July 2, 2001

Regular Board Meeting

Monday, July 2, 2001

Time: 2:00 P.M.

Place: Board Room

29300 Valley Center Rd.

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.

Board members present were: Directors Broomell, Armstrong, Aleshire and Stone. Director Polito

was absent. Staff members present were: General Manager Arant, General Counsel Cowett,

District Engineer Jewell, Director of Finance Jarrell, Director of Operations Dacus, Manager of

Accounting Jeffrey and Board Secretary Stetson. Spectators present were: Mr. and Mrs. Ferlita,

and Mr. Davis.

1.

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The increase in the monthly sewer service charge is proposed as increased operation and

maintenance costs have been experienced; namely, treatment and maintenance expenses.

Through the end of Fiscal Year 2001-2002, it is estimated that the Moosa Wastewater

facility’s total revenue will be $419,431 with expenditures at $458,058. Approval of the $3.00

per month per EDU increase in the sewer service charge results in estimated revenue of

$498,100 during Fiscal Year 2001-2002. It is projected that as of June 30, 2001, the Moosa

sewer operating budget will be in debt to the General Fund by $165,000. The proposed

$3.00 per month per EDU increase in the monthly sewer service fee should bring the Moosa

sewer fund to zero in three years. This projection assumes that the capital replacement

reserve remains unfunded.

An increase in the monthly STEP maintenance fee (Rimrock properties) of $1.00 per EDU

($27.00 to $28.00 per month) for inflation was proposed. In Fiscal Year 2000-2001, STEP

pressure sewer revenue collected is estimated at $6,300 while expenditures are estimated

at $29,000. Including the proposed $1.00 increase in the monthly maintenance fee results

in Fiscal Year 2001-2002 projections of revenue and expenditures of $9,740 and $14,270,

respectively. The STEP system’s maintenance costs are averaged over an 8-year cycle.

A newly developed float control unit for the STEP system is expected to reduce maintenance

costs.

No comments were received from members of the audience and the public hearing was

closed at 2:26 p.m.

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3. Proposed Increase in the District’s Meter Connection Fees:

President Broomell opened the public hearing at 2:27 p.m. to consider adoption of proposed

increases in the District’s meter connection fees. Director of Operations Dacus stated that

the District’s meter connection fees were last increased in 1994. An analysis of the District’s

costs for a new meter installation indicates the need to increase the fees by approximately

51%. Increased costs in labor, materials, equipment and traffic control have contributed to

an increase in the District’s expenses associated with installation of a new meter. The

biggest cost impact can be attributed to compliance with Cal-OSHA and Cal-Trans traffic

safety control requirements when a meter is installed where traffic is present. The purchase

costs for 1-½” and 2" meters increased substantially when the manufacturer’s design

modifications for these sized meters changed. This change, however, resulted in a more

efficient turbo design for these higher volume meters.

The different components that comprise the purchase of a new meter service were reviewed.

The District’s and the San Diego County Water Authority’s meter capacity charges collected

upon the sale of a meter range, respectively, from $1,252 to $12,520 and $2,004 to $19,238

(3/4" to 3" meters). Costs for the appropriately sized backflow device and pressure reducing

valve, if needed, are additional components of a new meter service installation. Currently,

the cost for a 3/4" meter (without a PRV) is $4,296. An increase in the District’s meter

connection fee for a 3/4" meter to $1,562, as proposed, results in the total cost of $4,958 for

a 3/4" meter. It was explained that the meter capacity charges are assessed based on a

detailed evaluation of facility needs to accommodate future growth in which a proportionate

share of the capital cost for future improvements is determined based on meter size and is

assessed or collected upon each new meter connection. This process is in compliance with

AB 1600. The District’s meter capacity charges are among the lowest in the county as the

District’s extensive water system was built to serve the demands of high agricultural demands.

Needed improvements to the District’s system are largely to improve service reliability

(system loops), and maintain and/or replace waterlines.

The Board expressed concern regarding the expense for property owners to purchase a new

meter connection. An analysis of costs pertinent to a new meter installation was suggested

in an effort to reduce costs for the customers; i.e. review of traffic control expenses and

investigation of technology that could reduce expenses. Further, the District’s meter

installation costs will be examined annually and recommendations of the appropriate meter

connection fees presented in the proposed annual budget. Director Aleshire stated that he

cannot vote to adopt the proposed increases in the meter connection fees at this time as

methods to contain costs should be evaluated noting that costs increased 51% over a 2-year

period.

No comments were received from members of the audience and the public hearing was

closed at 3:04 p.m.

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4. Proposed Miscellaneous Updates to the District’s Administrative Code:

The District’s Administrative Code was reviewed to identify sections requiring updating to

reflect current policies and procedures. Proposed modifications to approve updates to the

Code, as well as a change to the Retirement Dinner policy and deletion of the Engineering,

Operations and Maintenance and Construction Departments were presented as summarized

below:

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5. Lake Turner Recreational Concept:

General Manager Arant reported that the District’s position pursuant to the recreational use

of Lake Turner by the participating youth groups in the proposed consortium had been

reiterated to the participating members. That position is that the District would provide a

source for water and power and grade and maintain the access road. The consortium would

be responsible for ongoing costs such as servicing of the restrooms, trash pick-up, utility

usage, repair and/or replacement of facilities, as well as recreational development and its

operation. It was clarified that the Use Agreement will need to stipulate the consortium’s

ongoing costs and funding responsibility.

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A concern of the consortium members that remains is the level of financial exposure as each

participating member’s operating funds are limited. As such, establishment of a finite limit on

the financial exposure of each member was suggested by the consortium members. The

Boys and Girls Club and the YMCA have suggested that each participating member be

charged a specific amount on an annual basis or a fee-for-use basis be established which

would constitute the member’s financial exposure. Construction of recreational facilities

would be funded by the participating members as a group project or through donations.

6. ACWA Region 10 - Nominations for Board Officer Positions:

The Association of California Water Agencies’ Region 10 Nominating Committee is soliciting

candidates for the Region 10 Chair, Vice Chair and Board Member positions. The region’s

Chair and Vice Chair serve on ACWA’s Board of Directors. Statewide, ACWA has 10 regions

in which each region’s Board Members serve as alternates for the Chair and Vice Chair, if

appointed, in their absence to represent the region to the ACWA Board, support program

planning and activities for the region, and participate and encourage region involvement in

ACWA’s Outreach Program.

7. Resolution to Amend the 2000-2001 Budget to Appropriate Funds for the Electricity Litigation:

The District’s share in the costs of the litigation (Sweetwater Authority, et al. v. Dynegy, Inc.,

et al.) against the power providers through May 31

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8. Ratification of Support Position for S. 976 and HR 1985:

9. Request for Increase in Legal Services Fees - Best, Best & Krieger, LLP:

A request was received from Best, Best & Krieger for a 5% increase in legal services fees

which was presented for the Board’s consideration. The requested rate increase is to offset

the increases experienced since the last fee increase approved in March of 2000. The 5%

increase is the consumer price index measurement since the last fee increase, a 15 month

period. A survey of legal fees indicates that Best, Best & Krieger’s fees are competitive with

those paid by similar sized water agencies to other firms. Staff noted the legal services

provided by Best, Best & Krieger continue to be efficient and very responsive in meeting the

full range of the District’s legal needs. Adoption of Resolution No. 2001-31 was

recommended to approve a 5% increase in legal services fees from Best, Best & Krieger.

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10. San Diego County Water Authority’s Board of Directors’ Meeting:

President Broomell reported that a professional services agreement with Eduardo Arguelles

for $390,000 was awarded at the June 28

11.