VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, December 6, 2004
Time: 2:00 P.M.
Place: Board Room
29300 Valley Center Road
Valley Center, CA 92082
The Valley Center Municipal Water District Board of Directors’ meeting was called to order by President Broomell at 2:00 P.M.
ROLL CALL
Board members present were: Directors Broomell, Polito, Aleshire, Stone and Haskell. Staff members present were: General Manager Arant, General Counsel Cowett, District Engineer Jewell, Director of Operations Dacus, Director of Finance Jeffrey, Project Engineer Grabbe, Interim Director of Operations Hoyle, IT Specialist Learue and Board Secretary Stetson. Spectators present were: Messrs. Zizzi, Roff and Ross.
APPROVAL OF AGENDA
Upon motion by Polito, seconded by Haskell and unanimously carried, the following item was added to the agenda per Government Code §54954.2:
Consideration of adoption of Resolution No. 2004-38 placing in nomination Merle J. Aleshire as President of the Association of California Water Agencies Region 10.
CONSENT CALENDAR
Upon motion by Polito, second by Stone and unanimously carried, the following consent calendar items were approved:
1. Minutes of the Board meeting held November 15, 2004
2. Audit demands
3. Treasurer’s Report and Financial Statement for the period ended October 31, 2004
ACTION AGENDA
4. Engineering Services Agreement with Earth Tech, Inc. for Evaluation of the Lower Moosa Canyon Water Reclamation Facility Percolation Pond Capacity and Development of a Groundwater Management Plan:
The District’s current waste discharge permit for the Lower Moosa Canyon Water Reclamation Facility stipulates that prior to exceeding a discharge rate of 0.44 mgd, a technical report to demonstrate the basin has a capacity for discharges in excess of 0.44 mgd must be completed or implement an approved groundwater management plan. Currently, the average daily flow at the Lower Moosa Canyon Water Reclamation Facility is approximately 0.3 mgd. Committed capacity for the plant exceeds 0.44 mgd.
Adoption of Resolution No. 2004-37 approving an agreement with Earth Tech to provide professional engineering services to evaluate the Lower Moosa Canyon Water Reclamation Facility percolation pond capacity and prepare a Groundwater Management Plan was recommended. A technical report prepared will describe the available percolation pond capacity and groundwater management plan requirements necessary for discharge and disposal of the ultimate treated capacity of the Moosa treatment plant. Project Engineer Grabbe explained that submittal of the report and review by the Regional Water Quality Control Board will likely result in an updated Waste Discharge Permit.
Upon motion by Stone, seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2004-37
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT ENTERING
INTO A PROFESSIONAL ENGINEERING SERVICES
AGREEMENT WITH EARTH TECH, INC. FOR EVALUATION
OF THE MOOSA PERCOLATION POND CAPACITY AND
DEVELOPMENT OF A GROUNDWATER MANAGEMENT PLAN
was adopted by the following vote, to wit:
Ayes: Directors Broomell, Polito, Aleshire, Stone and Haskell
Noes: None
Absent: None
5. Review of the Fiscal Year 2003-04 Comprehensive Annual Financial Report (CAFR):
The District’s financial reports for the period ended June 30, 2004, including the Comprehensive Annual Financial Report (CAFR) and Appropriations Limit Worksheet were presented and reviewed. Director of Finance Jeffrey reviewed the 2003-04 CAFR, as summarized below:
• 49,336 ac. ft. of water was sold of which slightly over 17% was purchased by the District’s 10 largest customers. 81% of water sold was delivered to participants in the Interim Agricultural Water Program (certified agricultural customers).
• An 8.9% growth in meters (+696 to 8,537 total) was experienced. Classifications of the new meter are 644 M&I, 19 commercial and 33 agricultural.
• General Fund Equity increased $5.9 million with fixed assets increasing $4.7 million.
General Fund Reserves as of June 30, 2004, were:
Total Rate Stabilization Reserves $5,032,780
Operating Reserve $4,775,862
Total Restricted Reserves $605,446
Total Capital Projects Reserves $12,369,165
An appropriations limit worksheet in compliance with Article XIIIB of the California Constitution shows that the District’s appropriations limit from property taxes is $3,495,341 for the year ended June 30, 2004. It was noted that due to the action by the State Legislature to shift property taxes from local government to balance the budget, no tax revenue is expected to be received.
Mr. Michael Zizzi of the auditing firm Leaf & Cole LLP reviewed the Independent Auditor’s Report and stated that the financial statements are the responsibility of the District and the auditor’s responsibility is to express an opinion on those financial statements. It was the auditor’s opinion that “the financial statements referred to above present fairly, in all material respects, the financial position of Valley Center Municipal Water District at June 30, 2004 and 2003, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America, as well as the accounting systems prescribed by the State Controller’s Office and State Regulations governing Special Districts.”
The Statements of Cash Flows and Revenues, Expenses and Changes in Net Assets were reviewed which reported cash and cash equivalents at the end of the year at $12,258,346, a decrease of $3,779,902 from the end of FY 2002-03. Purchases of investments were $13,487,428. Capital contributions received (meter capacity fees) for the fiscal year were $1,654,903. Expenditures for the acquisition and construction of capital assets totaled $4,696,683 (corporate facility property and miscellaneous water facilities). Net assets at the end of Fiscal Year 2003-04 increased from $72,171,523 to $79,745,868. A review of the Balance sheets reported that current assets increased approximately $2.8 million, cash and investments increased $1.1 million, accounts receivable increased $1.1 million and there was a 2% increase in new meters and 56% increase in water consumption for May and June compared to the prior year.
In response to the Board’s inquiry as to what else the Board could do, Mr. Zizzi mentioned that he has been addressing with other agencies the creation of an Audit Committee. The Board has previously expressed its preference to address matters as a Board rather than using standing committees. Mr. Zizzi stated that audit committees can more regularly meet to focus on financial controls and issues or matters deemed appropriate by the committee. The process evaluations of several tasks and District operations which had been undertaken by staff were reiterated. Pertaining to the District’s control environment, Mr. Zizzi expressed that the District’s is “middle of the road”, but when questioned gave no specifics. Mr. Zizzi did clarify that the District has a good internal control structure, and has been proactive to change when informed of a procedure that can be improved upon. He stated that it is felt that this is a very positive internal control environment. Mr. Zizzi further added that throughout the water industry agencies largely do not readily accept change. Staff requested that Mr. Zizzi inform the District if he identifies a method or procedure that can be changed that likely will result in an improvement and its implementation is cost effective.
6. Adoption of Ordinances Amending Water Rates, Service Charges, Construction Water Permit Fees and Miscellaneous Charges:
Ordinances to approve increases in the District’s water rates, water service charges, construction water permit fees and other miscellaneous charges were presented for the Board’s consideration.
Director of Finance Jeffrey explained that Ordinance No. 2004-15 increases the District’s water rates to be effective January 1, 2005, to pass through increases from the wholesale suppliers, Metropolitan Water District and the San Diego County Water Authority. The proposed rate increases also include an adjustment of the District’s local share ($2.76 per ac. ft. increase) to offset inflation and to cover local operating costs and a $15.00/ac. ft. increase to partially recover the loss of property tax revenue that was shifted to balance the State’s budget. The District’s loss of property taxes is $1.4 million per year for the next two years. A $15.00 per ac. ft. increase in the water rate for this loss of revenue will raise $667,500. Following table outlines the current and proposed municipal & industrial and agricultural water rates with the proposed rates representing a 9.17% increase for M&I and a 12.79% increase in the agricultural rates:
Water Rate Components |
M&I – Current |
M&I – Proposed |
Agric. – Current |
Agric. - Proposed |
MWD Total |
$461.61 |
$489.59 |
$332.45 |
$360.45 |
SDCWA Total |
115.22 |
129.20 |
83.33 |
100.28 |
VCMWD Local Share |
74.57 |
77.32 |
74.57 |
77.32 |
ERAF- Tax Shift Recovery |
0.00 |
15.00 |
00.00 |
15.00 |
Total Increase in Rates |
|
$59.71 |
|
$62.70 |
Ordinance No. 2004-16 was presented for adoption that, if approved, will set forth new fees and charges for construction meter services; including, a $550.00 deposit (currently at $300.00), $75.00 installation, removal and processing charge and an $80.00 monthly charge for potable construction service and $50.00 for nonpotable service. In addition, all use under single day use permits will be with a water truck, disallowing direct use from a hydrant or blow off with a hose.
Director of Finance Jeffrey stated that the District’s policy has been to give consideration to meeting at least 50% of the District’s fixed operating expenditures with the monthly meter service charge and property taxes. The District’s current meter service charges only recover 31.5% of fixed costs when the loss of the District’s share of property tax revenue is considered. It was noted that the current meter service charges have not been adjusted since 1993. Ordinance No. 2004-17 would implement the following proposed water meter service charges to be effective January 1, 2005, and would generate approximately $325,000 annually which represents 34.3% of the District’s fixed costs:
|
Monthly Water Meter Service Charges |
Meter Size |
Current Charges |
Proposed Charges |
¾” |
$15.75 |
$17.25 |
1” |
22.00 |
24.00 |
1-1/2” |
33.00 |
36.00 |
2” |
44.00 |
48.00 |
3” |
66.00 |
72.00 |
Ordinance No. 2004-18 would revise several miscellaneous charges outlined in the District’s Administrative Code. They are: non-payment service charge, turn-on charge, and charge for transfer of service and fee for deferral of water and sewer availability charge processing.
The affects of the increase in water rates as proposed in Ordinance No. 2004-15 was discussed at length by the Board. It was noted that the substantial increases in the water rates coupled with market competition from Mexico and South America could put a number of growers out of business.
Directors Broomell and Polito recommended and the Board concurred with the proposal to decrease the $15.00/ac. ft. water rate increase proposed (recovery of property tax funds due to action by the State to shift local government’s property tax revenue to balance the budget) to $10.00/ac. ft. and offset this with larger increases in the meter service charges. In this manner, the impact upon the District’s agricultural customers will be less. As such, the proposed new monthly water meter service charges would be: $18.75 (3/4”), $26.00 (1”), $39.00 (1-1/2”), $52.00 (2”), and $78.00 (3”).
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2004-15
ORDINANCE OF THE VALLEY CENTER MUNICIPAL WATER
DISTRICT AMENDING THE ADMINISTRATIVE CODE TO
PROVIDE FOR CHANGES IN WATER RATES
was adopted as amended, by the following vote, to wit:
Ayes: Directors Broomell, Polito, Aleshire, Stone and Haskell
Noes: None
Absent: None
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2004-16
ORDINANCE OF THE VALLEY CENTER MUNICIPAL WATER
DISTRICT AMENDING THE ADMINISTRATIVE CODE TO PROVIDE
FOR CHANGES IN CONSTRUCTION WATER PERMIT FEES AND RULES
was adopted by the following vote, to wit:
Ayes: Directors Broomell, Polito, Aleshire, Stone and Haskell
Noes: None
Absent: None
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2004-17
ORDINANCE OF THE VALLEY CENTER MUNICIPAL WATER
DISTRICT AMENDING THE ADMINISTRATIVE CODE TO
PROVIDE FOR CHANGES IN WATER SERVICE CHARGES
was adopted as amended, by the following vote, to wit:
Ayes: Directors Broomell, Polito, Aleshire, Stone and Haskell
Noes: None
Absent: None
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2004-18
ORDINANCE OF THE VALLEY CENTER MUNICIPAL WATER
DISTRICT AMENDING THE ADMINISTRATIVE CODE TO
PROVIDE FOR CHANGES IN MISCELLANEOUS CHARGES
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
GENERAL MANAGER’S AGENDA
7. Review of Miscellaneous Informational Items:
• The Local Agency Formation Commission’s (LAFCO) assessment invoiced the District for Fiscal Year 2004-05 and retroactive adjustments for Fiscal Years 2002-03 and 2003-04 amounted to $27,736. Last year’s assessment had been approximately $5,000. The increase reflects LAFCO’s implementation of the
provisions of AB 1948 along with corrections applicable to Fiscal Years 2002-03 and 2003-04 and the amount calculated on the revised definition of general purpose revenues (total operating plus total non-operating revenues less aid from other governmental agencies).
• General Manager Arant reported that the Economic Study Group’s petition to the State Supreme Court for its rate litigation, Rincon del Diablo M.W.D., et al. v. San Diego County Water Authority, et al., was denied.
• Metropolitan will be moving forward to establish a methodology and time line for implementing cut backs per the Interim Agricultural Water Program (IAWP). The District will be recertifying its participating customers in the IAWP in FY 2005-06 if no cut-back in water supplies is implemented. Water delivery cut-backs are not expected this year due to the wet weather.
BOARD OF DIRECTORS’ AGENDA
8. Resolution Nominating Director Aleshire as Chair of ACWA Region 10:
Resolution No. 2004-38 was presented which places in nomination Merle J. Aleshire for President of ACWA Region 10. At the recent ACWA Conference, Director Aleshire was nominated and, pending adoption of the aforementioned resolution, elected President of ACWA Region 10 to complete the remaining one-year term vacated by Betty Ferguson.
Upon motion by Haskell seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2004-38
RESOLUTION OF THE BOARD OF DIRECTORS OF
THE VALLEY CENTER MUNICIPAL WATER DISTRICT
PLACING IN NOMINATION MERLE J. ALESHIRE AS
A MEMBER OF THE ASSOCIATION OF CALIFORNIA
WATER AGENCIES REGION 10 PRESIDENT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
9. ACWA/JPIA Extension of Coverage for Rainbow M.W.D.:
Director Aleshire reported that the ACWA/JPIA Executive Committee voted to continue its insurance coverage for the Rainbow M.W.D. until its new Board is established in January and then review the agency’s progress and deliberate continuance or discontinuance of the insurance coverage. Two newly elected Board members of Rainbow M.W.D. have indicated support of Rainbow’s capital improvement program.
10. Power Generator:
Director Stone asked if the District will be reassessing opportunities for power generation as energy shortages are again expected to be experienced in the State. He noted that technology has greatly improved in the self-generation of power such as hydroelectric power in a pipe and solar power. The feasibility of a generator or solar system to supplement the District’s energy needs will continue to be investigated.
ADJOURNMENT
11. Upon motion by Polito, seconded by Aleshire and unanimously carried, the meeting was adjourned at 4:30 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Board Secretary