Minutes: December 22, 2016

Call to Order

The regular meeting of the Vernon Township Municipal Utilities Authority (VTMUA) of the Township of Vernon was convened at 7:00 p.m. on Thursday, December 22, 2016 in the Vernon Municipal Center, 21 Church Street, Vernon, New Jersey.

Statement of Compliance

Adequate notice of this meeting had been provided to the public and the press on February 18, 2016 and was posted on the bulletin board in the municipal building in accordance with the Open Public Meetings Act, N.J.S.A. 10:4-6.

Roll Call

Thomas BuchneyP
Gloria GalloP
Edward SegerP
Joseph TadrickP
Vincent ZinnoP
Edward SnookP

Roll Call of Professionals

Attorney Richard Wenner, Engineer Ceren Aralp, Auditor Charles Ferraioli, and Executive Director John Scerbo were present.

1. Acceptance of Letter of Resignation from Tom McClachrie as VTMUA Commissioner

Vincent Zinno moved to accept the letter of resignation.
Gloria Gallo seconded the motion.

Discussion: Gloria Gallo asked why the VTMUA did not respond to the letter Tom McClachrie wrote to the mayor and council about the VTMUA after he announced his resignation when the letter contained many inaccurate statements. Attorney Richard Wenner said he was not given authorization from the commission as a whole to respond to the letter. Mr. Wenner said he does not recommend responding to the letter because he does not think it would serve any useful purpose. Ms. Gallo said she does not think the VTMUA should sit quietly about it because Mr. McClachrie made a lot of allegations about the VTMUA that are not correct. She said by not saying anything, it makes a statement on their part.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, Joseph Tadrick, and Edward Snook
Nays: None

2. Open Meeting for Public Comment

Thomas Buchney moved to open the meeting to the public.
Edward Seger seconded the motion.
All were in favor.
The meeting was opened to the public.

Chairman Edward Snook said opening the meeting to the public is for public comment and is not a question-and-answer format. Public comment is limited to five minutes per person.

3. Close the Meeting for Public Comment

Seeing no one from the public come forward, Chairman Snook asked for a motion to close the meeting to the public.
Thomas Buchney moved to close the meeting to the public.
Edward Seger seconded the motion.
All were in favor.
The public portion of the meeting was closed.

4. Consent Agenda

Resolution 16-47: Payment of November Bills

Vincent Zinno moved to pay the December 2016 bills.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

5. Approval of Minutes

November 3, 2016 Regular Meeting

Edward Seger moved to approve the November 3, 2016 regular meeting minutes.
Thomas Buchney seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

6. Receipt and Filing of Correspondence

Letter of Resignation from Tom McClachrie

Vincent Zinno moved to receive and file the letter.
Gloria Gallo seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

7. Resolutions

A. Resolution 16-48: Appointing Skylands Risk Management as Fund Commissioner for the Statewide Insurance Fund

Vincent Zinno moved to approve Resolution 16-48.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

B. Resolution 16-49: Approving a Risk Management Agreement with Skylands Risk Management Inc. along with the Exhibit A Referenced in the Agreement

Vincent Zinno moved to approve Resolution 16-49.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

C. Resolution 16-50: Resolution for 2017 Fund Year Statewide Insurance Risk Management Consultant Agreement and Exhibit A

Gloria Gallo moved to approve Resolution 16-50.
Vincent Zinno seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

D. Resolution 16-51: Approving the Release of Escrow for Vernon Valley Investors LLC

Thomas Buchney moved to approve Resolution 16-51.
Edward Seger seconded the motion.

Discussion: Vincent Zinno asked if all the electrical issues were resolved. Engineer Ceren Aralp said they were.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

E. Resolution 16-52: Approving the Purchase of Cellular Sensaphone Sentinel Devices from Hydra-Numatic Sales Co. for Pump Stations 1, 2, and 3

Vincent Zinno moved to approve Resolution 16-52.
Edward Seger seconded the motion.

Discussion: Gloria Gallo questioned the amount of the total purchase and asked if there was a monthly fee. John Scerbo said the fees were inclusive of that amount for the year. He also said the VTMUA would no longer be paying landline fees, so part of the expense of the new system is a wash.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

F. Resolution 16-53: Budget Transfer for 2016

Edward Snook moved to approve Resolution 16-52.
Vincent Zinno seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

8. Auditor’s Report

Auditor Charles Ferraioli said the new budget is less than $96,000 higher than the last year. The total new budget is $2,369,316. What drives the increase is the debt service payment to SCMUA, he said. That is $153,005 higher than last year. Capital improvements will increase from $52,000 to $75,000. Last year the debt service on the town bond was $87,353. This year the VTMUA is bonding $64,020, as it is the first year Mountain Creek will be billed for the deficit agreement. In addition, the town will not be doing services for the VTMUA any longer. That line item for the township’s services to the VTMUA was $100,000. This year, $175,000 will be budgeted for that line item because the town will not be doing the maintenance of the pumping system. All other appropriations are relatively flat, Mr. Ferraioli said. The overall difference in the budget from 2016 to 2017 would be $196,000, he said.

Mr. Ferraioli said 2017 would be the first year Mountain Creek would pay the 63% deficit of the VTMUA’s operating deficit.

Mr. Ferriaoli said the commissioners could decide to increase or decrease the amount for capital improvements.

Rates for users would increase about $100 for 2017. Based on one of his projections for the VTMUA, he said he had stated the rates would go up about $70 for the coming year if there were no new users on the system.

Executive Director John Scerbo said he wanted to underscore something very important that Mr. Ferraioli touched upon, and that is to follow the projections. He said the VTMUA went through the exercise of doing multiple scenario projections to understand where they would be, moving forward. The projections give the VTMUA a “flight path” to follow, he said. He said right now there are no additional EDUs forthcoming, and there are none that they know about in the future. At this point, even the pieces that were supposed to come into play from Mountain Creek are still uncertain, so the VTMUA does not know where anything is going and should stay with the projections. If it gets to the point where something occurs in 2017, they could always shift to the second projection and just insert the additional EDUs, he said. That would tell them where they should go next.

Mr. Scerbo also recommended that at the VTMUA’s rate hearing in January they once again ask the auditor to go through the projection again for the public so that the public knows the VTMUA is doing the best it can to keep the increase as palatable as possible. The public should know what that “flight path” is for future increases if there is no growth and no additional EDUs.

Vincent Zinno said if they take the approach of no growth and they don’t see the potential of growth he thinks they also need to take into consideration they need to remove the line item for connection fees for $30,000. With the permit fees and interest income, the amount is up to $50,000 listed as potential income. In connection and other associated fees that total nearly $50,000 as income from the new budget. He thinks the potential income should be removed from the budget.

Mr. Scerbo said he understands the point but the problem is that they need to project something in that line item, not knowing for sure what would happen, which is the same thing they did in 2016 when they had no idea what was coming other than the township connections and they needed to include something in the budget.

Mr. Scerbo said there would be minimal impact in growth from Mountain Creek in 2017 and, if there is any growth it is likely to be in 2018 and 2019. Mountain Creek is considering a new restaurant of about 140 seats.

Mr. Ferraioli said the VTMUA’s debt to the SCMUA increases in 2017 from $450,000 to $600,000. In 2022 and 2023, that debt increases to $1.5 million. Assuming Mountain Creek lives up to its agreement to funding their deficit at 63%, he added, for the VTMUA to get to the $1.5 million debt service payment to SCMUA, and if there is no increase in the user base, they would be asking the current users to pay an additional $400 a year between now and 2023 to build up to that debt service. That is the increase for debt service to SCMUA only. There would likely be increases in operating costs and other items, he added. Without any additional users, the user fees would increase about $100 a year going forward, he said.

The commissioners also considered that when there is water in the town center the user base is also likely to increase. Commissioner Gloria Gallo asked what is the status of that water. Commissioner Vincent Zinno noted Councilman Patrick Rizzuto was sitting in the audience and asked him about the status. Mr. Rizzuto said that other than the council being told it is a top priority, for anything to happen it would have to come to the township council for approval, and nothing has been put forth to the council. Commissioners noted even if the council moved on it immediately, just the approval and the construction could take up to two years before there is water in the town center.

Commissioner Thomas Buchney said everything points back to the VTMUA’s need to investigate expansion of the sewer service area. He said he thinks the people who need to understand this are not just the ratepayers but also the township council because it’s the governing body that is tying their hands.

Chairman Edward Snook noted that many houses that are being sold today are in need of new septics. He said he is aware of three houses just recently sold that required new septic systems. Before the mortgage companies give mortgages to the buyers they are making them replace the septic systems, he said.

Vincent Zinno also noted the VTMUA has no money for capital improvements if an emergency should occur, such as with the lift stations. Thomas Buchney asked engineer Ceren Aralp about the lift stations. She said upgrading the lift stations would cost about $500,000. She added they do not know the condition of two aging force mains that could pose future problems, and pump station #3 is aging and could be problematic. Ms. Aralp said they have started doing I&I studies (Inflow and Infiltration) on the area. Some repairs were made, but there are more to consider, she said.

Edward Seger said considering the I&I study they previously did, they need to maintain their infrastructure and should be thinking about it now if they can.

Mr. Scerbo said if there is a consensus to take the money out of the cash bond and to create an increase of between $90,000-$100,000 for the ratepayers, the VTMUA needs to do a motion so the auditor can change the budget to have it ready for the rate hearing to introduce the budget.

Edward Snook said it would behoove Mountain Creek to proceed with expansion plans to increase the user base if they do not want to pick up the 63% deficit. Charles Ferraioli said they would likely hear from Mountain Creek when the resort soon gets two bills from the VTMUA.

Vincent Zinno said he wants to clarify that Mountain Creek will not get the bills from the VTMUA but rather from the Township of Vernon. The agreement is between the municipality and Mountain Creek.

A. Resolution 16-54

Considering the projection of no potential expansion, Edward Seger moved to appropriate the cash bond to add the amount to the capital improvement or rate decrease fund.

Vincent Zinno seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

B. Resolution 16-55: Increasing the 2017 EDU Rate by $100

Vincent Zinno moved to increase the 2017 EDU rate by $100.
Edward Snook seconded the motion to move the discussion forward.

Discussion: Edward Seger said it is just for perception, but he feels the EDU rate should only be increased by $90 instead of $100. He thinks a two-digit increase rather than a three-digit might be better perceived. Vincent Zinno said he did not think it would make much of a difference whether it is $90 or $100. Thomas Buchney feels it is important for people to understand that the $100 increase is based on the projections of more increases in the future. It’s important for the council to understand they are tying the VTMUA’s hands, he said. Vincent Zinno suggested the VTMUA express that to the council when they do their presentation on the status of the VTMUA to the governing body in February or March.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Vincent Zinno, and Edward Snook
Nays: Edward Seger

C. Resolution 16-56: Introducing the 2017 Budget

Vincent Zinno moved to introduce the 2017 budget for the VTMUA.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

9. Attorney’s Report

Attorney Richard Wenner reported on the RFPs they sought because as of January 1 the VTMUA will no longer have the benefit of township employees maintaining the sewer facility.

Mr. Wenner said there was a pre-bid meeting in November. The bids were due on December 13. Only one proposal came in, by Agra Environmental, which is problematic, he added. Based on only one proposal, Mr. Wenner recommended rejecting the proposal. He said the proposal by Agra was also deficient in several areas, and Agra failed to answer several questions in the RFP. There was also no required list of equipment provided in the proposal. Mr. Wenner also said the terms in Agra’s proposal did not match the terms of the RFP. For all of these reasons, the single bid, and the many deficiencies in the bid, the attorney recommended the VTMU reject the bid.

With the VTMUA being up against the clock in finding someone to maintain the operations, Mr. Wenner suggested speaking with vendors who had requested applications but did not submit bids and find out why they didn’t, but that would take months he said. He said they might consider doing shared services with a municipality that offered, such as Hardyston. He said they could also re-advertise the RFPs.

John Scerbo said the township will work with the VTMUA during the month of January to transition the new operator, but Mayor Shortway has made it clear they are not giving the VTMUA any more time. Commissioner Gloria Gallo said she finds that so disturbing that it is incredible. Edward Snook said they had asked the mayor two months ago if the VTMUA could renegotiate the township agreement, but they were told the town wants nothing to do with the VTMUA. The mayor said the council does not want to negotiate with the VTMUA. John Scerbo said the township canceled the agreement with the VTMUA as of January 1, 2017.

Vincent Zinno moved to authorize Attorney Richard Wenner to accept and execute a contract with Hardyston Township for shared services for 12 months, to be renegotiated after six months.

Edward Snook seconded the motion.

Discussion: Edward Seger said the offer by Hardyston seemed a little high and asked the VTMUA not to disregard other options. John Scerbo said Attorney Wenner might have some room to discuss the cost with Hardyston.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Vincent Zinno, Edward Seger, and Edward Snook
Nays: None

Chairman Edward Snook called for a motion to reject the single proposal that came in from Agra Environmental.

Gloria Gallo moved to reject the proposal by Agra Environmental.
Vincent Zinno seconded the motion.

Discussion: Commissioner Joseph Tadrick said people have to take responsibility, and if the council is making decisions that affect the people of Vernon, then it lies with them. Why is the VTMUA “beating itself up” over this, he asked. If the council is making these decisions, why should the VTMUA take the heat, he asked. He said the VTMUA is trying to help the ratepayers, but they are not making the decisions on this.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Vincent Zinno, and Edward Snook
Nays: None
Abstain: Edward Seger said he had to abstain because he had not seen the proposal.

10. Engineer’s Report

Review of New Applications

A. Engineer Ceren Aralp said she received the application for the Vernon Township Municipal Building. She recommended 10.25 EDUs for the 13,282 square feet of municipal offices, an 8,280 square foot police department, a senior citizens center with 20 visitors a day, and a 92-seat meeting hall. John Scerbo sad the pipes would be installed in April 2017.

Edward Seger moved to accept the recommendation of 10.25 EDUs.
Gloria Gallo seconded the motion.

Discussion: Vincent Zinno questioned why the senior center is designated with only 20 visitors and does not go by the number of chairs, especially since they serve lunch daily and many more than 20 people attend. Gloria Gallo said the center is usually packed. Ms. Aralp said it is considered a meeting hall and is not based on the number of seats.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Vincent Zinno, Edward Seger, and Edward Snook
Nays: None

B. Ms. Aralp also said she received a report of estimated development by Mountain Creek in the current sewer service area, all going to Pump Station #2. In looking at the proposed dates, she said Mountain Creek plans to open a 140-seat restaurant in 2017 and in 2018 and 2019 there is a spa and another restaurant, a spa village, and employee housing dorms. She said she does not think the VTMUA has the capacity, and Mountain Creek has been made aware the pump station needs an upgrade. She wants to put on the record the pump station must be upgraded in order for this development to go forward.

John Scerbo said the mayor told him the new township attorney is going to negotiate a developer’s agreement with Mountain Creek to nail down a timeframe for when the pump station would be upgraded.

11. Executive Director’s Report

Executive Director John Scerbo reported R.S. Phillips Steel has put in railings and protectors in Pump Station #3, so the safety issue that was raised was taken care of. He also said the meter at Pump Station #2 is being worked on this week and should be in place within a week.

12. Commissioners’ Comments

Edward Seger said he thinks it is important to ask vendors who requested applications during the RFPs why they did not want to bid.

Vincent Zinno said he thinks the VTMUA did the right thing with the RFPs and the bidding, and they did a thorough job. The one package that came in was incomplete and they had no other option but to reject it and they did the right thing. He said he is very aware of the bidding process, and had they not rejected the bid they could be charged with discrimination by the next person who might come along. He also asked if there was any clarification with the lift stations. John Scerbo said nothing has been filed yet by the township requesting a declaratory judgment.

13. Chairman’s Comments

Chairman Edward Snook said he has received many bids over many years, and he agrees with Vincent Zinno that they did the right thing in rejecting the single bid. He also said he thinks it would be good to find out why other bidders did not submit their proposals. He feels the decision to go with Hardyston was a good one for now, and they can always go out to bid again.

14. Executive Session

Litigation and personnel matters, no further action taken.

WHEREAS, the Open Public Meetings Act, N.J.S.A. 10:4-6 permits the exclusion of the public in certain circumstances; and

WHEREAS, this public body is of the opinion that such circumstances presently exist.

NOW, THEREFORE, BE IT RESOLVED by the Vernon Township Municipal Utilities Authority of the Township of Vernon as follows:

1. The public shall be excluded from discussion of and action upon the hereinafter-specified subject matter.

2. The general nature of the subject matter to be discussed is litigation and personnel.

Gloria Gallo moved to go into executive session.
Vincent Zinno seconded the motion.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None
Time: 8:34 p.m.

Motion to return to public session.
Vincent Zinno moved to return to public session at 9:20 p.m.
Thomas Buchney seconded the motion.

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None
The VTMUA went back into public session at 9:20 p.m.

Adjournment

Thomas Buchney moved to adjourn the meeting at 9:21 p.m.
Edward Seger seconded the motion.
All were in favor.
The meeting was adjourned at 9:21 p.m.

The next meeting of the VTMUA will be on January 19, 2017 at 7 p.m.

Transcribed and submitted by Jessica Paladini
Vernon Township MUA Secretary