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HomeMy WebLinkAbout04-20-26 Special Board Meeting Minutes 1 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING OF THE OTAY WATER DISTRICT April 20, 2026 President Rivera called the meeting to order at 12:06 p.m. 1. ROLL CALL Directors Present: Rivera, Robak, Gonzalez, Croucher, and Lopez Directors Absent: None Staff Present: Jose Martinez, General Manager; Dan Shinoff, General Counsel; Michael Long, Chief of Engineering; Joe Beachem, Chief Financial Officer; Kevin Koeppen, Chief of Administra- tive Services; Andrew Jackson, Chief of Operations; Suzie Lawson, HR Manager; Jon Ravaglioli, Finance Manager; Beth Gentry, Engineering Manager; Michael Kerr, IT Man- ager; and District Secretary Jenny Diaz. President Rivera indicated that Board action was required to approve the remote attendance of Director Croucher. A motion to approve the remote attendance of Director Croucher was made by Director Lopez, seconded by Director Gonzalez, and carried with the following vote: Ayes: Directors Rivera, Robak, Gonzalez, and Lopez Noes: None Abstain: Director Croucher Absent: None 2. PLEDGE OF ALLEGIANCE 3. APPROVAL OF AGENDA A motion to approve the agenda was made by Director Robak, seconded by Director Lopez, and carried with the following vote: Ayes: Directors Rivera, Robak, Gonzalez, Croucher, and Lopez Noes: None Abstain: None Absent: None 4. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD’S JURIS- DICTION INCLUDING AN ITEM ON TODAY’S AGENDA 2 No one wished to be heard during this time; however, a request to address the Board was made later and addressed during Agenda Item #6. PUBLIC HEARING 5. COMPLIANCE WITH NEW LEGAL OBLIGATIONS REGARDING PUBLIC HEARING ON OTAY WATER DISTRICT VACANCIES AND RECRUITMENT AND RETENTION EFFORTS (ASSEMBLY BILL 2561 GOVERNMENT CODE SECTION 3502.3) President Rivera opened the Public Hearing at 12:08 p.m. Suzie Lawson, HR Manager, provided a PowerPoint presentation to the board outlining future hiring needs and current recruitment strategies. It was noted that Assembly Bill 2561 was signed into law on September 22, 2024, to address the issue of job vacancies in local government. At approximately 12:10 pm, President Rivera paused the meeting due to technical diffi- culties, and the meeting resumed at approximately 12:23 pm. Ms. Lawson continued her presentation and responded to the Board’s questions, com- ments and input as follows: President Rivera asked whether part-time positions or internships were included in the reported statistics. Ms. Lawson clarified that they were not, and that the data reflects only full-time positions. Director Robak commented on recruitment methodologies and asked whether staff tracked where most applications originate from. Ms. Lawson indicated that they do and noted that, following last year’s meeting, LinkedIn was specifically added as a tracking source. She further reported that, within the calendar year, 1,984 applications were re- ceived, of which 41 applicants indicated they learned of the vacancy through LinkedIn. Governmentjobs.com was identified as the primary source where applicants learned of an Otay vacancy. Numerically, this represents 85% of applications originating from Gov- ernmentjobs.com, Indeed, and the Otay website. Director Gonzalez requested that staff consider hosting a job fair at local community colleges. Ms. Lawson indicated that staff currently conduct outreach to local colleges and referenced the upcoming high school internship program. General Manager Mar- tinez noted that the Cuyamaca College website provides information and guidance re- garding employment opportunities. With no further comments, President Rivera closed the Public Hearing at 12:29 p.m. and no action was taken by the Board. WORKSHOP 6. DISCUSSION OF THE FISCAL YEAR 2027 BUDGET KEY FIGURES AND ASSUMP- TIONS IMPACTING THE UPCOMING BUDGET PROPOSAL 3 Joe Beachem, Jose Martinez, Jon Ravaglioli, and Beth Gentry provided a PowerPoint presentation to the Board on the proposed upcoming budget. Mr. Beachem presented the budget’s objectives, timeline, and general process, and re- sponded to the Board’s questions, comments and input as follows: In response to President Rivera’s question regarding the cost-of-service study (COSS) and the timing of the next Prop 218 hearing, staff confirmed that the COSS will com- mence this July 2026. The COSS needs to be completed in advance of the next budget cycle so its findings can be incorporated. The budget would then go to the Board for approval the following July (2027), with the Prop 218 hearing taking place the following October. Director Robak inquired whether the previous COSS aligned with projections for the actual cost to treat both water and sewer. Staff confirmed that the sewer COSS was completed last year with a corresponding five-year plan approved. Mr. Martinez briefed the Board on challenges, the District’s actions, and strengths, and responded to the Board’s questions, comments and input as follows: The challenges of a transitioning workforce were analyzed, leading to a discussion of employee demographics. President Rivera requested clarification regarding updates to the cross-connection con- trol handbook. Andrea Carey, Customer Service Manager, explained that the handbook was adopted by the State Water Resources Control Board approximately 1.5 to 2 years ago. Although it has been adopted, revisions can still be made, as staff has already observed. She added that staff continue to work with the San Diego County Water Au- thority to advocate to state representatives on areas they believe require further clarifi- cation in the handbook. Director Croucher inquired about statistics related to racial diversity. Staff indicated they would follow up with that information. President Rivera asked whether the District is improving its financial standing in the view of rating agencies and investors. Staff indicated that achieving a higher credit rating (e.g., AAA) would require raising rates to generate more money, creating a balanced act. A higher rating is not automati- cally better for the District if it negatively impacts ratepayers. Staff further noted that the interest rate savings between an A and AA-rating are signif- icant, but the savings from moving from AA to AAA are less substantial compared to the cost required to get there. Staff indicated they are very comfortable at the AA rating, noting the District is financially strong and well-positioned to manage market fluctua- tions, and clarified that the District is not actively seeking a AAA-rating, rather focusing on maintaining its AA-rating. 4 In response to President Rivera’s inquiry about whether the District is positioned to se- cure the most favorable rates when issuing bonds, staff confirmed that it is and noted that financial advisors are utilized to determine the appropriate rating agency for specific financing needs. Director Croucher inquired about the District’s credit rating compared to surrounding agencies. Staff indicated that a few agencies in the County hold an AA+ rating, while most are rated AA. A request was made by Director Croucher to get a comparative breakdown of the District’s rating relative to surrounding agencies. Mr. Ravaglioli presented on the Fiscal Year 2027 Administrative and Material Budget Impacts, and responded to the Board’s questions, comments and input as follows: Regarding identified key savings (offsetting increases), Director Gonzalez requested that these be clearly highlighted during the budget presentation to the Board to ensure they are visible to the public. A discussion was held regarding “regulatory creep” and its year-over-year comparison. Staff acknowledged that “creep” may not be the most appropriate term and indicated it will be revised moving forward. Regarding insurance premiums, Director Robak asked what the decrease was attributed to. Staff indicated the premiums are decreasing due to a positive trend in the company's experience modifier, which is based on a three-year rolling average of claims. Staff fur- ther noted that a "bad” loss year of claims from FY21 has rolled off the calculation period, and that by absorbing main break costs in-house and submitting fewer claims, the Dis- trict expects this positive trend to continue, further lowering premiums in the future. Director Gonzalez raised a question regarding election costs and staff stated they are charged based on voter population and are variable. Staff indicated the election fees included in the budget are what the Registrar of Voters charge for conducting the elec- tions, further noting that the fee is not flat, but rather calculated based on the voter pop- ulation in the specific area and can change annually based on the county' own cost calculations. Ms. Gentry presented on the CIP Program, and responded to the Board’s questions, comments and input as follows: Director Gonzalez made an inquiry regarding the disposal of an old hydro pneumatic tank. Staff indicated that the tank in question provided pressure stabilization for one of the smaller pressure zones, and that the old tank was recycled, not disposed of in a landfill. Asking whether the District received money for the recycled metal, staff indicated they believe they did but the specific amount was not immediately known. President Rivera asked about projects falling behind schedule due to external factors and whether funding limitations under the CIP are a contributing factor. Staff referenced Policy No. 6, noting that it permits staff to continue advancing work, even if projects progress faster than the fiscal year allocation, so long as spending remains within the total approved project budget. Staff further noted that under certain conditions if either 5 the fiscal year spending or the total project budget needs to be exceeded, they must return to the Board for approval. In response to President Rivera’s concern that funds may remain unused when projects do not progress as scheduled, staff noted that the District maintains a queue of projects that can be advanced to help meet spending targets (e.g., 95%) when delays occur, provided the budget is available. Responding to Director Gonzalez’s inquiry, staff stated the District actively seeks grants and employs a consultant to monitor available grants and regularly brainstorms applica- ble projects. The District applies for many grants. Having recently received a grant for electric vehicles (EVs), staff are transitioning the District’s fleet to EVs. Staff further noted that, following the Board’s recent approval of zero-emission vehicle charging sta- tions, these stations will be installed at Operations to support the expanding fleet, and clarified that the new charging stations being installed are 220-volt (Level 2), not Level 3 fast chargers. Director Robak brought up the topic of AI technology. Staff indicated they are exploring AI to enhance operational efficiency and asset management, noting that they are cur- rently evaluating their hydraulic model and considering AI tools, which often integrate with models developed by consultants. When asked whether AI has been useful, staff responded that it has. Director Croucher expressed appreciation for staff’s continued pursuit of grants and in- quired whether the cost of staff time for auditing and managing grants is factored into their overall value. Staff indicated that the cost of in-house staff to manage consultants and pursue grant opportunities is included in the operating budget. Responding to Director Gonzalez’s inquiry earlier, staff confirmed that the District has purchased and currently operates a few EVs. Director Gonzalez suggested showcasing one of the District’s EVs at a future event. Following this discussion, President Rivera paused the meeting to provide Mr. John Earl the opportunity to address the Board. Mr. Earl brought up the District’s compliance with the Public Records Act (PRA) and submitted a formal PRA request for video recordings from the March 2026 Board meeting and audio from the February 2018 Board meeting. His comments were acknowledged and will be recorded under public participation. Mr. Ravaglioli continued the presentation on the District’s Key Assumptions and Financ- ing Plan, and responded to the Board’s questions, comments and input as follows: Director Gonzalez requested to have staff add the current year's (FY26) rate information to next year's budget plan for reference, to better explain rate changes going forward. President Rivera noted the tight timeline and potential risks associated with receiving CWA’s final rates shortly before the June 30 budget presentation. He inquired whether staff had developed assumptions based on the potential range of rate outcomes CWA may adopt and how they intend to present the information. Staff indicated it anticipates having a "floor and ceiling" in their model to prepare for last-minute adjustments. 6 On a suggestion made by Director Gonzalez to consider postponing the budget/Board meeting, staff indicated they were not prepared to take that step at this time. Staff noted that the tight timeline is not unusual, and that the District has dealt with this situation before. It was further indicated that CWA board members, who represent other agencies facing similar deadlines try to stay within the provided guidance to avoid dis- rupting their own agencies' processes. On an earlier suggestion, staff indicated that changing the District's meeting date would compress other critical post-approval time- lines. After this discussion concluded, Director Lopez inquired about the 12 open vacancies (referenced earlier in the presentation made by Ms. Lawson) and whether there is a timeline to fill them, citing a concern about intentionally keeping them open to save money. Staff clarified that the opposite is true; money from vacancies is often used to hire temporary employees to avoid overburdening existing staff. Director Gonzalez asked whether temporary employees who turn out to be effective could be hired into permanent positions, and staff responded that they could apply for vacancy but must still complete the full, standard application process. President Rivera asked if staff found themselves receiving a spike in applications just before the closing date; while they could not provide statistics at the moment, staff noted that typically applications come in as soon as the job announcements are posted or find out about them. Staff further noted that the District's practice is to use an "apply by this date for early consideration" approach but to keep the position open until a selection is made, which allows consideration of strong candidates who apply after the initial dead- line, preventing the need to restart the entire hiring effort. Director Gonzalez requested an update from last year’s FTE count of 146, with staff reporting that the current total has increased to 148. This concluded the workshop and staff’s presentation. RECESS TO CLOSED SESSION 7. CLOSED SESSION The Board recessed to closed session at 2:11 p.m. to discuss the following matter: a) CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION [GOVERN- MENT CODE §54956.9 (d)(4)] INITIATION OF LITIGATION PURSUANT TO SUBDIVISION (d)(4) OF GOVERN- MENT CODE §54956.9 (ONE [1] POTENTIAL CASE) RETURN TO OPEN SESSION 8. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION