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HomeMy WebLinkAbout07-11-18 Board Minutes 1 MINUTES OF THE BOARD OF DIRECTORS MEETINGS OF THE OTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY July 11, 2018 1. The meeting was called to order by President Smith at 3:34 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak, Smith and Thompson Staff Present: General Manager Mark Watton, Attorney Jeanne Blumenfeld, Chief of Engineering Rod Posada, Chief Financial Officer Joe Beachem, Chief of Administration Adolfo Segura, Chief of Operations Pedro Porras, Asst. Chief of Finance Kevin Koeppen, Asst. Chief of Operations Jose Martinez, District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA President Smith indicated that as there is a speaker interested in addressing item 14a, DISCUSS CENSURE OF DIRECTOR HECTOR GASTELUM IMPLEMENTED BY THE OTAY WATER DISTRICT BOARD THROUGH THE ADOPTION OF RESOLUTION NO. 4333 ON APRIL 17, 2017, on the agenda, he would like to move it to follow agenda item 6, Public Participation. A motion was made by Director Robak, and seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the agenda with an amendment to move agenda item 14a to follow agenda item 6, Public Participation. 5. PRESENTATION OF AWARD FOR WATERSMART LANDSCAPE CONTEST “BEST IN DISTRICT” WINNER, MS. ROSALBA PONCE 2 Director Thompson presented the WaterSmart landscape contest award for “Best in District,” a $250 Anderson Nursery gift certificate, to Ms. Rosalba Ponce. He indicated that Ms. Ponce was a teacher and principal at Chula Vista Elementary school and as a community leader she has once again demonstrated her leadership by displaying to the community how attractive water conserving landscapes can be. Ms. Ponce utilized the monies she received from the turf rebate program ($2,000), which provides for $1.75 per square foot of grass converted to water conserving plants, to accomplish the remodeling of her landscape. Her new landscape will save approximately 38% of the water she was using previously. Ms. Ponce thanked the District for the recognition. She stated that the process of removing her turf and converting it to a WaterSmart landscape started two (2) years ago when she retired and attended a CWA course. She indicated that she started the project in her back yard where she learned from the many mistakes she made there and worked with the assistance of landscape designer, Ms. Angela Benson, to convert her front yard. She stated that she has learned how to water her new landscape with the assistance of a moisture detector after losing some of her plants to overwatering. She indicated that the benefits she has gained by converting her turf is reduced water cost and the expansion of her living space to the outdoors. She thanked the District again for the recognition and stated she would share her experience with others. She introduced her friends who love gardening and helping with her project, Mss. Helena Sabala and Elva Mellor. President Smith thanked Ms. Ponce for her efforts in setting a good standard for our community. Director Robak suggested that Ms. Ponce attend the Citizens Water Academy which will be held in Chula Vista in the fall. 6. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF APRIL 4, 2018 A motion was made by Director Thompson, and seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the minutes of the regular meeting of April 4, 2018. 7. 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 3 Mr. Larry Olds of El Cajon indicated as a retired employee he is aware that the District has developed a response plan for disaster preparedness. He stated he was not sure if the District has developed a plan to respond to an electromagnetic pulse (EMP) attack. He indicated they are generated in two ways, by the sun or when a nuclear device is detonated high in the atmosphere. An EMP discharge can permanently disable electrical systems. He asked if the District has discussed how to protect itself from such an attack. He stated he just wished to bring up the issue for the District to discuss if it has not already. General Manager Watton indicated that the District has considered this threat and would share the information Mr. Olds provided to staff for further review and discussion. ACTION ITEMS 8. BOARD a) DISCUSS CENSURE OF DIRECTOR HECTOR GASTELUM IMPLEMENTED BY THE OTAY WATER DISTRICT BOARD THROUGH THE ADOPTION OF RESOLUTION NO. 4333 ON APRIL 17, 2017 Mr. Edgar Hopida of Chula Vista indicated that he is urging the District’s board to continue the censure of Director Gastelum for his uncharacteristic and unflattering remarks towards immigrants, Muslims and others via social media and public statements. He stated that he felt he hasn’t shown any remorse or changed his social media discourse. He stated that Director Gastelum’s comments are very divisive and unbecoming of a board director who represents a very diverse community. Director Gastelum indicated that he took an oath on the bible to defend our constitution and respect the laws of this Country. He stated that illegal immigration is “illegal” and he stands by his comment on this issue. In response to an inquiry from Director Thompson, Attorney Jeanne Blumenfeld indicated that the censure was a response by the Board to specific conduct that they felt violated the District’s Code of Ethics. The board instituted a sanction due to this conduct and the board is not required to take any further action. President Smith further indicated that the action was a one-time admonishment and not a censorship. Director Thompson indicated that he wished to respond to Mr. Hopida’s comments that there is not anything to lift. Director Robak indicated that the last paragraph of the Resolution refers to the Board President and the powers granted to the President to conduct a review of 4 the current committee assignments for Director Gastelum and determine whether a temporary or permanent removal of some or all of his committee assignments might be appropriate. Director Robak indicated, as President at the time, he removed Director Gastelum from his committee assignments. He asked President Smith if he will continue to not assign Director Gastelum to committees. President Smith indicated that was correct and at the end of the censure period, the Resolution describes how consideration would be made to temporarily remove or permanently remove Director Gastelum from committee assignments. Director Robak indicated that he recalls that the board would evaluate after one year and determine if the sanction would continue. He stated that he does not monitor Director Gastelum’s social media posts, but he has not heard any complaints. He stated that in his observation for the past year, at least internally, Director Gastelum is working well with directors and staff. Director Gastelum indicated that this is the reason he wished this issue agendized. He stated that he wished to start participating in Committee discussions. He indicated that when this issue was discussed last year, the censure was determined to be a year and now that the year has passed, he is requesting to be assigned to a committee. After much discussion, the board indicated that they have seen Director Gastelum’s commitment to learn the water industry over the last year and commended him. They do wish to see him participate in committee discussions on the condition that he sincerely provide an apology and acknowledge the damage his comments have made to the Muslim Community. It was discussed that the apology offered by Director Gastelum did not address their concerns. Director Gastelum indicated that he had indicated in the boardroom, at the City of Chula Vista council meeting and in the media that he did not paint everyone with the same brush. He stated that his tweet was very specific to the individuals raping people and was linked to an article that indicated Sweden had become the rape capital of the world. He asked if he could not condemn rape, then what is he able to condemn that is wrong. He stated he reiterated numerous times that he did not paint everyone with the same brush. President Smith indicated that another concern the board has is when a Director’s personal beliefs and actions interferes with District business. Director Gastelum indicated that the tweets were from his personal Twitter account and that he had made it clear that his tweets were from his personal account and is not related in any way to Otay WD. President Smith indicated that the board is providing a path forward if Director Gastelum desires. CONSENT CALENDAR 5 9. 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: President Smith noted with regard to item 7c, that staff’s original recommendation was changed at the committee level from rejecting the bid to awarding the contract to M-Rae Engineering, Inc. for the construction of the pipeline cathodic protection improvements for Phase II. Director Robak pulled items 7e, APPROVE THE TRANSFER $30.0 MILLION OF POTABLE RESERVES TO CALPERS AND THE TRANSFER $1.8 MILLION OF SEWER RESERVES TO CALPERS; AND APPROVE THE SALE OF CURRENTLY HELD INVESTMENTS, AS NEEDED, TO TRANSFER THESE FUNDS, for discussion. A motion was made by Director Thompson, seconded by Director Robak and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve consent calendar items 7a, 7b and 7d (noted below). a) APPROVE AN INCREASE TO THE CIP P2561 BUDGET IN THE AMOUNT OF $150,000 AND AWARD A CONSTRUCTION CONTRACT TO LAYFIELD USA CORPORATION FOR THE RESERVOIR 711-3 FLOATING COVER AND LINER REPLACEMENT PROJECT IN AN AMOUNT NOT-TO-EXCEED $1,997,000.40 b) APPROVE CALTRANS UTILITY AGREEMENT NO. 33718 FOR SR-11 UTILITY RELOCATIONS ON ENRICO FERMI DRIVE AND ALTA ROAD d) REJECT ALL BIDS FOR THE CONSTRUCTION OF THE VALVE REPLACEMENT PROGRAM – PHASE I PROJECT President Smith presented item 7c for discussion: c) REJECT A BID FOR THE CONSTRUCTION OF THE PIPELINE CATHODIC PROTECTION IMPROVEMENTS – PHASE II PROJECT (NOTWITHSTANDING, THE COMMITTEE REJECTED STAFF’S RECOMMENDATION AND RECOMMENDS THAT THE CONTRACT BE AWARDED TO THE SOLE BIDDER, M-RAE ENGINEERING, INC. IN THE AMOUNT OF $347,000) [NOTE: APPROVAL OF THIS ITEM ON THE CONSENT CALENDAR IS AN APPROVAL OF THE BOARD 6 COMMITTEE’S RECOMMENDATION TO AWARD A CONTRACT TO M- RAE ENGINEERING, INC. FOR THE CONSTRUCTION OF THE PIPELINE CATHODIC PROTECTION IMPROVEMENTS – PHASE II PROJECT IN THE AMOUNT OF $347,000] In response to an inquiry from Director Thompson, General Manager Watton indicated that the practice has been that if the Committee recommended changes or takes a different direction, this is reflected in the minutes from the Committee discussion. This would avoid having different versions of the staff report held in the District’s files. The action being recommended is to award the contract to the single bidder, M- Rae Engineering, Inc. for $347,000. Director Croucher indicated that staff agrees and is happy with the Engineer, Operations and Water Resources Committee’s (EO&WR Committee) recommendation to go forward with the award of the contract. The Committee’s thought was that M-Rae Engineering, Inc. spent money and effort to submit the bid and they did not feel they should be punished because no other contractor bid on the project. It was also determined from the discussion that staff would make future projects a little larger to encourage bids from contractors providing cathodic protection services. A motion was made by Director Thompson, seconded by Director Robak and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the EO&WR Committee’s recommendation. President Smith presented item 7e for discussion: e) APPROVE THE TRANSFER $30.0 MILLION OF POTABLE RESERVES TO CALPERS AND THE TRANSFER $1.8 MILLION OF SEWER RESERVES TO CALPERS; AND APPROVE THE SALE OF CURRENTLY HELD INVESTMENTS, AS NEEDED, TO TRANSFER THESE FUNDS Assistant Chief of Finance Kevin Koeppen indicated that staff is requesting that the board approve the transfer of $30 million of potable reserves and $1.8 million of sewer reserves to CalPERs and approve the sale of currently held investments, as needed, to transfer these funds. The transfers are being made in the continuance of informational items and recommendations presented to the board at the May 2 and May 21, 2018 meetings which are aimed at reducing the District’s Unfunded Actuarial Liability (UAL pension costs). He stated as of June 7 30, 2018 the District is projected to have an unfunded liability of $51.3 million which carries an interest cost of 7%. Staff indicated that by making this advanced payment, the District will reduce this high interest UAL cost and save the District approximately $16.4 million over the next 25 years. He indicated to transfer the funds to CalPERs, the District will need to sell some of its investments. Staff estimates the loss on the sale of those investments to be approximately $75,000. However, this loss will be entirely offset by the financial benefit of reducing the 7% interest cost charged by CalPERs. Mr. Koeppen indicated in response to a comment from Director Robak that the District currently has unrestricted reserves that would be used to pay for CIP projects. These unrestricted reserves can be used for whatever is most cost beneficial for the District and it has been determined that utilizing these funds to pay down debt with a 7% interest cost (this is the District’s highest interest cost debt), would be the most beneficial to the District. In response to an inquiry from Director Gastelum, Mr. Koeppen indicated that the remaining $20 million would be paid off over approximately 15 years. He indicated that the District has “targets” set for its cash levels and the $31.8 million is the maximum that can be used and still maintain the District cash target levels. Director Thompson commended staff and indicated that it is very seldom that the board can take an action and save $16 million. He stated that the District has approximately 50,000 water customers and $16 million equates to an approximate savings of $340 per customer. A motion was made by Director Robak, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve staff’s recommendation. 10. RECESS OTAY WATER DISTRICT BOARD MEETING AND CONVENE OTAY WATER DISTRICT FINANCING AUTHORITY BOARD MEETING The Otay Water District Board meeting was recessed at 4:29 p.m. and the meeting of the Otay Water District Financing Authority Board was convened at 4:29 p.m. 11. ROLL CALL Directors Present: Croucher, Gastelum, Robak, Smith and Thompson 8 CONSENT CALENDAR 12. 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 Robak, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the following consent calendar item: a) ADOPT RESOLUTION NO. 2018-01 TO AMEND THE OTAY WATER DISTRICT FINANCING AUTHORITY BY-LAWS AUTHORIZING THE AUTHORITY TO HOLD REGULAR MEETINGS ON EACH DATE THAT IS A REGULAR MEETING DATE OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT 13. ADJOURN OTAY WATER DISTRICT FINANCING AUTHORITY BOARD MEETING AND CONVENE OTAY WATER DISTRICT BOARD MEETING The Otay Water District Financing Authority Board meeting was recessed at 4:30 p.m. and the Otay Water District Board meeting was convened at 4:30 p.m. ACTION ITEMS 14. BOARD b) DISCUSSION OF 2017 BOARD MEETING CALENDAR There were no changes to the calendar. INFORMATIONAL ITEMS 15. THIS ITEM IS PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEM. a) INFORMATIONAL UPDATE ON THE CURRENT AGREEMENT WITH THE CITY OF SAN DIEGO, THE CURRENT COST OF RECYCLED WATER, AND ALTERNATIVE SUPPLY STUDIES (CAMERON) 9 Director Thompson indicated with regard to the take-or-pay contract with the City of San Diego that if the situation does not change, he would like to see the District pursue bigger users as he would like to have the water used. General Manager Watton indicated that the District is bound by Proposition 218 and it is difficult to navigate around it. He stated that staff will provide a more extensive brief on the activities and studies performed over the years reviewing recycled water. The studies will give an outline of what the District has reviewed and determined. Staff plans to provide this report to committee in July 2018. b) RECEIVE A PRESENTATION OF THE IMPACT OF SEWER ISSUING DEBT IN FY 2019 VS. FY 2020; AND DIRECT STAFF TO PREPARE THE SEWER 218 NOTICES USING THE RATES ASSOCIATED WITH THE FY 2020 DEBT ISSUANCE (KOEPPEN) The board noted receipt of this item and waived presentation as it was reviewed in detail in committee. c) RECEIVE AN UPDATE ON THE DISTRICT’S COMPUTER AND CYBERSECURITY LANDSCAPE (KERR) It was indicated that this report provides general information as the District did not wish to provide too much detail on the District’s security systems as it could compromise the system. It was indicated in response to an inquiry from Director Robak that the District has done its due diligence and is employing all measures and safeguards to protect customer and employee data. It was inquired of the District’s attorney if a discussion could be agendized for closed session discussion and Attorney Jeanne Blumenfeld indicated that there is no State provision that allows the discussion of security in closed session. Director Thompson suggested that the matter be referred to the legislative list to submit for legislative change that would allow such discussions in closed session. It is indicated that Directors contact General Manager Watton to meet with staff if they wish more detailed information on the District’s computer and cybersecurity. REPORTS 16. GENERAL MANAGER’S REPORT General Manager’s Report General Manager Watton reviewed handouts that were provided on the dias for each member of the board (see attached). He also presented information from his report which included an update on drone testing and software evaluation, the assessment of the Cityworks system, CWA’s bid and solicitation portals, water rate increase notices and sewer 2018 notices, Salt Creek Golf Course lease 10 release agreement, the Salt Creek Roll Reservoir trails, and water sales and purchases. CWA Report Director Croucher reported that CWA held a board retreat where the discussion focused on the future. There was a lot of good input from members of the board and CWA came away with a list of items they will be pursuing, including meeting with the member agencies’ general managers to receive their input and to address and discuss that CWA views the general managers as subject matter experts. While CWA looks for their input, their input is not necessarily to provide direction. CWA is also focusing on legislative matters, working with MWD and CWA’s future goals. President Smith further reported that during the regular portion of CWA’s board workshop/board meeting, they discussed the changes to the policy for the rate stabilization fund. The changes will provide for lower rate increases from CWA. He also shared that CWA’s MWD representatives voted “no” on the Bay Delta Fix at MWD’s board meeting and CWA’s board asked that staff develop policies on the Bay Delta Fix. He stated they also discussed at the workshop developing a drought contingency plan for the Colorado River as it is predicted that there will be a drought on the Colorado River for the next two years. He indicated that the CWA board also reviewed all the legal issues with MWD and that two of the four CWA representatives to MWD board will be replaced. President Smith and Mr. Jerry Butkiewicz from the City of San Diego have been appointed to the two open seats. His term will begin on July 24 for six years. He stated that this will be the first time that the south and the east agencies have a representative at MWD. It generally has been two north county and two City of San Diego representatives. 17. DIRECTORS' REPORTS/REQUESTS Director Croucher indicated that President Smith will be “seated” at the August 20 and 21 meeting at MWD. President Smith noted that he will be sworn in on July 24 and will be seated at MWD’s board meeting on August 21, 2018. Director Croucher encouraged that Directors attend as this is an important event for Otay WD. Director Gastelum reported that he met with General Manager Watton for his quarterly meeting. He stated that he also attended a presentation by Sweetwater Authority’s General Manager, Ms. Tish Berge, on water supplies and aging infrastructure. He also participated in a webinar on customer service where it discussed doing more with less and he attended a Congressional Luncheon for Congressman Darryl Issa. Director Robak indicated he liked the new Strategic Plan booklet. He stated that he would like to see hydro-stations installed at the Water Conservation Garden 11 and asked if possibly the District could help them with acquiring a hydro-station. He commended President Smith for being appointed as one of CWA’s representative to MWD’s board of directors. He stated that he felt that President Smith is a thoughtful and knowledgeable individual who asks very good questions. He stated that he will be a very good representative, not just for Otay WD, but the region as a whole. 18. PRESIDENT’S REPORT President Smith indicated that he attended the American Water Works Association Annual Conference. He stated that it was really fascinating to see the cutting edge of water at a national conference and that Asset Management was a large focus at the conference. He indicated that he really would like to see Asset Management be taken to the next level where the District is monetizing risk. That is, including actual costs to repair failed infrastructure and an estimate of how much it would cost to replace/fix infrastructure within the Asset Management system. They also discussed communicating with customers of how assets/infrastructure are managed, maintained and repaired so they understand why agencies raise rates. President Smith indicated that the District’s legal counsel has information in response to an inquiry from Director Thompson concerning the ability to discuss security in closed session. Attorney Jeanne Blumenfeld indicated she misspoke and that there is a public security exemption under the Brown Act, Government Code Section 54957, which allows public entities to discuss threats to security and, specifically, issues relating to water, the supply of water, and when distribution of water is threatened. 19. CLOSED SESSION The board recessed to closed session at 5:15 p.m. to discuss the following matters: a) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] OTAY WATER DISTRICT v. CITY OF SAN DIEGO; CASE NO. 37-2017- 00019348-CU-WM-CTL b) CONFERENCE WITH LEGAL COUNSEL – PENDING LITIGATION [GOVERNMENT CODE §54956.9] MARK COZIAHR vs. OTAY WATER DISTRICT; CASE NO. 37-2015- 00023413 c) PUBLIC EMPLOYEE PERFORMANCE EVALUATION [GOVERNMENT CODE §54957.6] 12 TITLE: GENERAL MANAGER The board reconvened at 5:59 p.m. and Attorney Blumenfeld reported that the board met in closed session and took no reportable actions. 20. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 6:00 p.m. ___________________________________ President ATTEST: District Secretary 13 President’s Report Tim Smith July 11, 2018 Board Meeting # Date Meeting Purpose 1 6-Jun OWD Regular Board Meeting Monthly board meeting 2 7-Jun Metro Commission Monthly Commission Meeting 3 12-14 Jun American Water Works Association Annual Conference Receive Industry Updates 4 18-Jun Committee Agenda Briefing Met with General Manager Watton to review items that will be presented at the June committee meetings 5 19-Jun F & A Committee Reviewed items that will be presented at the July board meeting 6 20-Jun Ad Hoc General Manager Evaluation Committee Discussed the General Manager's Evaluation 7 21-Jun CWA Matters Meeting Met with Director Croucher and General Manager Watton to discuss CWA matters 8 25-Jun OWD EO&WR Committee Reviewed items that will be presented at the July board meeting