VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, August 6, 2007
Time: 2:00 P.M.
Place: Board Room
29300 Valley Center Road
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.
ROLL CALL
Board members present were: Directors Broomell, Polito, Aleshire, Stone and Haskell. Staff members present were: General Manager Arant, General Counsel Akins, Director of Finance Jeffrey, District Engineer Grabbe, Director of Operations Hoyle, Board Secretary Stetson, Project Manager Williams, Pumps and Motors Supervisor Stetson and IT Specialist Rivard. Spectator present was Mr. David Ross, Roadrunner Newspaper.
CONSENT CALENDAR
Director Aleshire referred to the Treasurer’s Report for June 30, 2007, noting that the investment portfolio has not met the District’s Performance Measurement Standard for return on investments of “Greater than the 12-month rolling average return on U.S. treasury bonds”. The District average yield is at 4.837% with the 12-month rolling T-bond at 4.960%. Director Aleshire stated that the District’s investment portfolio has been below the earnings of LAIF and treasury notes and that the investments managed by Contango have reduced the District’s yield. Director of Finance Jeffrey explained that Contango has selected some long-term investments to counter the risk of declining interest rates. Staff clarified that when funds with Contango mature, the funds are rolled into the LAIF in an effort to maintain a balanced portfolio between LAIF, U.S. Treasuries and funds invested with Contango. Per Director Aleshire’s recommendation, staff was directed to survey comparable agencies to obtain data on their investment strategy and yield performance.
1. Upon motion by Aleshire, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held July 16, 2007
• Concept approval of the Blueberry Hill waterline extension project consisting of approximately 500 linear feet of 8-inch diameter water distribution pipeline and required appurtenances
• Report of developers’ constructed facilities accepted in Fiscal Year 2006-07
• Board of Director’s request for per diem compensation and reimbursement of expenses
• Audit demand check numbers 114381 through 114623
• Treasurer’s Report and Financial Statements for the period ended June 30, 2007
ACTION AGENDA
2.
Concept Approval of the Sea Bright Line Extension Project:
Concept approval of the Sea Bright line extension project and authorization to enter into a District Facilities Agreement for construction cost participations for the District’s participation in the upsizing of a proposed 8-inch diameter pipeline to 12-inch diameter and owner participation in the proposed replacement of an 18-inch diameter pipeline were requested.
Project Manager Williams stated that the proposed Sea Bright development consists of 24.62 acres to be subdivided into nine residential lots. The property is traversed by approximately 1,300 linear feet of a District 18-inch diameter waterline which has been identified in the District’s Water Master Plan to be replaced (Rodriguez Road pipeline replacement project - Priority Code “A”). The Rodriguez Road pipeline replacement project has been phased to allow the portion located within the Sea Bright development to be bid separately. The development’s proponent and the District desire to locate the pipeline within the development’s roadways rather than lot-line easements. As such, because the development can be designed so that the existing 18-inch pipeline is not impacted and it could be served by an 8-inch line, the developer’s participation in the proposed 18-inch diameter pipeline replacement project was proposed to be the cost of the additional 18-inch line required (approximately 250 linear feet) within the proposed development and all costs associated with the design, inspection and construction management of the pipeline replacement project. Funding for construction of this replacement project had previously been approved by the Board.
The proposed Sea Bright development also includes the installation of approximately 503 linear feet of 8-inch diameter pipe within Rodriguez Road. District participation in the upsizing of the proposed 8-inch pipeline to a 12-inch diameter pipeline to provide system redundancy and improve service to the area was recommended. The district’s funding responsibility for participating in the upsizing of the line would be the difference between the engineer’s estimate for installation of the 12-inch and 8-inch diameter pipelines. Funding for the upsizing of the pipeline would be from the District’s Unscheduled Pipeline Replacement Project account.
Staff recommended the Board grant concept approval of the Sea Bright line extension project and approve the construction cost participations.
Upon motion by Aleshire, seconded by Stone and unanimously carried, concept approval of the Sea Bright line extension project was granted and staff was authorized to enter into a District Facilities Agreement for the design and construction of the proposed water facilities pursuant to the development project including the provisions for district participation in the upsizing of the proposed 8-inch waterline and the proponent’s participation in the District’s Rodriguez Road 18-inch pipeline replacement project.
3. Update on the Valley Center Road Pipeline Relocation Project and Review of Shutdown Procedures:
An update on the Valley Center Road pipeline relocation project was provided by Project Manager Williams. He reviewed that the District’s pipeline relocation project extends within Valley Center Road from Ridge Ranch Road to Cole Grade Road. The pipeline project was bid as a line item to the County’s Valley Center Road realignment project resulting in a total contract amount of $4,843,957 for the waterline replacement. The District entered into a reimbursement agreement with the County to fund $4,200,000 of these improvements, with the County funding the balance. The pipeline relocation project consists of: 18,437 linear feet of pipe, 42 fire hydrants, 42 air vacuum/release assemblies, 12 main line connections, and miscellaneous appurtenances and facility relocations. At present, approximately 35% of the pipeline has been installed and $1.87 million has been paid.
Shutdown procedures pursuant to the Valley Center Road pipeline relocation project were outlined. The contractor requests shutdowns as needed for the project, but are scheduled at the District’s convenience considering staff availability, system demands and other planned activities. Shutdowns are only allowed Tuesday through Thursday and requests for a shutdown must be submitted by the contractor a minimum of 4 days in advance. To ensure that a pipeline shutdown goes smoothly with minimal interruption to District customers, the contractor provides a shutdown schedule and must have needed parts on site, equipment available and the tie-in exposed. In-house, work orders are generated and circulated to the various departments for notification and action such as identifying valves and impacted accounts.
4. Review of Metropolitan Water District’s Interim Agricultural Water Program Supply Reduction Plan:
Metropolitan Water District (MWD) has notified its member agencies (San Diego County Water Authority) that there will likely be a 30% cutback in water supplies for participants in the Interim Agricultural Water Program (IAWP) beginning in January 2008. The San Diego County Water Authority has requested that each of its member agencies that participate in the IAWP prepare a supply reduction plan which will be compiled in an overall regional plan to be submitted to MWD.
For the supply reduction, the base measurement period will likely be Fiscal Year 2003-04 which will be advantageous as during that year, the maximum allowed under the IAWP was delivered, which is 100,500 ac. ft. Utilizing FY 2003-04 as the base year will provide the highest allocation. This allocation may then be used to calculate each IAWP customer’s monthly water usage allocation based on a percentage reduction of consumption in 2006-07. MWD has determined that in order for a participant in the IAWP to not be subject to a supply reduction, the participant must have withdrawn from the Program as of December 31, 2006 or one year prior to the start of a new reduction program. The penalty rate from MWD for usage over an allocation will be two times the bundled Tier 2 treated M&I rate or $1,226/ac. ft.
The District’s draft IAWP Water Supply Reduction Implementation Plan was presented for the Board’s comments, which includes an outline of the anticipated methods to be implemented by the IAWP participants to achieve the reduction in water demands as well as the methodologies for administering the reduction program and monitoring and verifying usage reduction. General Manager Arant explained that once MWD and the San Diego County Water Authority determine the method and basis for allocation, each IAWP customer will be given their respective monthly water usage allocations which is expected to be provided at least two months prior to the start of the reduction period. The District’s monthly bills will reflect the allocation for the month and the usage over and under the monthly allocation. Usage credits representing consumption under a monthly allocation can be rolled forward to offset over-usage in successive months. Credits accumulated in the first six months of the reduction program can be used in the second six month period, but cannot be transferred to a program in a second year per MWD’s policy. Water usage over a monthly allocation will be billed at the penalty rate imposed by MWD.
Staff recommended that to allow a transitional period for IAWP customers, penalty charges for over-usage in the first two months of implementation of the reduction program will be suspended. However, if the over-usage is not fully offset by under-usage in the third month, the water consumed exceeding the customer’s allocation for the first three months will be billed at the penalty rate. To establish an incentive for customers to reduce water usage and meet their allocations, it was proposed that penalties collected for usage above an allocation shall not be refundable. If an agency does not meet its water usage reduction level, its allocation under the IAWP in future years will be reduced. However, because MWD will assess penalties based on an agency exceeding its allocation over each of the 6 month periods of the program, the penalties collected monthly by the District for over-usage may exceed the penalty imposed by MWD. As such, the Board directed staff to eliminate reference in the District’s IAWP Water Supply Reduction Implementation Plan pertaining to retention or refund of penalties in order to further evaluate this matter. A provision to group accounts under the same ownership was recommended to report over or under usage against the group’s total allocation.
The District’s IAWP Water Supply Reduction Implementation Plan amended to eliminate reference to a policy pertaining to retaining or refunding penalty funds collected will be submitted to the San Diego County Water Authority that will be included in the overall regional plan to be submitted to Metropolitan Water District.
5. Water Loss Report for Calendar Year 2006:
The District’s Strategic Plan contains a performance measurement standard for unknown water loss of 5% or less per calendar year. During 2006, the unaccounted water loss was 3.2% or 1,469 ac. feet that has a value of $630,796. In calendar year 2005, the unknown water loss had been 5.8%. The average unaccounted for water loss for the last five fiscal years is at 4.7%. The reduction in water loss during 2006 was attributed to less construction activity and an active meter exchange program of large meters. In addition, exchanging meters as part of the conversion program to automatic meter reading will contribute toward maintaining low unaccounted for water losses.
6. Investment Advisor Fees:
In response to the Board’s request, information on the District’s investment advisor fees was presented. Contango Capital Advisors, Inc., through an investment management agreement with California Bank & Trust, invests and sells assets for the District per the guidelines of the District’s investment policy. The investment advisor fees paid to Contango Capital Advisors, Inc. is 0.25% of the value of the investment. Fees have averaged $20,924 per year over the last three fiscal years. Also, a $7.50 fee is charged for each staff-directed transaction of investments held by Wachovia Securities. The District’s investment funds are diversified with approximately one-third invested though the investment management agreement (Contango), one-third in the Local Agency Investment Fund (LAIF), and one-third with Wachovia Securities.
GENERAL MANAGER’S AGENDA
7. Review of Miscellaneous Information Items:
General Manager Arant reported that at the July 26th San Diego County Water Authority Board of Directors’ meeting, the San Diego Integrated Regional Water Management Plan was adopted and application for Proposition 50 grant funds was authorized. Also, the Memorandum of Understanding with employees for Fiscal Years 2007-08 through 2009-2010 was approved.
A letter from the San Diego Desal Partners will be mailed to entities in the San Diego region which addresses the importance of desalination to the area to improve water supply reliability and water quality. Their support of the proposed Carlsbad-Poseidon Resources desalination plant at the permit hearings of the State Lands Commission (October 30th) and the California Coastal Commission (November 14-16) is requested.
BOARD OF DIRECTORS’ AGENDA
8. ACWA-JPIA Executive Committee Meeting:
Director Aleshire reported that the ACWA-JPIA Executive Committee adopted a revised expense reimbursement policy incorporating the change his committee had recommended to no longer allow the payment of expenses incurred by directors’ spouses and guests at ACWA/JPIA functions. Previous action had disallowed the payment for alcohol beverages.
ACWA/JPIA Chair Wes Bannister, who is not supportive of the revised expense reimbursement policy, took unilateral action to cancel the JPIA reception for Board of Directors held at the ACWA biannual conferences. A special meeting of the ACWA/JPIA Executive Committee will be held next week to discuss reinstatement of the ACWA conferences’ JPIA Board of Directors’ reception.
CLOSED SESSION
9. A Closed Session was called by President Broomell at 4:17 p.m. pursuant to:
● Government Code §54956.8, Real Property Transaction, Conference with Negotiator
Property: 11580 Betsworth Road, Valley Center
Agency Negotiator: Gary T. Arant, General Manager
Negotiating Party: WorldWater & Solar Technologies
Under Negotiation: Terms of Lease
RECONVENE
10. The regular Board meeting was reconvened at 4:50 p.m. No action was reported.
ADJOURNMENT
11. Upon motion by Aleshire, seconded by Polito and unanimously carried, the meeting was adjourned at 4:51 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary