at that. Water sales are close to budget and cash flow is on track.

Executive Director’s Report:

  • Mr. Becher stated that he met with the MVWA financial advisor, Rick McCarthy who pointed out that the MVWA has an opportunity to re-finance the 2006 bond series, which has $11.5 million dollars in principle left. The MVWA could cut the annual debt service by $50,000 a year and save a $1 million in aggregate over the life of the loan. The total closing costs would be between $115,000 to $140,000. Mr. Arcuri stated he thought it was worth looking into.
  • The Automated Meter Reading project is going very well. There are 17,000 modems installed, which is approximately 40% installed. All of the collectors are up and running. Most of the modems that are installed are being read by 3 to 4 collectors. The collector on the County Building is getting reads from as far as eight miles. The system is performing better than expected. Some customers are holding back and do not want their meter changed. The MVWA has a fee of $50 per billing period if the MVWA has to keep going back and reading the meter manually. We have discussed postings for shut-offs if we are not allowed in the house to change the meter. The Board feels that we should start following our Rules and Regulations and enforce them.
  • Mr. Becher and Mr. Goodney were at the Spring wwwww conference and discussed the severe winter conditions with their counterparts from other water authorities. They all experienced large numbers of frozen pipes, water main breaks and deep frost penetration. We had high overtime costs and private contractor costs We have exceeded our budget due to those conditions and are still analyzing it. Next month we will have figures for you and recommendations on how we are going to cover these costs.
    The MVWA has an agreement with the Canal Corporation to keep the reservoir levels at 1195. This winter the Canal Corporation did not slow it down until they reached 1192. At that point we were starting to run a deficit in the system, the tank levels were dropping and we were starting to think about by-passing the treatment plant. We went back to our attorney’s and filed a Court Action for a clarification from the court on the agreement with the Canal Corporation. The preliminary conference was last week and our attorneys met with the Judge. When our situation went from bad to worse Mr. Picente made a call to the Canal Corporation and they cut their flows back and the reservoir started going back up to 1195. Mr. Goodney and the maintenance crews did a phenominal job but with five to six water main breaks a day we had to bring in private contractors. The cost of that is $155,000.
    Chairman DeLia stated that he would call this an enforcement action.
  • Mr. Becher handed out copies of a letter received from a customer praising three of the MVWA empolyees; Terry, Anne, Mike and Bernie. Just wanted us to know how proud we should be to have such polite and helpful individuals working in our office and fortunate for all of us who depend on such great service.

Mr. Bova asked Mr. Becher how many contractors we hired and how many leaks were there. Mr. Becher stated that between January and February there were 75 - 80 main breaks and they fixed approximately 20-25 of the leaks. Mr. Bova stated that back in 2004 there were more main breaks and the MVWA never had to call in contractors.

Mr. Coyne asked Mr. Becher how much over budget is the MVWA in paving costs. Mr. Becher stated that it is approximately $150.000.

Chairman DeLia adjourned the meeting at 5:48 PM.

Respectfully submitted,

__________________________
Suzanne M. Harmon, Secretary
Mohawk Valley Water Authority