VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, June 20, 2005
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 and Stone. Director Haskell was absent. Staff members present were: General Manager Arant, General Counsel Cowett, Director of Finance Jeffrey, Director of Operations Hoyle, District Engineer Grabbe, Board Secretary Stetson, Water Facilities Supervisor Stetson and Manager of Accounting Pugh. Spectators present were: Mr. Kim of Fieldman, Rolapp & Associates and Mr. Ross, Valley Roadrunner Newspaper.
CONSENT CALENDAR
1. Upon motion by Polito, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held June 6, 2005
• Audit demands
• Board of Director’s request for reimbursement of expenses and per diem compensation
ACTION AGENDA
2. Adoption of the Proposed
Lower
Moosa
Canyon
Sewer Capacity Charge:
District Engineer Grabbe stated that the current sewer capacity charge for connection to the Lower Moosa Canyon Water Reclamation Facility is $6,450 per equivalent dwelling unit (EDU). The sewer capacity charge is used to construct improvements needed to expand the capacity of the treatment facility required for new sewer connections.
A capacity charge increase of 1.6% to $6,550 per EDU was recommended for new connections to the Lower Moosa Canyon Water Reclamation Facility. The proposed increase is based on the estimated cost to expand the existing facility to a sufficient capacity for the service area.
The Engineering Memorandum detailing the recommended proposed sewer capacity increase was reviewed which states that “The proposed rate is based on the estimated cost to expand the existing facility to a sufficient capacity for the service area ($14,246,250) divided by the estimated number of additional EDUs in the service area that could connect to the system (2,175 EDUs). The cost estimate for determining the capacity charge is based on 1) the actual cost of previous projects with components sized for the ultimate capacity less previously received capacity charges, 2) the estimated cost of the facilities required to expand the capacity of the wastewater treatment plant as necessary, and 3) the estimated interest expense to fund and construct the required improvements in multiple incremental phases so that the required capacity is available when needed.
The memorandum further explains that it is anticipated that an ultimate capacity of 1.0 mgd will be required for full build out of the Moosa service area based on a total demand of 5,000 EDUs at an average flow of 200 gallons per day. There are currently approximately 2,254 EDUs connected to the system, approximately 280 EDUs fully paid and not connected, and approximately 444 EDUs that are partially paid. Based on the amounts received from the partially paid commitments and the number of remaining EDUs, it is estimated that 2,175 EDUs, at the full amount, would approximate the remaining funds to be collected. The proposed sewer capacity charge of $6,550 per EDU would become effective as of August 22, 2005, which is 60 days following action by the Board.
Staff recommended updating the analysis of the Lower Moosa Canyon Water Reclamation Facility sewer capacity charge annually to reflect changes in the proposed facilities due to updates in the waste discharge permit, changes in commitment status, actual expenses for interest and completed improvement projects and increases in construction costs due to inflation. It was also recommended that the Engineering News Record Construction Cost Index be used for adjusting estimated construction costs for inflation.
The public hearing to consider the proposed increase in the sewer capacity charge for the Lower Moosa Canyon Water Reclamation Facility was opened at 2:21 p.m. No written comments had been received and there were no comments from audience members on this matter. The public hearing was closed at 2:22 p.m.
Upon motion by Polito, seconded by Aleshire and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2005-09
ORDINANCE OF THE BOARD OF DIRECTORS
OF VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING ADMINISTRATIVE CODE SECTIONS 171.2
AND 171.10 TO INCREASE THE SEWER CAPACITY
CHARGE FOR THE LOWER MOOSA CANYON WATER
RECLAMATION FACILITY
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
3. Adoption of Increase in the Water Meter Capacity Charge:
The District’s meter capacity charges, a component of the cost for a new water meter installation, are collected and the revenue allocated toward construction of capital facilities, such as reservoirs, pump stations and pipelines needed to provide service to the new meter accounts. The facilities to serve new developments are identified in the District’s 2002 Water Master Plan. And, as recommended in the Water Master Plan, the meter capacity charges are reviewed each year and adjustments, if necessary, are recommended to provide for cost increases due to inflation as determined by the Engineering News Record Construction Cost Index. Following review of the meter capacity charges, a 4% increase is proposed to reflect current projections for build-out, proposed construction schedules and adjustments for inflation using the ENR Construction Cost Index for May 2005. Staff also recommended adding the appropriate share (50%) of the proposed corporate facility project to the improvements funded from the meter capacity charges, which resulted in a total increase of approximately 63%. The proposed meter capacity charges, with and without the increase to provide funding for adding a portion of the proposed corporate facilities were reviewed, which are set forth below:
Meter Size |
¾” |
1” |
1-1/2” |
2” |
3” |
Current Capacity Fee |
$1,870 |
$3,180 |
$6,180 |
$9,920 |
$18,710 |
Proposed Increase Without Corporate Facility |
$80 |
$135 |
$255 |
$415 |
$790 |
Subtotal |
$1,950 |
$3,315 |
$6,435 |
$10,335 |
$19,500 |
Additional Required for Corporate Facility |
$1,100 |
$1,870 |
$3,630 |
$5,830 |
$11,000 |
Proposed Meter Capacity Fee |
$3,050 |
$5,185 |
$10,065 |
$16,165 |
$30,500 |
District Engineer Grabbe reviewed that the total cost of the corporate facility is estimated at $15 million and had been earmarked in the District’s long-term financial model to be fully funded by water revenues. Securing one-half of the cost for the corporate facility project from new connections to the District’s system (allocated to new development) will result in the following:
• Lower water rates in the future due to less capital funding requirements; and
• A delay in the issuance of debt to fund capital replacement projects resulting in a significant savings in interest expenses and lower water rates in the future.
The public hearing to consider the proposed increases in the District’s meter capacity charges was opened at 2:41 p.m. The proposed increases had been published and posted. No written communication was received and there were no comments from the audience. The public hearing was closed at 2:42 p.m. Adoption of Ordinance No. 2005-10 adopting the proposed water meter capacity charges to provide for increased costs due to inflation and the addition of that portion of the corporate facility project allocated to new development was recommended with an effective date of effective August 22, 2005.
Upon motion by Polito, seconded by Aleshire and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2005-10
ORDINANCE OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING ADMINISTRATIVE CODE SECTION 160.4(c)
INCREASING METER CAPACITY CHARGES
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
4. District’s Long-Range Capital Financing Plan:
Director of Finance Jeffrey reviewed that the Board had elected the option of “Bond Financing, Corporate Facility Constructed in 2015”, for the development of the District’s Long-Range Capital Financing Plan with the following assumptions as it would provide for lower debt service expenses and lower water rates, provide greater capacity for debt issuance in the future and reduces debt coverage requirements:
• All Metropolitan Water District and San Diego County Water Authority wholesale rate increases are passed through,
• District local costs are offset by an annual inflation adjustment,
• Increases in the monthly service charges due to increased O&M costs and to offset the loss of property tax revenue,
• Replacement projects are funded over 15 years, at an average of $3.0 million per year plus inflation,
• Water System Master Plan Ultimate projects, including the corporate facility development, to commence in 2015-2016, and will be constructed over an eight-year period,
• Utilize Cal-PERS “Fresh Start” Program with payment over 30 years.
The District’s Water Master Plan has identified system improvements and capital facility replacement projects which total $62,960,000. The District’s Long-Range Financial Plan is considered a living document which will be updated to reflect current information. A modification to be incorporated in the Financial Plan model is that a portion of the meter capacity charges will be earmarked for the construction of the District’s corporate facility project.
Mr. Kim of Fieldman, Rolapp & Associates provided information on financing the District’s capital improvement projects. He explained that cash or debt financing can be elected and their advantages and disadvantages were reviewed. Mr. Kim recommended a combination of cash financing and debt financing as it would allow the District to better manage rate increases and fund necessary capital improvements in a timely and responsible manner.
Information on the financing options available to the District; including, general obligation bonds, water revenue bonds, lease revenue bonds and certificates of participation, was provided by Mr. Kim. Voter approval is required to issue General Obligation bonds and water revenue bonds. Certificates of Participation are the financing option widely used by water agencies. Mr. Kim explained that most lenders will evaluate the District’s outstanding debts, its financial conditions and expected future revenue and expenses. As recommended by Mr. Kim, the District will carefully evaluate its need to borrow debt.
A graph depicting the estimated Ending Fund Balances through Fiscal Year 2022-2023, in which a minimum of $5 million is retained in the Capital Improvement funds, indicates there will be a $6.7 million debt issue in 2007-08. The graph charting the District’s ending Fund Balances and Debt Service were plotted through FY 2022-23 to address the issuance of debt for the projects proposed in the District’s 20 year Water System Master Plan. Beyond this time period, unknown factors such as the projects identified in the District’s updated 2002 Water System Master Plan and the County’s General Plan affecting zoning will greatly influence conditions resulting in it being difficult to predict debt service requirements. Director Aleshire stated that the debt service graph should, in the future, reflect a sustaining level of infrastructure replacement. General Manager Arant stated that in 2007, an update of the District’s Water System Master Plan will be undertaken to identify facilities needing replacement/updating and the estimated costs for these improvements will be included in the financial model.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the District’s Long-Range Capital Financing Plan was accepted.
5. Adoption of Ordinance Amending the Administrative Code Implementing the Classification and Compensation Study, Incorporating Changes per the Approved Memorandum of Understanding with Employees and Amendments to Employee Compensation and Recognition Awards:
Ordinance No. 2005-08 was presented for the Board’s consideration to implement the final recommendations of the District’s Classification and Compensation study to be effective June 26, 2005, incorporate changes per the approved Memorandum of Understanding with employees, and amendments to the District’s Administrative Code pertaining to employees’ compensation for its awards program.
Articles 8 and 40 of the District’s Administrative Code, Compensation and Organization of Staff, respectively, were proposed to be amended to implement the recommendations of the Classification and Compensation Study as well as the 3% cost of living adjustment (COLA) for employees per the MOU. To provide parity between the Department Head positions, a $200.00 per month car allowance was proposed for the District Engineer similar to that given the Director of Finance (the Director of Operations is assigned a District vehicle). The cost of implementing the final recommendations of the District’s Classification and Compensation study is at .9% of the base 2004-2005 payroll. The number of authorized positions remains at 80, which was approved with the adoption of the Fiscal Year 2005-06 budget.
Amendments presented per the current Memorandum of Understanding with employees and initiation of the weekend/holiday standby pay include:
▪ A 3% COLA for the seven day standby period ($23.34 to $24.04 per day),
▪ Establishment of the weekend/holiday standby pay of $116.04 for the period beginning at 4:00 p.m. on Friday until 7:00 a.m. on the subsequent Monday, and
▪ A 3% COLA on the shift differential pay ($1.06 to $1.09 per hour).
Modifications concerning compensation and employee recognition awards were presented, which would increase the:
▪ Employee of the Quarter award from $50.00 to $75.00
▪ Annual maximum reimbursements for educational reimbursement from $1,000 to $1,500 for employees with less than two years with the District and from $2,500 to $3,500 for employees with more than two years of employment with the District.
▪ Educational Awards given employees upon obtainment of a recognized certificate or degree (i.e. Grade III Water Distribution Certificate award of $125 increased to $150).
Upon motion by Polito, seconded by Stone and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2005-08
ORDINANCE OF THE VALLEY CENTER MUNICIPAL WATER
DISTRICT AMENDING THE ADMINISTRATIVE CODE TO
INCORPORATE CHANGES PER THE APPROVED MEMORANDUM
OF UNDERSTANDING WITH EMPLOYEES, IMPLEMENT CHANGES
TO THE ORGANIZATION CHART PER THE APPROVED CLASSIFI-
CATION AND COMPENSATION STUDY AND MODIFY PROVISIONS
OF THE EMPLOYEES’ AWARD AND RECOGNITION PROGRAMS
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
6. Adoption of Comprehensive Employee Training and Development Program:
The document “Critical Asset Management: Employee Recruitment, Training and Development, Retention and Succession Planning” was presented for the Board’s adoption. This comprehensive employee training and development program complies with the District’s Strategic Plan for development of said program. The document organizes the District’s practices on recruitment, training and education and successor development plans. Also, a new employee training and education program will be developed based upon departmental training and education plans.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the District’s comprehensive employee training and development program document “Critical Asset Management: Employee Recruitment, Training and Development, Retention and Succession Planning” was adopted.
7. Resolution Supporting ACWA’s “No Time to Waste: A Blueprint for California Water:
Adoption of Resolution No. 2005-21 endorsing ACWA’s Water Blueprint, “No Time to Waste: A Blueprint for California Water” and committing to an outreach plan to secure implementation of the document’s specific initiatives and measures was requested. The District will be contacting its state representatives to promote the document’s recommendations.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2005-21
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE VALLEY CENTER MUNICIPAL WATER DISTRICT
SUPPORTING ACWA’S “NO TIME TO WASTE:
A BLUEPRINT FOR CALIFORNIA WATER”
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
8. Award of Contract for Security Lighting Upgrades:
Bids were received for the installation of low sodium security lights, poles and associated conduits at seven District facilities. Pumps and Motor Supervisor Stetson reported that the bids were opened on June 1, 2005, with the lowest received from J & L Electric at $94,697. Award of contract to J & L Electric for the security lighting upgrades at seven facilities was recommended.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2005-22
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AWARDING CONTRACT FOR INSTALLATION OF
LOW SODIUM SECURITY LIGHTS, POLES AND
ASSOCIATED CONDUITS AT SEVEN DISTRICT FACILITIES
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
9. Adoption of Fixed Charge Special Assessments for Assessment District No. 96-1:
Resolution No. 2005-16 setting the District’s fixed charge special assessments for Assessment District No. 96-1 (Treasures at Castle Creek) was presented. An assessment for 2005-2006 of $784.86 per parcel for the 200 parcels in the assessment district is needed to meet the principal and interest obligations for the limited obligation improvement bonds sold by the District pursuant to the improvements to the Moosa Sewer Treatment Facility for the affected properties in the Treasures development.
Director of Finance Jeffrey reported that the Water Code authorizes the District to add delinquent and unpaid water and other charges to the property taxes of the property using the water or service. This year, it is not necessary to lien any parcels for unpaid water or other charges and place the lien on the tax roll.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2005-16
RESOLUTION OF THE BOARD OF DIRECTORS OF VALLEY
CENTER MUNICIPAL WATER DISTRICT PLACING FIXED CHARGE
SPECIAL ASSESSMENTS FOR 2005-2006 ON PROPERTY
WITHIN ASSESSMENT DISTRICT NO. 96-1 PURSUANT TO
STREETS AND HIGHWAYS CODE SECTION 8680 AND 8682
ON THE SAN DIEGO COUNTY SECURED PROPERTY TAX ROLL
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
GENERAL MANAGER’S AGENDA
10. Review of Miscellaneous Informational Items:
• Poseidon Resources Seawater Desalination Project - General Manager Arant reported that he had met with representatives of the Poseidon Resources Corporation and discussed the potential for the District’s participation in their Seawater Desalination Project being constructed at the Encina Power Station in Carlsbad. To become a participant, an agreement could be entered with an agency that would take more desal water from Poseidon than provided in its agreement which, in turn, would leave more water in the San Diego County Water Authority’s aqueducts for delivery to the District. Such an agreement would require approval from the Metropolitan Water District and the San Diego County Water Authority. Also, an agreement would need to be reached that the desal. water is exempt from being local water or our access to IAWP water from Metropolitan would be reduced. A memorandum of agreement will be drafted to address the above issues.
• Beat the Peak Brochure – A brochure will be included in the customers’ water bills providing water conservation tips on how to “beat the peak” watering hours. It encourages outside watering during the off-peak hours of between 8:00 p.m. and 6:00 a.m.
• PERS Fresh Start Program - Notification was received that the District has been approved for PERS’ Fresh Start Program for payment of its unfunded liability. Including the employees’ share, the District’s PERS rate will be 27.91% of payroll. The District’s appeal is pending before PERS Administrative Law Judge in which consideration for a reduction in the District’s unfunded liability or a reduction in the interest rate will be requested.
BOARD OF DIRECTORS’ AGENDA
11. Nomination of Director Aleshire for the Position of ACWA Region 10 Vice Chair:
Upon motion by Polito, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2005-23
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 VICE CHAIR
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
CLOSED SESSION
12. A Closed Session was called to order by President Broomell at 4:38 p.m. pursuant to:
$ Government Code '54957.6, Conference with Labor Negotiators:
Designated Representative: Gary T. Arant, General Manager
Employee Organization: Valley Center Municipal Water
District Employees Association
The Regular meeting was reconvened at 5:11 p.m. No action was reported.
ADJOURNMENT
13. Upon motion by Aleshire, seconded by Polito and unanimously carried, the meeting was adjourned at 5:12 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary