Loading...
HomeMy WebLinkAbout10-03-18 Board Minutes 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY October 3, 2018 1. The meeting was called to order by President Smith at 3:30 p.m. 2. ROLL CALL Directors Present: Gastelum, Robak, Smith and Thompson Directors Absent: Croucher (out-of-town on business) Staff Present: General Manager Mark Watton, General Counsel Dan Shinoff, Chief Financial Officer Joe Beachem, Chief of Engineering Rod Posada, Chief of Operations Pedro Porras, Chief of Administration Adolfo Segura, Asst. Chief of Finance Kevin Koeppen, Asst. Chief of Engineering Dan Martin, District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Robak, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve the agenda. 5. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF JUNE 6, 2018 A motion was made by Director Robak, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve the minutes of the regular board meeting of June 6, 2018. 2 6. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA General Manager Watton presented District Secretary Susan Cruz a certificate recognizing her for her 20 years of service to the District. He congratulated her on her service accomplishment. Ms. Cruz thanked the Board and District and indicated she enjoyed doing her job and was happy to be with the District for 20 years. President Smith thanked her and indicated that they were happy to have her. PUBLIC HEARING 7. PUBLIC HEARING ON RATES AND CHARGES THE BOARD WILL BE HOLDING A PUBLIC HEARING TO CONSIDER THE PROPOSED SEWER RATES, FEES, AND CHARGES TO BE IMPLEMENTED IN THE FISCAL YEAR 2018-2019 OPERATING AND CAPITAL BUDGET AND TO AUTHORIZE, FOR A PERIOD OF FIVE YEARS, THE PASS-THROUGH OF COST INCREASES FROM SEWER SERVICE PROVIDERS AND DISTRICT SEWER INCREASES FOR FISCAL YEARS 2020-2024 NOT-TO-EXCEED 10 PERCENT ANNUALLY FOR ALL COSTS OTHER THAN PASS-THROUGH COSTS. THE BOARD INVITES THE PUBLIC TO PROVIDE COMMENTS ON THE PROPOSED RATES, FEES AND CHARGES a) APPROVE THE PROPOSED SEWER RATES AND CHARGES TO BE IMPLEMENTED IN THE FISCAL YEAR 2018-2019 OPERATING AND CAPITAL BUDGET; ADOPT ORDINANCE NO. 568 AMENDING SECTION 53, AND APPENDIX A, SCHEDULE OF FEES OF THE DISTRICT’S CODE OF ORDINANCES; AUTHORIZE, FOR A PERIOD OF FIVE-YEARS, THE PASS-THROUGH OF COST INCREASES FROM SEWER SERVICE PROVIDERS; AND AUTHORIZE, FOR A PERIOD OF FIVE-YEARS, DISTRICT SEWER RATE INCREASES NOT-TO-EXCEED 10 PERCENT ANNUALLY, FOR ALL COSTS OTHER THAN PASS- THROUGH COSTS Assistance Chief of Finance Kevin Koeppen indicated the District is holding a Proposition 218 hearing on sewer rates. Staff will presenting the sewer rate changes, hear the public comments on the rate changes and, at the close of the public hearing, request that the board consider approving Ordinance No. 568 to adopt the changes to rates, fees and charges to sewer billings beginning on January 1, 2019. In addition, to authorize the changes to pass-through increases or decreases to cover changes to rates and fees from the District’s sewer providers and authorize, for a period of five years, sewer increases and pass- through increases not to exceed 10% per year for internal District costs. Mr. Koeppen indicated that in March staff presented the sewer cost of service study to the board and in May the board adopted the budget incorporating the 3 presented rates. Today, the District is holding the Proposition 218 Public Hearing and, if the proposed rate changes are approved by the board, the rates will become effective January 1, 2019. He reviewed the rate changes and indicated that the overall proposed sewer rate decrease is 7%. He stated that the District has not received any disputes regarding the sewer rate changes and staff is recommending that the board adopt Ordinance No. 568 approving the rate changes and the pass-through of sewer costs not to exceed 10% per year for a period of five years. In response to an inquiry from President Smith, Mr. Koeppen indicated that based on current estimates, the District’s sewer rate increases will be 4.6% annually for the next five years. It was discussed that staff felt that it is best to make the rate adjustments as needed annually. Mr. Koeppen explained in response to an inquiry from Director Gastelum that the reason for the proposed decrease in the sewer rate is during the drought, the average winter water use average dropped from 14 to 9.5 units due to conservation. Because of this conservation, the sewer rate needed to be increased. Currently, water use is going up and the average winter water use is back to 14 units which is allowing the District to reduce its sewer rate. It was discussed that the District is the 6th lowest cost sewer provider in the County. This is worth noting as the District’s system is very small and does not have the benefit of economies of scale, but the District is able to run its sewer system efficiently and keep its costs down. The District has reached out to the County to possibly share services and increase efficiency. The County has not expressed interest at this time. President Smith opened the Public Hearing to hear the public’s comments on the sewer rate changes at 3:50 p.m. There were no requests to speak and President Smith closed the hearing at 3:50 p.m. In response to an inquiry from Director Robak, Mr. Sean Cooper of HDR (District’s rate consultant) indicated that there has been instances where sewer utilities have had their rates challenged, however, he is not aware of any recent or current lawsuits. He stated that they do follow accepted principles and methodologies when establishing sewer rates and the Cost of Service Study supports the rates presented for the board’s adoption. A motion was made by Director Robak, seconded by Director Thompson and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve staff’s recommendation. 4 CONSENT CALENDAR 8. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: A motion was made by Director Thompson, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve the following consent calendar items: a) ADOPT ORDINANCE NO. 569 AMENDING THE APPENDIX OF SECTION 6, CONFLICT OF INTEREST CODE (COIC), CONTAINED WITHIN THE DISTRICT’S CODE OF ORDINANCES TO UPDATE THE POSITION TITLES REQUIRED TO FILE A FORM 700; UPDATE WITHIN SECTION 6.05, STATEMENTS OF ECONOMIC INTERESTS: TIME OF FILING, IF A PERSON FILES AN ASSUMING OFFICE FORM 700 FILING BETWEEN OCTOBER 1 AND DECEMBER 31, THAT PERSON NEED NOT FILE AN ANNUAL FORM 700 UNTIL TWO (2) APRILS FROM THE MONTH OF FILING AN ASSUMING OFFICE FORM AND THAT PERSONS WHO REPORT FOR MILITARY SERVICE SHALL FILE WITHIN 30 DAYS OF RETURNING TO OFFICE; TO CODIFY WITHIN SECTION 6.04, STATEMENTS OF ECONOMIC INTERESTS: PLACE OF FILING, THE PRACTICE OF ELECTRONICALLY FILING FORM 700’S; AND TO UPDATE GOVERNMENT CODE SECTION NUMBERS AND REFLECT CURRENT STATUTE LANGUAGE THROUGHOUT THE COIC b) AWARD TWO (2) PROFESSIONAL AS-NEEDED CONSTRUCTION MANAGEMENT AND INSPECTION SERVICES CONTRACTS TO ALYSON CONSULTING AND VALLEY CONSTRUCTION MANAGEMENT, EACH IN AN AMOUNT NOT-TO-EXCEED $600,000. THE TOTAL AMOUNT FOR THE TWO (2) CONTRACTS WILL NOT EXCEED $600,000 DURING FISCAL YEARS 2019 AND 2020 (ENDING JUNE 30, 2020) c) ADOPT RESOLUTION NO. 4351 AMENDING POLICY NO. 6, ANNUAL CAPITAL IMPROVEMENT PROGRAM DEVELOPMENT, OF THE DISTRICT’S CODE OF ORDINANCES d) ADOPT A NEGATIVE DECLARATION FOR THE VISTA VEREDA AND HIDDEN MESA ROAD WATER LINE REPLACEMENT PROJECT 5 ACTION ITEMS 9. FINANCE AND ADMINISTRATION a) ADOPT RESOLUTION NO. 4352 OF THE OTAY WATER DISTRICT AMENDING RESOLUTION NO. 4350 TO AUTHORIZE THE REFINANCING OF THE DISTRICT’S VARIABLE RATE DEMAND CERTIFICATES OF PARTICIPATION (1996 CAPITAL PROJECTS) THROUGH THE ISSUANCE BY THE OTAY WATER DISTRICT FINANCING AUTHORITY OF ITS WATER REVENUE BONDS, SERIES 2018A IN AN AGGREGATE PRINCIPAL AMOUNT NOT-TO-EXCEED $36,000,000, APPROVING THE EXECUTION OF CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTS IN CONNECTION THEREWITH Assistant Chief of Finance Kevin Koeppen indicated that staff is requesting that the board adopt Resolution No. 4352 amending Resolution No. 4350 to authorize the refinancing of the District’s variable rate demand Certificates of Participation (1996 Capital Projects) through the issuance by the Otay Water District Financing Authority of its water revenue bonds, series 2018A in an amount not- to-exceed $36 million, approving the execution of certain documents and authorizing certain acts in connection with the refinancing. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Mr. Koeppen’s report. Staff responded to comments and questions from the board and indicated that they felt this would be a very prudent action as the District will be going from a variable rate to a fixed rate on the issuance. A motion was made by Director Thompson, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve staff’s recommendation. 10. RECESS OTAY WATER DISTRICT BOARD MEETING AND CONVENE OTAY WATER DISTRICT FINANCING AUTHORITY BOARD MEETING President Smith recessed the Otay Water District board meeting and convened the Otay Water District Financing Authority board meeting at 4:00 p.m. 11. ROLL CALL Directors Present: Gastelum, Robak, Smith and Thompson Directors Absent: Director Croucher 6 ACTION ITEMS 12. FINANCE a) ADOPT RESOLUTION NO. 2018-03 RESOLUTION OF THE OTAY WATER DISTRICT FINANCING AUTHORITY AMENDING RESOLUTION NO. 2018-02 TO AUTHORIZE THE REFINANCING OF THE DISTRICT’S VARIABLE RATE DEMAND CERTIFICATES OF PARTICIPATION (1996 CAPITAL PROJECTS) AND INCREASING THE ISSUANCE AMOUNT OF THE AUTHORITY’S WATER REVENUE BONDS, SERIES 2018A TO AN AGGREGATE PRINCIPAL AMOUNT NOT-TO-EXCEED $36,000,000, APPROVING THE EXECUTION OF CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTS IN CONNECTION THEREWITH Assistant Chief of Finance Koeppen requested that the board adopt the Otay Water District Financing Authority Resolution No. 2018-03 amending Resolution No. 2018-02 to authorize the refinancing of the District’s variable rate demand Certificates of Participation (1996 capital projects) and increasing the issuance amount of the authority’s water revenue bonds, series 2018a, to an aggregate principal amount not-to-exceed $36,000,000, approving the execution of certain documents and authorizing certain acts in connection therewith. A motion was made by Director Robak, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: Director Croucher to approve staff’s recommendation. 13. ADJOURN OTAY WATER DISTRICT FINANCING AUTHORITY BOARD MEETING AND RECONVENE OTAY WATER DISTRICT BOARD MEETING President Smith adjourned the Otay Water District Financing Authority Board meeting was reconvened the Otay Water District board meeting at 4:06 p.m. 14. BOARD a) DISCUSSION OF 2018 BOARD MEETING CALENDAR As there were no critical matters to discuss, the board canceled the December 2018 board meeting. There were no other changes to the board meeting calendar. 7 INFORMATIONAL ITEM 15. THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: a) FISCAL YEAR 2018 DIRECTORS’ EXPENSES Finance Manager Eid Fakhouri provided an update on the Fiscal Year 2018 Directors’ expenses. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Mr. Fakhouri’s report. In response to an inquiry from President Smith, Mr. Fakhouri indicated that the total expenditures for FY 2018 was $55,921.75 and the budget was $62,000. President Smith indicated that he made an effort to find the best match for conferences, etc. to educate the board on water issues to manage board expenditures and assure that the board stayed under its budget. He stated that he is proud to say that during his term as President, the board expenses were under budget. b) UPDATE ON THE POTABLE WATER, RECYCLED WATER, AND WASTEWATER TREATMENT STUDIES PREPARED BY THE DISTRICT AND OTHER AGENCIES OVER THE LAST TWENTY-FIVE YEARS Engineering Manager Bob Kennedy indicated that this item is being presented to update the board on potable, recycled and wastewater treatment studies prepared by the District and other agencies over the last twenty-five years. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Mr. Kennedy’s report. The board and staff discussed the various studies and it was indicated that many agencies are discussing diversifying their water supplies. Within the District’s service area, there is not a lot of opportunities for diversification as there is no groundwater basins, open reservoirs or a large supply of recycled water. The District’s best opportunity for water supply diversification is desalinated water. The District will continue to look at potential water resource projects and if they can provide water at CWA’s cost or lower, these are projects the District will pursue. c) YEAR-END REPORT ON THE DISTRICT’S FISCAL YEARS 2015-2018 STRATEGIC PERFORMANCE PLAN FOR FISCAL YEAR 2018 Chief of Administration Adolfo Segura presented the Fiscal Year-end 2018 Strategic Performance Plan update. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Mr. Segura’s report. 8 The board discussed how some of the measures in the Strategic Plan directly impact water rates, such as the results for the measures Distribution System Water Loss and Change Order Rate. The water loss savings for FY 2018 is $620,000 which decreases water rate increases by 0.7% and the change order rate savings is $740,000 which decreases water rate increases by 0.8%. It was noted as a comparison for the Distribution System Water Loss measure that Sacramento’s water loss was 17.1% and the District’s water loss measure was 3.3% for FY 2018. The board commended staff for their good work. REPORTS 16. GENERAL MANAGER’S REPORT General Manager Watton presented information from his report which included an update on the hydrants being included in parcel manager in the customer service database, employee recognition luncheon, monthly board meeting audio streaming, emergency response plan, AMR change outs, water conservation and potable and recycled water sales. Staff responded to comments and questions from the board. 17. CWA REPORT President Smith reported on an item discussed at CWA’s Engineering and Operations Committee that is pertinent to the District. He indicated that CWA had solicited bids for the San Diego 28 Flow Control Facility. The engineer’s cost estimate for the project was $7 to 8 million and the actual bids were $14 to $19 million. CWA’s staff indicated that the contractors are so busy with work that it is driving the bids up. It was noted that bids are also being affected by the possible increase in steel cost due to the new tariffs that are being instituted and by the purchase by Northwest Pipe Company of Amron which is decreasing competition. He shared that a report distributed at CWA’s Imported Water Committee describes the history of the Local Resource Projects and the incentive funding ($250 to $350 an acre foot) that MWD provides agencies to produce more diverse water supplies. He stated that to receive the funding, the agencies must provide/complete items on a list. Until the list is completed, MWD will not release funding. He indicated that if MWD has not released the incentive funding to an agency who has applied for it, it is likely they have not completed the list of items. President Smith asked District Secretary Susan Cruz to forward a copy of the report to the members of the board. She indicated that she would do so. He lastly reported with regard to CWA’s two-year budget that the first year of the budget has been completed and CWA expended $13 million of their $26 million budget for that year. Thus, CWA saved $13 million this past fiscal year. 9 18. DIRECTORS' REPORTS/REQUESTS Director Thompson reported that he attended, along with Director Gastelum, a meeting of the Conservation Action Committee where they discussed the Colorado River, its historic trends and its current situation. Director Gastelum reported that he did attend the Conservation Action Committee as reported by Director Thompson. He indicated that he also attended a tour of the Twin Oaks Water Treatment Plant, the Citizens Water Academy and CSDA’s Quarterly Meeting. Director Robak explained that the Conservation Action Committee is a standing committee of CWA and the purpose of the committee is to work with the private sector to promote water conservation. He stated that he felt they are doing a good job in leading the program. He shared that he attended MWD’s board meeting in September to support Director Smith on his official “seating” on MWD’s board. He lastly shared that a former Otay WD board member, Mr. John Lamp, who served on the board in the 1970’s and 1980’s passed away about a month ago. He stated Mr. Lamp was a real credit to the agency. 19. PRESIDENT’S REPORT President Smith thanked Director Robak for attending his induction onto MWD’s board. He shared that he hosted his first MWD/CWA Inspection Trip where he led a tour of the State Water Project/Bay Delta. (President Smith’s report of meetings he attended during the month of September will be attached to these minutes.) 20. CLOSED SESSION The board recessed to closed session at 5:15 p.m. to discuss the following matters: a) CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] AGENCY DESIGNATED REPRESENTATIVES: BOARD AD HOC COMMITTEE MEMBERS EMPLOYEE ORGANIZATION: OTAY WATER DISTRICT EMPLOYEES’ ASSOCIATION AND ALL REPRESENTED AND UNREPRESENTED PERSONNEL INCLUDING MANAGEMENT AND CONFIDENTIAL EMPLOYEES 10 The board reconvened from closed session at 6:04 p.m. General Counsel Dan Shinoff indicated that the board met in closed session and took no reportable actions. 21. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 6:04 p.m. ___________________________________ President ATTEST: District Secretary 11 President’s Report Tim Smith October 3, 2018 Board Meeting # Date Meeting Purpose 1 4-Sep Quarterly Meeting with OWD General Manager Watton Met with GM to receive an update on projects or items impacting Division 1 2 5-Sep OWD Regular Board Meeting Monthly Board Meeting 3 13-Sep Committee Agenda Briefing Met w/ General Manager Watton to review items that will be presented at the September committee meetings. 4 18-Sep EO&WR Committee Reviewed items that will be presented at the October board meeting. 5 20-Sep Met with Dir Croucher and General Manager Watton Discussed CWA Matters 6 26-Sep East County Caucus Discuss CWA issues