VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, April 21, 2003
Time:
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 Vice President Polito at
ROLL CALL
Board members present were: Directors Polito, Aleshire, Stone and Haskell. Director Broomell arrived at 2:50 p.m. Staff members present were: General Manager Arant, General Counsel Cowett, District Engineer Jewell, Director of Operations Dacus, Director of Finance Jeffrey, Project Engineer Grabbe, Project Manager Pumar and Board Secretary Stetson. Spectators present were: Messrs. Meyer, Austin and Stewart, representatives of Woods Valley Ranch development, and Mr. Dave Ross, Valley Roadrunner Newspaper.
CONSENT CALENDAR
1. Upon motion by Aleshire, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held
April 7, 2003
• Audit demand check numbers 93572 through 93778
• Treasurer’s Report for the period ended
March 31, 2003
• Board of Director’s request for reimbursement of expenses and per diem compensation
• Quarterly disclosure of expense reimbursements per Government Code §53065.5
ACTION AGENDA
2. Valley Center and Cole Grade Roads Pipeline Replacement Project, Request for Budget Adjustment:
District Engineer Jewell reviewed that Board approval had been granted for the replacement of the District’s pipeline at and near the intersection of Valley Center and Cole Grade Roads due to its deteriorating condition and potential for additional pipeline breaks and property damage. Replacement had been originally scheduled to be completed in conjunction with the County’s road reconstruction project, but this project has been delayed with a current projected start date of late 2004.
Construction costs for the Valley Center/Cole Grade Roads Pipeline Replacement project are estimated at $570,583. This estimate had been prepared by an engineering consultant, R.W. Beck. Funds budgeted for this project are $400,000. The increase in the estimated construction cost can mainly be attributed to:
▪ Night time construction and paving requirements
▪ Special construction requirements to avoid contact with hazardous materials and a contingency in the event the handling and disposal of hazardous materials is required (leakage from the gas station’s tanks).
Benefits of completing the work at night were discussed which include minimal impact upon the residents of Valley Center as there may be traffic delays of 15 to 30 minutes. Such delays in the day time would cause a significant back-up of traffic considering the volume of traffic in the affected area. Project Manager Pumar explained that the excavation permit for this pipeline replacement project will include a traffic control plan which will be the responsibility of the contractor. Construction is expected to commence June 15th at a time when school is not in regular session and should be completed prior to the beginning of the 2003-04 school year.
Staff noted that the consultant’s construction cost estimate of $570,583 may be high, but there are many variables affecting this project which may increase contractors’ bids. Adoption of Resolution No. 2003-16 was requested to appropriate an additional $220,000 to the Valley Center and Cole Grade Roads Pipeline Replacement Project.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2003-16
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING THE 2002-2003 BUDGET BY APPROPRIA-
TING AN ADDITIONAL $220,000 TO THE
VALLEY
CENTER
ROAD/COLE GRADE ROAD PIPELINE REPLACEMENT
was adopted by the following vote, to wit:
AYES: Directors Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: Director Broomell
3. Authorization to Enter into a Joint Community Facilities Agreement with the Valley Center-Pauma Unified School District and Woods Valley LLC:
Developer of the Woods Valley Ranch project, NNP-Woods Valley LLC, has requested the Valley Center-Pauma Unified School District sponsor formation of a Community Facilities District (CFD) to finance the acquisition and/or construction of certain non-school facilities and school facilities necessary to serve the development (Woods Valley Ranch) within the proposed CFD and authorize the CFD to levy a special tax within the CFD and incur bonded indebtedness to finance such non-school facilities and school facilities. Non-school facilities include water and sewer facilities of the wastewater treatment plant, water line to be replaced in Woods Valley Road and the on-site water and sewer systems that will be dedicated to the District upon completion for ownership, operation and maintenance.
District approval of the proposed Joint Community Facilities Agreement is required by the school district to ensure that the water and sewer facilities will be properly designed, constructed and maintained. The agreement stipulates that the District is not directly or indirectly approving or responsible for the levy of special taxes nor responsible for the issuance of bonds or the payment of debt service on such bonds or responsible for the cost of creating the CFD or for its ongoing administration.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following Resolution, entitled:
RESOLUTION NO. 2003-17
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
FOR ENTERING INTO A JOINT COMMUNITY FACILITIES
AGREEMENT WITH VALLEY CENTER-PAUMA UNIFIED
SCHOOL DISTRICT AND NNP-WOODS VALLEY LLC
was adopted by the following vote, to wit:
AYES: Directors Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: Director Broomell
4. Approval for the Design of the PRV and Large Meter Upgrade:
Approval of Task Order No. 2 to the existing Agreement for Professional Services between the District and R.W. Beck for the preparation of engineering drawings and specifications for the PRV and Large Meter Upgrade project was requested. The project consists of upgrading the existing Adams pressure reducing valve and the Champagne Village and Circle “R” 8-inch diameter compound meters to current District standards. The proposed fee for service is not-to-exceed $56,684.
Upon motion by Aleshire, seconded by Stone and unanimously carried, Task Order No. 2 to the existing Agreement for Professional Services Between the District and R.W. Beck dated January 9, 2002 for the preparation of engineering drawings and specifications for the PRV and Large Meter Upgrade project was approved.
5. Support of Assembly Bill 1385 (Haynes) and Proposed Federal CALFED Reauthorization Legislation:
Assembly Bill 1385 (Haynes), sponsored by the Economic Study Group, sought to amend the law to provide that upon detachment from a county water authority, LAFCO would allocate facility capacity to the detaching lands based upon prior financial contribution and/or water use. In response to strong opposition from CAL-LAFCO, the detachment language was removed from the proposed bill. AB 1385 has been amended to implement the SANDAG governance model at the San Diego County Water Authority requiring a Board measure to pass by a dual standard of 55+1% of the all-in financial weighted vote and a majority of the agencies voting, with each agency casting one vote. AB 1385 will be heard in the Assembly Local Government Committee on Wednesday, May 7, 2003. The Board authorized support of Assembly Bill 1385.
General Manager Arant reported that Senator Feinstein will be introducing legislation to provide federal funding reauthorization for CALFED. According to Metropolitan, CALFED has been a valuable process in that it has made advancements in improving water quality and ecosystem restoration that will provide the opportunity for the transfer of more water from the Delta. The Association of California Water Agencies (ACWA) has asked its members to communicate a position of support for this legislation to their federal representatives.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the Board authorized support of Assembly Bill 1385 (Haynes) and the proposed legislation (Feinstein) for federal funding reauthorization for CALFED.
6. Review of the District’s Budget Policies:
The District’s budget policies, set forth in Article 115 of the Administrative Code, were presented for the Board’s review and consideration of modification. Director of Finance Jeffrey stated that the policies are in conformance with the Government Finance Officers’ Association’s budgeting practices. The seven policies are: Reserves, Fees and Charges, Debt, Use of One-time and Unpredictable Revenues, Balancing the Operating Budget, Revenue Diversification and Contingencies.
Four general categories of reserves were reviewed as summarized below:
• Rate Stabilization Reserves – used to level water rates, fixed wholesale charges and pumping rates.
• Operating Reserves – provides funds for emergencies with a limitation of one year’s operating budget.
• Restricted Reserves – includes the agricultural rebate reserve, replacement reserves for licensed vehicles and Skyline Ranch Sewer Treatment Plant and the Lower Moosa Canyon Replacement Reserve.
• Capital Reserves - provides funding for continuing budgeted capital projects, improvements funded from capacity charges and future capital additions and replacements.
Staff recommended adoption of Ordinance No. 2003-04 to modify the District’s budget policies governing reserve funds to:
▪ Increase the Rate Stabilization Fund reserves to include 50% of the newly implemented fixed charges which consist of the Capacity Reservation Charge from Metropolitan, and the Customer Service Charge and Emergency Storage Project Charge from the San Diego County Water Authority. This would increase the reserve’s maximum from $1.6 million to $2.4 million. In this manner, fluctuations in the water charges from Metropolitan and the SDCWA based on their new rate structures should be funded.
▪ Transfer funds in the Ready-to-Serve Reserve to the Rate Stabilization Fund Reserve.
▪ Establish an Energy Efficiency Reserve with the $556,000 received from the energy claims settlement.
▪ Clarify that the Pumping Rate Stabilization Reserve is limited to 50% of budgeted pump charge revenue.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2003-04
ORDINANCE OF THE VALLEY CENTER MUNICIPAL
WATER DISTRICT AMENDING THE ADMINISTRATIVE CODE
SECTION 115.8(a) TO PROVIDE FOR CHANGES IN BUDGET POLICIES
was adopted by the following vote, to wit:
AYES: Directors Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: Director Broomell
7. Overview of the Proposed 2003-2004 Budget:
General Manager Arant reported that the District’s budget for Fiscal Year 2003-2004 is being prepared and will be presented to the Board in May. An outline of proposed new programs and capital projects to be reviewed at this time with the Board will continue to be evaluated and may be modified prior to the budget presentation. Director of Finance Jeffrey presented an outline of the proposed budget as follows:
Revenues:
~ Water sales of 42,500 ac. ft. are projected.
~ No rate changes in the budget. Metropolitan and the SDCWA are proposing increases effective January 1, 2004, that will be passed through to the District’s customers per policy.
~ Financing Plan’s financial model will be completed in FY 2003-04 and will be presented for the Board’s review. Rate restructuring or a funding mechanism for capital projects may be considered.
~ Installation of 399 new meters is anticipated which includes 161 fire meter services.
~ Interest income is projected at $624,000 (average 2.6%), which is an equivalent to $15 per ac. ft.
Personnel:
~ Two new positions requested; Water Systems Technician for the SCADA program, and an Engineering Technician to assist with capital projects. Filling the Water Systems Technician position would be contingent upon approval of the SCADA capital project.
~ A cost of living adjustment of 4% is included. Negotiations for a new MOU are in the process.
Energy:
~ Increases in electrical rates are expected as well as an increase in natural gas prices. No change in the District’s pump zone charges will be recommended. $100 per ac. ft. has been budgeted (12.5¢ per kW for electricity and 91¢ per therm for natural gas).
Other Operating Items:
~ $46,500 budgeted to complete the Vulnerability Assessment by June 30, 2004, as required by law. And, $14,000 included for a temporary employee to assist in this process.
~ Budgeted costs for the Economic Study Group are at $80,000 (up from $50,000 the previous year).
~ Replacement of five service trucks.
Capital Projects:
Capital project funding requests total $7,082,700. It was reiterated that some of the capital requests may be deferred to future years.
General - Capital
Corporate Facility Expansion (completion of new Board $200,000
Room and remodeling of existing modular to offices)
Finance – Capital
Network Security 25,000
Computer Network Improvements 25,000
Engineering - Capital
Cole Grade Pipeline Replacement 550,000
Electronic Document Management 75,000
Nelson Way Pipeline Replacement 645,000
PRV and Large Meter Upgrades – Adams 380,000
Hillcrest Drive Main Replacement 75,000
Charlan Road Pipeline Replacement 75,000
Geographical Information System 240,000
Rodriguez Road Pipeline Replacement 585,000
Lilac Road Pipeline Replacement 575,000
V.C. Road, East Main Replacement – Design 200,000
Meadows #2 Reservoir 1,000,000
Couser Way Pipeline Replacement 100,000
SCADA System Improvements 2003 1,400,000
Couser Pump Station - Design 75,000
Merry Ferry PRV Upgrade 90,000
Unspecified Pipeline Replacement 250,000
Valley Center Pump Station Valve Upgrade 100,000
Field – Capital
Valley Center Pump Station Gas Engine Replacement 330,000
Rainbow Pump & Motor Replacement 65,000
Electric Panel Replacement – McNally 35,000
Roof Replacement – Betsworth & V.C. Pump Station 30,000
Ladder Safety Systems 7,000
Staff was directed to review the capital projects outlined above and, if a project should be deferred for consideration to a future fiscal year budget, eliminate the project from the proposed FY 2003-2004 budget and prioritize the remaining capital projects.
Moosa Sewer:
An increase in the monthly sewer service charge of $2.00 to be effective January 2, 2003, had not been initiated. It is proposed to increase the sewer service charge by $3.00 on July 1st with an additional $3.00 charge effective January 1, 2004, which will resume funding of the Moosa Sewer Fund Replacement Reserve. The total monthly sewer service charge as of January 1, 2004, would be $34.00/EDU.
Increase the Septic Tank Effluent Pump (STEP) maintenance charge by inflation or by $1.00 for a total STEP charge of $30.00 per month.
Skyline Sewer:
The Skyline Ranch sewer plant is self-supporting. Because of an anticipated cash balance carryover, rates are expected to decrease from $33.55 to $33.15.
Woods Valley Ranch Sewer:
Prior year revenues were allocated to reserves as no homes have yet been built. Revenues for the Woods Valley Ranch Sewer budget are expected to be collected by a fixed charge special assessment on the properties in the development. The budget includes funding for a replacement reserve and an operating reserve.
Discussion ensued regarding the requirements for construction of a wastewater treatment plant to serve the Woods Valley Ranch properties once flows to an interim facility reach 5,000 gpd. Once sewer flows reach 5,000 gpd, no additional connections to the sewer system will be allowed until the permanent treatment plant is operating. The potential of constructing sewer collection lines and reclaimed water lines in conjunction with the county’s Valley Center Road improvement project was also discussed as several proposed developments near Woods Valley will be pursuing sewer service.
The Proposed Fiscal Year 2003-2004 budget will be presented at the May 19th Board meeting with further review and discussion, if needed, scheduled for the June 2 and June 16 Board meetings. Additional meetings to review the budget can be scheduled if necessary for adoption prior to June 30, 2003.
8. Review of Metropolitan’s and the San Diego County Water Authority’s New Water Rate Structures and Potential Impact on District’s Rates:
General Manager Arant reviewed that Metropolitan and the San Diego County Water Authority’s wholesale water rates as revised and effective January 1, 2003, are a combination of a commodity and fixed rate structure. The District’s wholesale water suppliers’ rate structures and their impact on the District’s retail rates were reviewed as follows:
▪ Water rates from the District’s wholesale suppliers prior to January 1, 2003, totaled $550.70/ac. ft. for M&I and $397.50/ac. ft. for Agricultural IAWP customers as shown on the attached Exhibit “A”. Fixed costs are 4.3% (M&I) and 5.9% (Ag.) of the total wholesale charges.
▪ Beginning January 1, 2003, with implementation of the new rate structures by the District’s water wholesale suppliers, their costs total $524.46/ac. ft. for M&I and $374.93 for Ag. Including a water loss factor of 6%, the wholesale water costs are $557.94/ac. ft. (M&I) and $398.86 (Ag.) as shown on the attached Exhibit “B”. Fixed costs are 11.7% (M&I) and 6.9% (ag.) of the total wholesale charges.
▪ The District’s local costs (operating and maintenance) have been maintained at $71.62/ac. ft.
Director of Finance Jeffrey stated that there is a need for a larger safety factor in calculating water rates as fixed charges from the District’s suppliers are calculated based on variable revenues. Further, the District has paid for water loss through its local water rate and has absorbed $12.83/ac. ft. in rate increases since 1996, resulting in a decrease in local revenues. The District’s budgets have been balanced using reserve funds, but offset by water sales in excess of budget projections.
The following recommendations were presented by staff:
● With fixed charges accounting for 7% to 12% of total water costs, it is essential that the District recover all water purchases through wholesale rate pass-throughs, including a factor for water loss.
● There will be a need to dedicate reliable revenues to fund infrastructure replacement projects as specified in the Master Plan and any debt service requirements.
● The wholesale component of current water rates is less than 1% below that charged by our suppliers. This could be mitigated in FY 2003-2004 with a rate increase of .32¢/HCF on the ag. rate and 1.67¢/HCF on the M&I rate. An increase in the rates could be implemented in January of 2004 when increases in the wholesale water rates are expected from both Metropolitan and the San Diego County Water Authority.
● Index the District’s water rate of $71.62/ac. ft. for inflation.
● Retain the District’s water availability charge of $10.00/ac. to be earmarked for capital replacement projects and repayment of existing debt service.
General Manager Arant noted that at the water availability charge hearing scheduled for June 2nd, the Board will consider approving continuance of the $10.00/ac. District-wide availability charge in which the funds will be used for capital projects, debt service and other purposes. Recommendations as set forth above will be included in the proposed Fiscal Year 2003-2004 budget.
CLOSED SESSION
9. A Closed Session was called by President Broomell at 2:37 p.m. pursuant to:
·
Government Code §54956.9(a), Conference with Legal Counsel - Existing Litigation.
Name of Case: Sweetwater Authority, et al. v. Dynegy, Inc., et al.
San Diego Superior Court Case GIC 760743
·
Government Code §54956.9(a), Conference with Legal Counsel - Existing Litigation.
Name of Case: Rincon del Diablo Municipal Water District, et al. vs. San Diego County Water Authority, et al.
San Diego County Superior Court Case No. GIC798230
·
Government Code §54956.9(a), Conference with Legal Counsel - Existing Litigation.
Name of Case: Cougar Pass Coalition v. John Braman, et al.
San Diego County Superior Court Case No. GIN028464
·
Government Code §54957.6(a), Conference with Labor Negotiations
Agency Representatives:
Gary
T. Arant, General Manager
William
J. Jeffrey, Director of Finance
The Regular Board meeting was reconvened at 5:00 p.m. No action was reported.
ADJOURNMENT
10. Upon motion by Aleshire, seconded by Haskell and unanimously carried, the meeting was adjourned at
ATTEST: ATTEST:
______________________________ ______________________________
Secretary President