April 19, 2010
VALLEY CENTER WATER DISTRICT
Regular Board Meeting
Monday, April 19, 2010
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 Miller, District Engineer Grabbe, Director of Operations Hoyle, Director of Finance Jeffrey, Manager of Accounting Pugh, Board Secretary Stetson and Manager of IT Pilve. Spectators present were: Ms. Howells and Messrs. Laird and Rogers.
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 April 5, 2010
• Audit demand check numbers 125379 through 125493 and wire disbursements for March 2010
• Quarterly report of employees’ expense reimbursements for the quarter ended March 31, 2010
• Resolution No. 2010-17 declaring the District’s intent to reimburse itself for Woods Valley Ranch Water Reclamation Facility Expansion Project expenditures from the proceeds of a future State Revolving Fund (SRF) loan
• Concept approval of the Panorama View line extension project consisting of approximately 321 feet of 8-inch water distribution pipeline and required appurtenances
▪ Board of Director’s request for reimbursement of expenses and report of expense reimbursements
ACTION AGENDA
2. Request by Valley Center Vaqueros Regarding Use of the District’s Property on Lilac Road:
A request was received from the Valley Center Vaqueros, an equestrian organization, to formally initiate discussions with the District for use of the District’s nine acre parcel on the southeast corner of Lilac and Valley Center Roads (APN 186-23-117). The Valley Center Vaqueros’ lease with the county for use of Aerie Park will expire on April 30, 2010.
General Manager Arant reviewed that if the Board is in agreement to pursue negotiations with the Valley Center Vaqueros for use of a portion of the District’s Lilac Road property, terms of the agreement would include:
▪ Short-term lease (i.e. 5 years) with a termination clause and potential five-year increment renewals,
▪ All costs associated with the planning, land use process and permits would be at the expense of the Valley Center Vaqueros,
▪ Valley Center Vaqueros would be responsible for maintenance of the property,
▪ Full liability insurance protection approved by the District’s carrier would be required, and
▪ Compensation for use of the property would be being responsible for annually mowing the District’s four parcels near the intersection of Valley Center and Lilac Roads.
Mr. Shannon Laird, President of the Valley Center Vaqueros, and Mr. Will Rogers, member and architect, clarified that the Valley Center Vaqueros have entered into a verbal agreement with the Valley Center Parks & Recreation for an interim use of the property adjacent to the community hall on Lilac Road. A more long-term property lease for the organization’s activities is desired, such as proposed for use of the District’s Lilac Road property, and eventually a more permanent facility site. The County of San Diego Department of Planning and Land Use personnel have provided guidelines for use of the Valley Center Parks & Recreation property which is felt can be satisfied. Mr. Laird stated that it is likely that similar regulations will be required for use of the District’s Lilac Road property. The Valley Center Vaqueros will pursue a variance on the animal use designations for the properties which will negate the need to obtain a Major Use Permit, a time-consuming and expensive process.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, staff was directed to pursue negotiations with the Valley Center Vaqueros for its use of the District’s nine acre parcel (APN 186-23-117) on the southeast corner of Lilac and Valley Center Roads.
3. Report from Howells Government Relations Re: Potential Federal Funding Sources:
General Manager Arant reviewed that a contract had been executed between the District and Howells Government Relations to analyze the District’s identified water resource development projects for potential federal funding sources. Jacqueline Howells explained that Howells Government Relations is a full-service government affairs and public relations firm working with businesses, industry and government and non-profit clients to facilitate their legislative funding and business development objectives at the federal, state and local levels. Ms. Howells provided data on her analysis of the District’s projects, as summarized below:
• Projects were reviewed with District staff and analyzed for potential Federal funding eligibility.
• Met with Federal Departments, agencies and U.S. Congress; including, the U.S. Department of the Interior, Bureau of Reclamation, Department of Agriculture, Environmental Protection Agency, and Congress Members and their staff and counsels.
• Projects reviewed and discussed with the contacts were:
~ Wastewater Recycling Projects:
Woods Valley Ranch Water Reclamation Facility Expansion
Lower Moosa Canyon Water Reclamation Facility Expansion
Welk, North Village and Lilac Ranch Water Reclamation Facilities
~ Local Water Supply Projects:
Lake Turner non-potable supply
Beck and Meyers wells
Desalination improvements
~ Solar Photo-voltaic Projects
~ Aging Infrastructure Projects:
Country Club Reservoir cover replacement
Gordon Hill and Rodriguez Road pipeline replacements
Pfau Pump Station replacement
Meadows highline replacement
Ms. Howells opined that Federal funding opportunities exist for the District’s projects and could be pursued, including:
U.S. Congress – Authorization legislation and appropriation requests
U.S. Bureau of Reclamation – Water reclamation projects using Title 16 funds and other programs available to water districts. (The District has identified $89 million of potential water reclamation projects).
U.S. Department of Agriculture – Water infrastructure and conservation programs for farmers and ranchers.
U.S. Environmental Protection Agency – Clean Water Act and Safe Drinking Water Act State Revolving Fund loans and other programs for infrastructure and wastewater projects.
Local funding participation will be required for Federal funding programs. The Bureau of Reclamation Title 16 loans for wastewater/water reclamation projects require that the local agency file a financial report demonstrating how the local share will be provided. As such, if Federal funding programs are going to be pursued, an increase in the District’s local share of the water rates, demand offset charges and other revenue sources will be evaluated.
A commitment to sustain the program of pursuing Federal funding for a minimum of 2 years is necessary as this time period is required to produce results. In addition, the Board’s and key staff’s presence in Washington, D.C. and at the agencies’ regional offices will be important for a successful results-oriented federal advocacy program. Ms. Howells stated that her advocacy services to work with the District on a long-term basis toward seeking authorization legislation and federal appropriations and available grants for the District’s projects would be at a monthly cost of $6,500 plus travel expenses. Ms. Howells was commended for her report. The Board’s consensus was that a federal funding advocacy program will be considered in the District’s Fiscal Year 2010-2011 budget.
4. Review of Revenue and Expense Projections for the Proposed 2010-2011 Fiscal Year Budget:
An overview of the District’s preliminary revenue and expense projections and proposed capital projects in the Fiscal Year 2010-2011 budget was presented by Accounting Manager Pugh as outlined below:
▪ The budget reflects an estimated deficit of $2.8 million; $1.1 million from operations, $1.2 million from capital, $.2 million from Moosa capital, and $.3 million from Woods Valley capital. A balanced budget was presented through cost cutting measures, minimizing capital expenditures and utilizing reserves ($800,000 - Equipment Reserves, $250,000 - James Jones Settlement payment, $100,000 - energy credits and $120,000 - ACWA-JPIA retrospective premium payment).
▪ No increases to the local share of the water and wastewater rates are included in the budget.
▪ Water sales budgeted for FY 2010-11 are 30,000 ac. ft. Estimated water sales for FY 2009-10 are 30,170 ac. ft., which is 8.9% below the budget estimate.
▪ A pass-through of Metropolitan Water District’s and the San Diego County Water Authority’s wholesale rate increases are estimated to increase the District’s rates as follows:
Domestic – 12.8%
IAWP – 18.4%
SAWR – 12.4%
▪ An increase in the local component of the District’s water rates of 19% (4.46¢/HCF to $122.00/ac. ft.) to generate revenue to help balance the budget and for capital improvement needs would result in total rates (including the wholesale rate increases), as follows:
Domestic - $1,268/ac. ft., a 13.4% increase
IAWP - $1,042.70/ac. ft., an 18.4% increase
SAWR - $1,114.57/ac. ft., a 13.1% increase
▪ There is no increase in the budget for the monthly meter service charges which were last adjusted in March 2007. Proposed increases in the meter service charges of $4.50 for a ¾-inch meter, $6.00 on a 1-inch meter and $18.00 on a 3-inch meter will be considered by the Board. These increases would generate approximately $607,300 in a year.
▪ Estimated interest earnings rate for FY 2010-11 is 1.25% that will generate $187,500 in revenue, equivalent to $6.25 per ac. ft.
▪ Property tax revenue is projected at $1,852,000, a reduction of 10% from FY 2009-2010. $591,000 will be received in water service availability charges.
▪ The Lower Moosa Canyon Water Reclamation Facility charges were proposed as follows:
Current Proposed
Monthly Service Charge $44.50 $48.95
Low Pressure Maintenance Fee $36.75 $40.42
▪ The monthly standby and service charge for the Woods Valley Ranch Wastewater system is unchanged ($98.60/EDU), and is collected on the tax rolls.
▪ Capital improvement projects to be requested in the FY 2010-2011 budget total $2,554,630 which is comprised of $1,694,000 for water projects, $478,030 for the Lower Moosa Canyon Water Reclamation facility and $382,600 for the Woods Valley Ranch Reclamation facility.
▪ Total operating expenses in the FY 2010-2011 budget are $42,891,214 which includes $100,000 for a Federal and State Government Relations program that will provide advocacy support toward securing funding sources for capital projects. Discussion ensued regarding considering an increase in the District’s local share of the water rates which have not been increased since 2007, that will allow for an availability of funds from a local revenue source that can be identified as needed for Federal funding programs. The merits of Federal Government entitlements were discussed. It was the consensus of the Board that there are misgivings concerning the Federal funding programs, but in recognition of the District’s capital improvement project needs and the potential availability of Federal funds for the these projects, it was felt that it would be in the District’s best interest to pursue federal funding sources and utilize a federal advocacy service such as Howells Government Relations. As such, $100,000 for Federal and State Government Relations will be included in the 2010-11 budget.
The proposed Fiscal Year 2010-2011 budget will be presented to the Board for review and discussion in May that will include the final wholesale rate increases from Metropolitan Water District and the San Diego County Water Authority. An increase in the water rates for the District’s local share will be considered for January 2011 to coincide with the increases in the wholesale water rates. The Board will also be provided a water and wastewater rate survey for a comparison of fees and charges.
5. Consideration of Interim Agricultural Water Program Conservation Credit Carry-over from 2009 to 2010:
Board approval to allow a carry-over of credits accumulated by participating customers in the Interim Agricultural Water Program during calendar year 2009 into the 2010 IAWP year was requested. General Manager Arant explained that Metropolitan Water District’s IAWP regulations do not permit accumulated conservation credits to be carried forward from one program year to the next for additional water allocation. However, confirmation was received from Metropolitan that an agency has the flexibility to implement the IAWP reduction with its customers as long as the IAWP reduction goal is met, which for 2010 is a 25% reduction of the established baseline level.
The District’s IAWP conservation level for 2009 was 44% from the base year with IAWP participants accumulating approximately 2,540 acre feet in conservation credits. A carry-over or additional allocation for IAWP participants in 2010 equal to 50% of the conservation credits accumulated at the end of the 2009 program year was recommended. In this manner, the additional credits can be used to offset penalty charges or over-usage during 2010. In addition, it was recommended that the conservation performance of IAWP participants be monitored to determine if additional conservation credits from 2009 could be allocated during the calendar year 2010 program. General Manager Arant noted that the potential for and level of conservation credit carry-over for the Special Agricultural Water Rate participants from the Fiscal Year 2009-10 program to the FY 2010-2011 program will be evaluated.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, a 50% carry-over of net Interim Agricultural Water Program conservation credits accumulated as of the end of the IAWP calendar year 2009 program as additional water allocation for use in the calendar year 2010 IAWP program was approved.
6. Resolution Congratulating the Association of California Water Agencies on the Occasion of its Centennial Anniversary;
The Association of California Water Agencies (ACWA) is celebrating its centennial throughout 2010 and has asked its member agencies to adopt resolutions recognizing the ACWA Centennial Celebration.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2010-19
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE VALLEY CENTER MUNICIPAL WATER DISTRICT
CONGRATULATING THE ASSOCIATION OF
CALIFORNIA WATER AGENCIES (ACWA) ON THE
OCCASION OF ITS CENTENNIAL ANNIVERSARY
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 Water Purchase Agreement with Poseidon Resources for up to 7,500 ac. ft. of desalted water from the Carlsbad-Poseidon Seawater Desalination Project has been reviewed by counsel and will be presented for the Board’s adoption at the May 17th meeting.
• The San Diego County Water Authority has sent letters to the Metropolitan Water District challenging their water rate structure. The Authority is questioning how Metropolitan charges for State Water Project costs which are assessed through their System Access Charge, the transportation rate. The Authority’s position is that Metropolitan’s State Water Project costs should be recovered through the Supply Costs. Litigation may be filed which could terminate Metropolitan’s Local Water Supply Development Program subsidy for the Carlsbad-Poseidon Desal. project. A commitment from the San Diego County Water Authority to cover the funds lost for the desal. project from their actions to challenge Metropolitan’s rate structure will be sought.
BOARD OF DIRECTORS’ AGENDA
8. Informational Forum:
Director Aleshire reported he had attended the April 7th Informational Forum, “California’s Comprehensive Water Package”, hosted by ACWA and the California Latino Water Coalition. Though there had been a low turn-out, the presentations were well organized and informative addressing the comprehensive water package.
ADJOURNMENT
9. Upon motion by Aleshire, seconded by Haskell and unanimously carried, the meeting was adjourned at 4:51 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary