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HomeMy WebLinkAbout05-02-18 Board Minutes 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT May 2, 2018 1. The meeting was called to order by President Smith at 3:35 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak (arrived at 4:45 p.m.), 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 A motion was made by Director Croucher, and seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve the agenda. 5. LEGISLATIVE UPDATE Ms. Rosanna Carvacho of Brownstein, Hyatt, Farber and Schreck provided an update on the 2018 California Legislative session. She stated that the State of California Legislature has two-year sessions and we are in the second year of the two-year session. She indicated that because we are in the second year, any bills that do not pass before the legislature by August 31, 2018 would be considered “dead” and would need to be reintroduced in the next session (2019 to 2020). She stated that there are approximately 3100 assembly bills and 1500 senate bills introduced in the last couple years. Ms. Carvacho also noted that the budget process is underway in the legislature and hearings are being held on the budget proposed by the Governor in January. The budget only requires a simple majority (in the past it required a 2/3 vote) and 2 must be passed by June 15 as set by the State Constitution. She reviewed some of the bills that the District has interest in tracking as they have an impact on the District’s operations (please reference Attachment A to the staff report). President Smith inquired how much of the $8.88 billion bond, proposed by Dr. Jerry Meral, has been allocated for Southern California. Ms. Carvacho indicated that she would review the bond to see how it is broken down and share her findings with the board. In response to an inquiry from Director Thompson, Ms. Carvacho indicated that SB 623, the tax on water, has gotten traction as the Governor has made this bill a priority and he is pushing the bill forward. The bill is also getting support from the dairy industry and the farmers in terms of the fertilizer fee. Because the water community is on its own now, whereas in the past they all worked together as a coalition and, thus, were stronger and able to keep such legislation from moving forward. Ms. Carvacho indicated in response an inquiry from Director Gastelum, that Proposition 218 could pose a challenge to SB 623 as urban ratepayers are paying the tax and are not receiving benefit from the tax. Director Croucher also noted that SB 623 is taxing water which a basic necessity for survival, whereas food is not taxed, and that the bill could set a precedence. 6. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF FEBRUARY 7, 2018 AND SPECIAL BOARD MEETINGS OF FEBRUARY 7, 2018 AND APRIL 11, 2018 A motion was made by Director Thompson, and seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve the minutes of the regular board meeting of February 7, 2018 and special board meeting of February 7 and April 11, 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 General Manager Watton presented Chief of Operations Pedro Porras an award recognizing him for his 30 years-of-service to the District. He and President Smith thanked Mr. Porras for his dedicated service to the District. CONSENT CALENDAR 3 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 Croucher, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve the following consent calendar items: a) APPROVE THE FIRST AMENDMENT TO THE 2001 AGREEMENT FOR THE OPERATION AND MAINTENANCE OF THE PUMP STATION WITH THE LAKEVIEW AT HIGHLANDS RANCH HOMEOWNERS ASSOCIATION b) APPROVE AMENDED AGREEMENTS TO EXTEND THE TERMS FOR TWO (2) YEARS, PLUS THREE (3) ONE-YEAR EXTENSION OPTIONS; ONE WITH INFOSEND TO PROVIDE BILL PRINT AND ELECTRONIC BILL PRESENTMENT SERVICES IN AN AMOUNT NOT-TO-EXCEED $1,310,000 ($262,000 ANNUALLY, INCLUDING PASS-THROUGH POSTAGE COSTS OF $170,000), AND ONE WITH ELECTRONIC PAYMENT EXCHANGE TO PROVIDE ONLINE PAYMENT TRANSACTION PROCESSING SERVICES IN AN AMOUNT NOT-TO- EXCEED $1,500,000 ($250,000 ANNUALLY) c) RECEIVE THE DISTRICT’S INVESTMENT POLICY, BOARD OF DIRECTORS POLICY NO. 27, FOR REVIEW AND RE-DELEGATE AUTHORITY FOR ALL INVESTMENT RELATED ACTIVITIES TO THE CHIEF FINANCIAL OFFICER IN ACCORDANCE WITH GOVERNMENT CODE SECTION 53607 d) APPROVE THE TRANSFER OF THE SAN MIGUEL FIRE TRAINING SITE TO THE COUNTY OF SAN DIEGO FOR USE BY THE COUNTY FIRE AUTHORITY e) APPROVE CHANGE ORDER NO. 4 TO THE EXISTING CONTRACT WITH BLASTCO, INC. IN THE CREDIT AMOUNT OF <$267,197.50> FOR THE 978-1 AND 850-2 RESERVOIRS INTERIOR/EXTERIOR COATINGS AND UPGRADES PROJECT f) APPROVE CHANGE ORDER NO. 2 TO THE EXISTING CONTRACT WITH T.C. CONSTRUCTION COMPANY, INC. IN THE AMOUNT OF $149,280.00 FOR THE HILLSDALE ROAD 12-INCH WATERLINE 4 REPLACEMENT (CIP P2573) AND SEWER REPAIRS (CIP S2048) PROJECTS g) AWARD A PROFESSIONAL ENVIRONMENTAL SERVICES CONTRACT TO ICF JONES AND STOKES, INC. FOR THE MAINTENANCE AND MONITORING OF THE SAN MIGUEL HABITAT MANAGEMENT AREA AND CIP-ASSOCIATED MITIGATION PROJECTS FOR A THREE (3) YEAR PERIOD (JUNE 2018 – JUNE 2021) IN AN AMOUNT NOT-TO- EXCEED $483,787.40 ACTION ITEMS 9. ENGINEERING AND WATER OPERATIONS a) APPROVE THE WATER SUPPLY ASSESSMENT AND VERIFICATION REPORT DATED MARCH 2018 FOR THE OTAY RANCH RESORT VILLAGE PROJECT, AS REQUIRED BY SENATE BILLS 610 AND 221 Environmental Specialist Lisa Coburn-Boyd indicated that the County of San Diego submitted a request to the District for a Water Supply Assessment and Verification Report (WSAVR) for their Otay Ranch Resort Village Project pursuant to Senate Bills 610 and 221. The primary intent of the bills is to improve the link between water supply availability and land use decisions. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Ms. Coburn-Boyd’s report. President Smith reiterated that this project is in the District’s planning documents and there is a decrease in estimated water needs of approximately 300 acre feet (AF) for the project. A motion was made by Director Thompson, seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve staff’s recommendation. 10. BOARD a) DISCUSSION OF 2018 BOARD MEETING CALENDAR It was indicated that the July board meeting has been moved to the following Wednesday, July 11, 2018, as the normal date of the meeting falls on the July 4th holiday. President Smith also noted that a Special Board meeting has been scheduled on Monday, May 21, 2018, for a Budget Workshop. 5 There were no other changes to the board meeting calendar. INFORMATIONAL ITEM 11. THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: a) REPORT ON THE STATUS OF THE SALT CREEK GOLF COURSE PROPERTY RECEIVE INFORMATION REGARDING A LOWER COST STRATEGY FOR FUNDING CALPERS Assistant Chief of Finance Kevin Koeppen provided an update on the history of the Salt Creek Golf Course and future options that the Board could consider for the property. He reviewed information in the staff report (attached). He also presented photos of the current state of the Salt Creek Golf Course property and indicated that the Highlands Group is still exiting the property and they are up to date on their billing. In response to an inquiry from Director Croucher, General Manager Watton indicated that the District has been reaching out to the City of Chula Vista, County of San Diego, etc., to see if there is interest in the property. The District does not have any responses back yet, but staff will keep the board informed. Director Thompson indicated that though the District reduced its rent for the golf course property to $6000 per month, which he felt was very low for 270 acres, the lessees have, unfortunately, not been successful with running a golf course on the land. He suggested, for long term purposes, that staff also review the possibility of utilizing the golf course property to expand the District’s mitigation bank. He asked that staff provide a recommendation on the disposition of the property after reviewing all the facts and circumstances. He inquired if 90-days would be enough time to accomplish this review. General Manager Watton indicated that 90-days would be enough time to develop a preliminary recommendation. Director Croucher indicated that because the District has a take or pay contract with the City, he asked that staff review the possibility of utilizing the recycled water to create a park with a lake, similar to Padre Dam MWD’s Santee Lakes Park. It is a beautiful addition to their community and a benefit to their ratepayers. He indicated whether this was an opportunity that may or may not work on the golf course property, he would like staff to explore it and all possible options. He stated if 90-days is not enough time to perform such a review, he asked that staff advise the board. President Smith also suggested exploring the possibility of doing something similar to the Otay River Valley potable recharge project (potable indirect reuse) on the golf course property as well. He asked that as the District does this 6 review, that it keep in mind its ratepayers and its primary function as a water district. b) RECEIVE INFORMATION REGARDING A LOWER COST STRATEGY FOR FUNDING CALPERS Assistant Chief of Finance Kevin Koeppen presented the analysis regarding a lower cost strategy for funding CalPERS in an effort to reduce the impact on rates of the cost to fund the CalPERS unfunded liability. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Mr. Koeppen’s report. Mr. Koeppen noted that a handout has been provided on the dias from the District’s Financial Advisor in response to an inquiry from the District’s Finance and Administration Committee regarding whether the debt payments could be modified so they would not be negative in the last few years of the 30-year debt. The handout shows on page six (6) the payment schedule which avoids negative payments. It was discussed that this strategy would save ratepayers up to $15.3 million due to interest savings (3.5 to 4% debt interest rate versus 7%). President Smith suggested that the District evaluate net revenues versus net expenses at the end of the fiscal year and if there are any excess net revenues, that staff evaluate if any of the excess monies should be placed in CalPERS. He also suggested that a Board Policy should be developed to codify this practice. In response to an inquiry from Director Thompson, staff indicated that the rating agencies look at CWA’s debt and calculate the District’s portion of that debt. Regarding the CalPERS unfunded liability, the rating agencies see it more as an optional payment. He indicated that while the District will no longer have the benefit of the optional payment, the District is receiving a great benefit from the lowered interest rate cost which improves the District’s debt coverage ratio as its payment on debt is lower. It was indicated in response to another inquiry from Director Thompson that CWA and other agencies are considering this same strategy. Director Croucher stepped off the dias at 4:55 p.m. and returned at 4:58 p.m. Staff stated in response to an inquiry from Director Gastelum that the funding of CalPERS was impacted by the 2008 recession which dropped investment values. The market is now recovering from the recession, but recently CalPERS dropped their discount rate from 7.5% to 7% which has caused the payments into CalPERS to increase. Additionally, the District has lowered its headcount and CalPERS applies it charge to the District as a percentage of payroll which is projected out to the future and this charge is based on a larger number of employees than the District currently employs. 7 General Manager Watton indicated, in response to an inquiry from Director Thompson, that the California Pension Reform Act, PEPRA, reduced pension benefits to 2% at 62. Staff could calculate the percentage drop in the District’s pension obligation on a staffing basis and share the findings with the board. REPORTS 12. GENERAL MANAGER’S REPORT General Manager Watton presented information from his report which included an update on the employee picnic scheduled on August 11, the Enterprise Content Management System and Public Portal, meter sales, discrepancy in the amount of recycled water purchased from the City of San Diego, water conservation and sales. The board had comments and questions concerning a few items in the General Manager’s report and staff responded to the questions and comments. 13. CWA REPORT Director Croucher reported that CWA has been focused on legislative matters and the proposed partial WaterFix for the Bay-Delta as it does not address storage. He stated that MWD will be financing approximately 70% of the project cost and CWA is monitoring how MWD will be allocating the cost of the WaterFix to it member agencies. He stated that CWA is also working with ACWA related to SB 623, the proposed water tax. ACWA had performed a poll and the results indicate that 73% of voters opposed the proposed tax on drinking water. ACWA should be releasing a press release on this issue soon. He also reported that CWA is working with the State Water Resources Control Board (SWRCB) on credit for new water that is produced. The SWRCB is only willing to provide a 10% credit and CWA is working with legislators for a 15% credit. He stated that they have been working with Senator Hueso to push forward the Salton Sea restoration. He shared that CWA hosted a MWD workshop to review the “Guiding Principles” to enhance the working relationship between the two agencies. He lastly shared that CWA will also be hosting a press conference on the proposed water tax and they have reached out to ACWA, the San Diego Taxpayers Association and the San Diego County Board of Supervisor to attend the press conference. President Smith added that CWA’s Engineering and Operations Committee discussed water quality management and is coordinating an outreach effort for the community in August. He shared that he had presented to CWA some things he felt that Otay WD was doing better, which included the analytics on Social Media outreach and Otay WD’s CalPERS funding option. He stated he felt that water agencies should be sharing what they feel they do better so all agencies have the benefit of each other’s expertise. 14. DIRECTORS' REPORTS/REQUESTS 8 Director Robak indicated that the District had discussed social media at its last board meeting and he wished to share his top three “tweets” during the month: 1) the wastewater plant in Tijuana; 2) the proposed water tax; and 3) the photo of the group who participated in the San Diego Regional Chamber’s 2018 Binational Delegation trip to Mexico City. He also stated that an article in the Los Angeles Times indicated that the top candidates for the Governor for the State of California, Lieutenant Governor Gavin Newsom and Los Angeles Mayor Eric Garcetti. are not big proponents of the WaterFix. He lastly shared that he attended a behind the scenes tour of the Aquatica water park which was hosted by the South County Economic Development Council and he learned that they recycled a significant amount of the water they use. Director Gastelum reported that he attended the Heritage Road Ribbon Cutting Ceremony two weeks ago. He also commented that as there was no one from the public attending today’s meeting to address the Salt Creek Golf Course matter, he felt that it spoke well for the transparency of the District. Director Thompson reported that he participated in the 13th Annual San Diego Regional Chamber’s 2018 Binational Delegation Trip to Mexico City. He stated that it was very worthwhile. There was a lot of discussion on infrastructure along the border and the Otay WD’s interest in the Rosarito Desalination Project. He stated that he wanted to share that he was very frugal in the expenditures for his participation in the Delegation Trip and stayed at a less expensive hotel than the other participants and the total cost for his participation was approximately $800. He stated if any Director would like to see the itinerary for the Delegation Trip he would be happy to share a copy. Director Robak added to his report that he attended the Water Conservation Garden Festival last Saturday and it was very well attended. 15. PRESIDENT’S REPORT President Smith indicated that the District did receive an email back from the California Attorney General’s office regarding per diems. The Attorney General indicated that they do not review special districts and he inquired if the board would like to agendize a discussion on per diems at the next scheduled board meeting. The board indicated interest in discussing the issue at the June 2018 board meeting. He reported that the Metro Commission JPA and the City of San Diego’s Pure Water Project is receiving opposition from the communities, especially Mira Mesa and University City, on their environmental report. The communities are concerned with the pipeline that will be built from the Metro Commission’s wastewater pump station to North City. The communities felt there was not enough public outreach and alternative routes. It was noted that the project has been approved to move forward, but is getting some opposition from the community. 16. CLOSED SESSION 9 The board recessed to closed session at 5:38 p.m. to discuss the following matter: a) CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] AGENCY DESIGNATED REPRESENTATIVES: MARK ROBAK AND TIM SMITH EMPLOYEE ORGANIZATION: OTAY WATER DISTRICT EMPLOYEES’ ASSOCIATION AND ALL REPRESENTED AND UNREPRESENTED PERSONNEL INCLUDING MANAGEMENT AND CONFIDENTIAL EMPLOYEES Director Croucher left at 5:41 p.m. The board reconvened from closed session at 6:40 p.m. Attorney Jeanne Blumenfeld indicated that the board met in closed session and took no reportable actions. 17. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 6:40 p.m. ___________________________________ President ATTEST: District Secretary 10 President’s Report Tim Smith May 2, 2018 Board Meeting # Date Meeting Purpose 1 4-Apr OWD Regular Board Meeting Monthly board meeting 2 5-Apr Metro Commission Monthly Commission Meeting 3 9-Apr Salt Creek Golf Course Condition Review Review condition of the Salt Creek Golf Course 4 11-Apr OWD Special Board Meeting Special board meeting to discuss the Salt Creek Golf Course 5 13-Apr Committee Agenda Briefing Met with General Manager Watton to review items that will be presented at the April committee meetings 6 16-Apr OWD EO&WR Committee Reviewed items that will be presented at the May board meeting. 7 19-Apr OWD Ad Hoc Employee Negotiations Committee Discussed employee negotiation matters. 8 27-Apr Board Agenda Briefing Met with General Manager Watton and General Counsel Shinoff to review items that will be presented at the May Board Meeting