City Council Workshop
                        2000-W-01
                   City Council Chambers
                       1110 Houston
                     January 12, 2000
                         5:30 P.M.

                          Minutes

  I.  Call to order

 II.  Roll Call

      In Attendance:
      Elizabeth G. Flores,		Mayor
      Alfredo Agredano,		Councilmember, District I
      Louis H. Bruni,		Councilmember, District II
      John C. Galo,		Councilmember, District III
      Cecilia May Moreno,		Councilmember, District IV
      Eliseo Valdez, Jr.,		Councilmember, District V
      Joe A. Guerra,		Councilmember, District VI
      Mario G. Alvarado,		Councilmember, District VII
      Consuelo “Chelo” Montalvo,	Mayor Pro Tempore, District VIII
      Gustavo Guevara, Jr.,		City Secretary
      Larry Dovalina,		Acting City Manager
      Cindy Collazo,		Acting City Manager
      Jaime L. Flores,		City Attorney

III.  Groundwater Supply Project presentations review, 
      consideration, and possible action.

      Motion to declare a factual finding by this City Council, 
      that based upon the information provided to this Council 
      by staff and by the city’s private consultant company 
      CH2MHILL, the timely, efficient and effective action by 
      this Council to procure ground water as an alternative 
      source of water for the citizens of Laredo, is necessary 
      in order to preserve and protect the public health and 
      safety of the city’s residents, and to keep intact and 
      unimpaired the good health of the citizens of Laredo in 
      advance of a potential impairment of the city’s current 
      source of water;

      And further, that this factual finding establishes an 
      exemption to the competitive procurement provisions of 
      Chapter 252 of the Texas Local Government Code, specifically 
      by the exemption provided by Section 252.022 (a) (2) of 
      the Code, given that this is a procurement necessary to 
      preserve and protect the public health and safety of the 
      municipality’s residents.
	
      Moved:  Cm.  Alvarado
      Second:  Cm.  Valdez
      For:	  6	Against:  0	Abstain:  0

      (Cm.  Moreno & Cm. Guerra not present.)											
	
      Motion to instruct staff to finalize and analyze the 
      responses and present it to the Water Issues Committee by 
      February 1, 2000.

      Moved:  Cm.  Bruni
      Second:  Cm.  Galo
      For:	  6	Against:  0	Abstain:  0
	  
      (Cm.  Moreno & Cm.  Guerra not present.)

1.  Presentation by Azurix.
	
    Principal Speakers included:

    Raymond Hart, Associate
    Richard Harville, Project Manager Operations
    Michael E. Lucchesi, Engineering and Construction
    Michael C. Havener, Ground Water Development
    Dan Pearson, Regulatory Management
    David Marquez, Community Development.

Growing with Enron
  
   *  Leading integrated natural gas and electricity company.
   *  $34 billion in market capitalization
   *  $36 billion in annual revenues
   *  $33 billion in assets
   *  Transports 18% of North American’s natural gas
   *  #1 Marketer of Natural Gas
   *  #1 Wholesale Power Marketer
   *  Operates one of the nation’s largest natural gas 
      transmission systems
   *  Markets natural gas and electricity nationally and 
      worldwide.

Enron Engineering and Construction Design/Build Capabilities

   *  A leader in the engineering, procurement and construction 
      of infrastructure and energy projects worldwide as a global 
      division of Enron Corp.
   *  Bonding and project guarantee capability backed by over 
      $33 billion in assets and $36 billion in yearly revenue
   *  Constructed over 6,000 miles of pipelines
   *  Have over 1,700 miles of pipeline under construction
   *  Design/build projects completed:  $15.6 billion
   *  Ongoing projects:  $8.5 Billion
   *  920 Engineers and Professionals on staff
   *  Major offices in Texas, Washington, California, Oregon, 
      Argentina, Indonesia, Brazil and the UK

Operating experience:

   *  Over 5,700 employees
   *  Over 1,200 water wells – over 50% of our supply is 
      groundwater
   *  Over 500 miles of pipelines, aqueducts, canals (with 
      thousands of miles of water mains)
   *  765 water treatment plants – over 821 MGD of water 
      production capacity
   *  491 wastewater plants – over 582 MGD of treatment capacity
   *  Serving over 10 million people
   *  Operating and developing the largest private Aquifer 
      Storage Recovery (ASR) facility to date

Azurix North America Divisions include:

   *  Contract Operation Services
   *  Engineering and Automation Services
   *  Residuals Management
   *  Underground Infrastructure Rehabilitation
   *  Carbon Regeneration
   *  Utility Ownership and Operation.

Azurix North America Contract Operation Services Division

   *  Contract Operation and Maintenance of Municipal and 
      Industrial Water and Wastewater Facilities and Associated 
      Infrastructure.
   *  Build/Own/Operate/Transfer (Boot)
   *  Design/Build/Operate (DBO)
   *  Purchase and Operate
   *  Financing
   *  Training
   *  Quality Assurance/Quality Control
   *  Billing and Collection Services
   *  Meter Reading

Drilling and Wellfield Development:

   *  Founded in Texas in 1882
   *  The largest water well Company in the world
   *  70 offices
   *  700+ drill rigs
   *  Innovative leader in geophysics, aquifer testing, 
      drilling and treatment

Ground Water Supply Development:

   *  Water Supply Investigations
   *  Surface and Borehole Geophysics
   *  Test Drilling Programs
   *  Aquifer Testing and Analysis
   *  Groundwater Modeling
   *  Water Quality Evaluations
   *  Well Field Operation and Maintenance

Ground Water Supply Development

   *  Complete Range of Water Well Drilling Services
   *  Focus on High Capacity Public Water Supply Wells
   *  Well Pumps and Pump Houses
   *  Water Treatment Systems
   *  Well and Pump Maintenance Services

  With a vast fleet of drilling rigs and our experienced staff 
  of water supply professionals, Layne Christensen can meet 
  any challenge needed to perform ground water acquisitions. 

Construction Differences Water Wells vs. Oil/Gas Wells

   *  Strict licensing requirements for water well drillers
   *  Water wells must be sand-free
   *  Water well efficiency is critical to pumping capacity 
      and requires different drilling and construction methods
   *  Drinking water has quality requirements

Water Source Evaluation presented by Hillco Partners

   *  Texas Natural Resource Conservation Commission Water 
      Manager and resident expert for over 25 years
   *  Intimately involved in the day-to-day activities of the 
      TNRCC’s surface and ground water management and water 
      quality programs
   *  Overseen hundreds of water supply development projects 
      and water sales agreements
   *  Managed and operated the Rio Grande Watermaster’s Office
   *  Permitted the state’s first aquifer storage and recovery 
      project
   *  Helped legislature’s create the Edwards Aquifer Authority 
      and other ground water district
   *  Assisted ground water district with the development of 
      their rules and procedures

Development Approach

   *  Azurix believe that it is the best interest of Laredo to 
      partner with a contractor which is not already aligned 
      with a specific water supply source
   *  Recent CH2Mhill Study identified up to five groundwater 
      alternatives that should be considered and evaluated
   *  Study expressed uncertainties about the identified 
      alternative groundwater sources
      -- limited knowledge of aquifer conditions
      --sustainability of desired amounts
      -- recharge potential
      -- increased competition for the water
      -- expansion potential
      -- specific environmental and their party impacts
      -- long term water quality
   *  Careful consideration of ground water supply options
      -- maximize sustainability
      -- assure water quality
      -- maintain reasonable costs 
      -- minimize risk

Development Approach

The Azurix Team will quickly perform necessary technical and 
financial evaluations in the selection of Laredo’s future 
alternative supply source

      -- With input from Laredo, develop an evaluation and 
         implementation plan
      -- Select alternative water supply sources to evaluate
      -- Review existing data and information
      -- Identify critical data and information needed for 
         comparative analysis purposes, including such key 
         parameters as:
   
  *  Sustainability of the source
  *  Potential competition for resource by others
  *  Potential impacts (3rd party, environmental, etc.)
  *  Local/state/federal authorization requirements
  *  Right-of-way and property issues
  *  Costs (capital and operating)
  *  Implementation time frames
  *  Public acceptability 

Development Approach

   *  Quickly collect critical supplemental data and information
   *  Perform detailed sustainability, cost/benefit and risk 
      analysis of each 
   *  Provide detailed analysis to Laredo for review
   *  Select water supply source(s)
   *  Finalize implementation plan with Laredo
   *  Azurix Team will finalize development rights to selected 
      water supply source(s)
   *  Team will complete system design and begin construction

2.  Presentation by American States Water Company

Principal Speakers

*Jim Stephens
	Texas Eco President
*Joel Dickson
	AWR Vice President

*Glen Lewis
	AWR Project manager
*Todd Schieman
	Administrative Analyst

Project Objectives

   *  Design, engineer, construct and operate a secondary 
      water system
   *  Provide long term options
   *  Work with the City to communicate benefits to the community

Relevant Experience – American States Water Company

   *  A W R was established in 1929
   *  500 Employees
   *  Own 39 separate water systems
   *  Operating in 75 cities
   *  Serving 1 Million people

Relevant Experience – Financial Strength

   *  1999 Revenues $166 Million *
   *  1999 Net Revenues $17.7 Million *
   *  Assets Exceeding $500M
   *  Standard & Poor’s Rating of A+
   *  Rated A2 by Moody’s Investor’s Services
   *  Stock Traded on the NYSE [AWR]
  Latest twelve months ended Septemeber 1999

Relevant Experience – Operations

   *  Supply 62 Billion gallons of water annually
   *  5 Surface water treatment plants
   *  6 Granular activated carbon VOC treatment plants
   *  Iron and manganes filtration plants
   *  Blending treatment operations
   *  Chloramination/chlorination facilities
   *  Production from 22 different ground water basins
   *  Own & operate 300 wells
   *  Own, operate and maintain over 2,600 miles of pipeline
   *  96 Million gallons of storage capacity
   *  242,000 water service connections

Relevant Experience – Construction, Operation & Maintenance

   *  $42M of Capital projects in 1999
   *  “In-house” engineering with extensive management of contractors
   *  Predictive, preventive, corrective maintenance programs
   *  Worksite inspection and reporting

Relevant Experience – Water Quality

   *  Water quality certified by State, third party testing & 
      “In-house” Quality Assurance Department
   *  Active with industry organizations providing Leadership 
      in the preparation of Water Quality control Plans and 
      Waterworks Standards

Project Implementation & Timeline

   *  Project initiation upon execution of signature
   *  Term: 25+ Years
   *  Initial Rate of 5MGD up to 25MGD
   *  At City’s option, contract may be extended up to 100 years
   *  We will assist the City in communicating the benefits 
      of this project to the community
   *  This project will be tailored to your specific needs

Project Implementation & Timeline With Water Source Evaluation

   *  A ground water source identified
   *  Quantities that exceed projected consumption levels
   *  Water quality meeting or exceeding all federal, State and 
      local standards
	  
Closing Statement

   *  70 years as an industry leader in water services with the 
      ability to provide the required services to the City of 
      Laredo
   *  Critical to the City’s growth is a secondary source of 
      high quality water which we can provide
   *  A project tailored to your specific needs

3.  A presentation proposal by H. B. Zachary Company and Thames Water

	City of Laredo’s Requirements:

   *  Certain, reliable, long-term secondary Groundwater source
   *  Affordability for citizens
   *  Development team with

      --Long-term commitment to the City
      --Financial strength
      --Experience in Groundwater development
      --Experience in infrastructure design
      --Construction experience
      --Operational experience

Why Tejas Laredo Water?

   *  Extensive worldwide infrastructure project development and 
      implementation experience
   *  Secured water source
   *  Ability to develop financing options that make the project 
      affordable
   *  Project duration within 18-24 months
   *  Long-term commitment to Laredo’s future
   *  Strong local and business roots

H. B. Zachary Company

   *  Lead Project Partner
   *  Founded 1924 in Laredo
   *  South Texas based construction and maintenance company
   *  Over 12,000 employees
   *  Annual revenues exceed $1 Billion
   *  Experience in design, construction, and financing of 
      complex public infrastructure projects

Thames Water

   *  One of the World’s largest private water organizations
          --400-year history in running the largest water system 
            in the world (London, United Kingdom)
               -96 drinking water treatment plants
               -360 waste water treatment plants
          --100 facilities outside the UK
   *  Recent purchase of E’Town – New Jersey water and wastwater 
      business ($1 billion)
   *  Annual revenues 42 billion
          --International project portfolio valued at $4.7 billion
          --Global customer base of 23 million people 
   *  11,000 employees

San Lorenzo Water Partners

   *  Briscoe, Petty and Faith ranches
         --160,000 acres over Carrizo Aquifer
   *  Best alternative source of groundwater
   *  Vested interest in the responsible development of 
      alternative water sources
   *  Interest in protecting the region’s ecology
   *  Funded initial engineering studies

Dannebaum Engineering

   *  Texas-based engineering company
   *  Founded in 1944
   *  Civil engineering consultants
   *  Infrastructure design
      --Water and wastewater
      --Street and drainage

LBG-Guyton Associates

   *  Recognized experts in Groundwater resources
   *  Groundwater work in Texas since late 1930’s
   *  Extensive work for 
      --TWDB
      --Private clients on Groundwater resources
   *  Past work on Basis of Water Availability Studies 
      (such as the CH2M Hill study for the City of Laredo

Water Source Evaluation

   *  Initial engineering studies completed
   *  Long-term supply of 20 million gallons per day (MGD)
   *  High water quality
   *  Verify CH2M Hill study – Best Source of Water for the 
      City of Laredo

Water Source Development Approach

   *  Assure long-term, responsible development
   *  Optimize development of all available surface and 
      ground waters
   *  Not use Laredo’s bonding capacity
   *  Minimize rate impacts
      --Sequence development and construction to meet needs
      --Economic development along pipeline ROW
      --Use creative financing plans

Water Sounce Development Approach

Value-added Solutions
   *  Conservation programs
   *  Water distribution system leakage
   *  Unaccounted-for water
   *  Impact fees 
   *  Rate structuring
  			. EMBED MSGraph.Chart.8 \s ...
		
Why Tejas Laredo Water

   *  Extensive worldwide infrastructure project development 
       and implementation experience
   *  Secured water source
   *  Ability to develop financing options that make the 
      project affordable
   *  Project duration within 18-24 months
   *  Long-term commitment to Laredo’s future
   *  Strong local and business roots

4.	Presentation by United Water.

Principal Speakers

Robert C. Siemak,
   Program Director
William Turner,
   Groundwater Exploration and Water Rights
John Joyner, 
   Financial Analysis
Vince Tovar,
   Construction/ Operation
Dana Batiste,
   Community Programs
Tim Farrell,
   Wellfield Management

Team Background

Relevant Experience

   *  United Water serves more than 7.5 million people in the U.S.
   *  United Water services 19 states 
   *  United Water serves 85 million Worldwide
   *  AGW has provided Water Supply Development Services 
      Throughout the World
   *  Experience and Resources are Measured by our employees
   *  Professional and Technical Staff of United Water 
      currently employees 2,500 and Suez-Lyonnaise employees 
      210,000

Water Source Evaluation and Development Approach

   --Task One - Identify Water Sources
   --Task Two – Optimize system & select preferred option
   --Task Three – Secure water right
   --Task Four – Construct production & conveyance facilities
   --Task Five – Operate & maintain system

Cost Model Preparation

   --Rural Development Administration
   --Rural Utilities Service
   --Community Adjustment Investment Program
   --NAD Bank
   --State Revolving Loan Fund
   --G. O. Bonds
   --Revenue Bonds
   --Private Financing Taxable Tax-Exempt

5.	Presentation by U. S. Filter.

	Team Members include:
	
	Jerry Coffey, P. E.,
		Regional V P of Municipal Development – USFOS
	Sarah Ruddock, 
		Agua de Miguel
	William Rosenbaum,
		USFilter Engineering & Construction
	Walter Ebaugh, Ph. D., P. G. 
		Team Leader

Relevant Experience Summary

   *  Developed 14 similar water resources worldwide
   *  Operate 569 Water Wells
   *  Develop and/or maintain 15,000+ miles of waterlines
   *  12 of the 15 design, build, and operate water/wastewater 
      plants built in U. S. 
   *  Currently implementing a $140M 12-mgd R O Reclamation 
      Project, Honolulu

Vivendi Water – The World’s Largest Water Services Company

   *  Recently Acquired U. S. Filer
      $6.2+ Billion
   *  Created Vivendi Water
      Revenue of $13 billion
   *  U. S.  Filter operating Services and Professional Services 
      Group (PSG) 
      Combined Resources


   *  Ranked in top 100 International Firms
      80,000+ Employees and 7,000+ clients
   *  World Class Research Center

USFilter Corporate Qualifications

   *  27 years of successful experience
   *  250+ firms make U. S. Filter the water source
   *  Annual Revenues of over $5 Billion
   *  Over 2,000 Manufacturing, distribution and sales offices 
      throughout the world
   *  Activities and offices in over 94 countries
   *  The undisputed world leader in providing water treatment 
      systems, products and services

USFilter Operating Services

   *  First Municipal Outsourcing Project
      --Still a valued client
      27 + years of service
   *  Annual Revenues
      Exceeding $375 Million
   *  >2,700 Water and wastewater employees
   *  Operate >260 Treatment Plants
   *  Treat in excess of 1.75 Billion GPD of Water
   *  Only firm that can engineer, manufacture equipment, 
      build and operate

Benefits of Public-Private partnerships

   *  Obtain accountability from a substantial firm
   *  Lower costs to City and citizens
   *  Expedite facility design and construction process
   *  Obtain water quality guarantees and minimize City risk
   *  Allows city to focus on handling growth in a quality manner
   *  Long-term contract promotes stable water rates

Agua de Miguel

   *  Wholly-Owned subsidiary of Michael Holdings, Inc.
       --Developer of gas and oil in South Texas since 1983
       --2nd Largest producer of natural gas in Webb County
       --5th Largest taxpayer in Webb County
       --Extensive gas well database
       --Currently operates 400+ gas wells in area

Texas Water Rights Key Issues

   *  Texas recognizes common-law
      “Rule of Capture” for Groundwater Ownership
   *  Landowners have right to water that they can 
      “capture” from beneath their land
   *  Landowners can sell or lease their right to capture water
   *  Limitations on right to capture are minimal
   *  Liability for waste, withdrawal of water for malicious 
      injury, and land subsidence 
 
USFilter Engineering & Construction

   *  20+ Year of Design/build experince
   *  Experienced engineering team – 400+ Staff
   *  Major Groundwater design/build/operate projects
         --12 Multi-million dollar municipal D/B/O/O projects
   *  Groundwater Supply Design Capabilities:
         --3-D views with rotation, shading and contours
         --Piping, pumps, headloss and pressure design
         --Groundwater withdrawal computer modeling
         --Well/bore analyses
   *  Commitment to include National and Local Engineers as Part of our Project Team
   *  Will include major National and local
         --Engineers
         --Construction Contractors

USFilter Groundwater Services

Hydrogeology Specialists in:
   *  Groundwater supply planning
   *  Exploration and well-siting on rock Fracture Zones
   *  Aquifer testing
   *  Yield and sustainability studies
   *  Wellhead protection evaluation
   *  Wellfield management and permitting
   *  Water system design

USFilter Groundwater Services

	Highly Experienced:
   *  Diverse geologic settings
   *  Supplies for Municipal and industrial clients
   *  Regulatory Compliance
   *  Smart well-siting to Foster Superior Yields
   *  Forward computer modeling of wellfields
   *  Proven problem solvers

Investigation requirements and wellfield layouts
	
      Goals of staged water production
        --Compile existing well and aquifer data
        --Conduct aquifer (pumping) test
        --Model sustainable yield
      Wellfield layout considerations
      Dual aquifer production considerations

Reasons to locate wellfield close to Laredo

   *  Minimize pipeline and conveyance costs
   *  Fits goals of staged water production
   *  Single and dual aquifer options are viable
   *  Artificial recharge through aquifer storage and recovery

Water Treatment Alternatives

   *  Pretreatment prior to storage ponds
   *  Membrance technologies
   *  Reverse osmosis treatment
   *  Parallel  treatment for emergencies
   *  Disposal of treatment by-products

Summary of innovation Aspects

   *  Water for land use and ROW
   *  Parallel pipeline for redundancy and repair
   *  Use of natural gas as primary power for wells, pumping 
      and treatment
   *  Subcontracting with geologists, hydrologists, and water 
      right attorney’s to create groundwater “Brain Trust”
   *  Storage ponds “In Town” to minimize raw water pipeline 
      size/cost
   *  Pump from ponds to meet true emergencies

Value-Added Considerations

   *  $100,000 Annual Commitment
   *  Pipes and valves to serve colonias with water and/or 
      wastewater services
   *  Raw-water treatment in holding ponds
   *  Non-polluting recreational use
   *  Attract a water park
   *  Use city construction teams, lower cost, retain all 
      staff and improve productivity on city line breaks/
      replacements
   *  Natural gas use for power adds local value

Financial Considerations

   *  Lease/own arrangement
   *  Off-balance-sheet financing
   *  Issuance of Revenue bonds
   *  Private financing

Cost Considerations

   *  Evaluation and Testing
   *  Water wells
   *  Natural gas vs. electric power
   *  Collection and conveyance
   *  Storage close to Laredo vs. distance
   *  Delivery of large daily quantities for emergencies
   *  Aquifer storage and recovery practices

IV.	Adjournment		  Adjournment time:  9:25 p.m.

	Motion to adjourn	
	Moved:  Cm.  Bruni
	Second:  Cm. Agredano	Against:  0	Abstain:  0

I hereby certify that the above minutes contained in pages 01 to 
15 are true, complete, and correct proceedings of the City 
Council Workshop held on the 12th day of January, 2000.

			   	______________________________
				Gustavo Guevara, Jr.
				City Secretary