April 1, 2002
VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, April 1, 2002
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, Polito, Aleshire, Stone and Haskell. 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. Spectator present was Mr. Ross, Valley Roadrunner Newspaper.
CONSENT CALENDAR
1.
Upon motion by Polito, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held March 18, 2002
• Audit demand check numbers 88533 through 88711
• Treasurer’s Report for the Period ended February 28, 2002
• Board of Director’s request for reimbursement of expenses and per diem
compensation
ACTION AGENDA
2. Review of Tentative Order for National Pollutant Discharge Elimination System Permit for
Discharge of Hydrostatic Test Waters and Potable Water:
District Engineer Jewell provided information concerning the Regional Water Quality Control
Board’s (RWQCB) Tentative Order requiring permits for discharging potable water. The
RWQCB has the authority and responsibility to issue permits for discharges into the surface
waters and has determined that the discharge of test water and potable water can be a threat
to water quality objectives and, therefore, must be regulated.
Regulations are being developed that will address discharge of hydrostatic test waters and
potable water that could affect the District’s operations. Regulations of the Tentative Order
Valley Center Municipal Water District
Board of Directors’ Meeting
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for discharge of hydrostatic test waters and potable water are being established. A Draft
Order has been issued. A Technical Advisory Committee, which has representation from
water agencies including the District’s Director of Operations Chuck Dacus, has been working
with staff of the RWQCB to modify the regulations as set forth in the Draft Order.
Discharges of water by the District that will be required to comply with the new regulations
include new construction (flushing and disinfection of new facilities and draining existing
water mains), operation and maintenance (flushing of lines, discharge of pressure relief
valves, overflow of reservoir, pump bearing water, water sampling and automatic valve
operation), and unscheduled or emergency situations (line breaks, leaks and in a health
emergency the flushing and chlorinating of facilities).
It is required that Best Available Technology be applied to the removal of pollutants
commonly found in these discharges. The Draft Order indicates that discharges less than
100,000 gallons per day and 30 days or less are considered a low threat to water quality and
can be monitored by the discharger with a Pollution Prevention and Monitoring and Reporting
Plan (PPMRP). The Technical Advisory Committee will continue working to increase the
acceptable discharge levels that can be addressed within a PPMRP rather than the
requirement for a discharge permit. Others areas being addressed by the Technical Advisory
Committee include:
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Practical notification requirements
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Where dechlorination is required = nondetectable
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Larger volume before routine reporting required
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More clear definition of surface water, receiving water and storm drain
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Practical schedule for implementation 3. Endangered Species Act Reform – Support for HR 2829 (Walden) and HR 3705 (Pombo):
Legislation to effect reform of the Endangered Species Act (ESA) have been introduced into
the House of Representatives that will improve the science used in the ESA and critical
habitat decisions. They are HR 2829 (Walden) and HR 3705 (Pombo). Components of
HR 2829 include:
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Requiring that resource agencies “give greater weight” to data that has been peerreviewed;
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Prohibits new listings unless the species has been observed in the field;
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Subjects all agency actions to peer review by qualified individuals; and
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Requires greater information exchange during consultations. HR 3705 would:
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Allow much greater stakeholder involvement in data collection, public notice and agency actions;
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Create “Independent review boards” to govern every step of the ESA process.
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Upon motion by Aleshire, seconded by Stone and unanimously carried, staff was
directed to seek co-authorship and support from area Congressional Members for
HR 2829 and HR 3705.
4. Board Per Diem - Annual Review:
Per Board direction, the Board’s per diem is annually reviewed for consideration of
modification. Currently, the Board receives compensation at $100.00 per diem, which was
last adjusted in February of 1993. Per law, the Board may increase its per diem amount by
5% for each calendar year since the date of the last adjustment. In order to change the
existing per diem, a public hearing on this matter would need to be noticed and held.
Upon motion by Stone, seconded by Polito and unanimously carried, the Board elected
to retain its current per diem of $100.00.
5. Certificate of Achievement for Excellence in Financial Reporting, Fiscal Year 2000-2001:
General Manager Arant informed the Board of the District receiving the award for Certificate
of Achievement for Comprehensive Financial Reporting for the Fiscal Year ending June 30,
2001 for the 10
th
consecutive year. This award is recognition from the Government Finance Officers Association of the District’s Comprehensive Annual Financial Report for FY 2000-
2001 for conformance with the highest standards for preparation of state and local
government financial reports. Director of Finance Jarrell, Manager of Accounting Jeffrey and
the entire Finance Department staff were commended for this accomplishment.
6. Contract for Audit of the District’s Financial Records for FY 2001-02:
A proposal was received from Gilchrist, Steen, Stanfield & Newquist to perform the audit of
the District’s records for the year ending June 30, 2002. Fees included in the proposal are
$16,600 for the general audit, and $3,750 for the retirement audit. Cost for the general audit
increased $900 or 5.7% from last year, while the retirement audit decreased $1,750. This is
the last audit for the Retirement Plan which was terminated in FY 2001-02. Staff
recommended approval of the contract with Gilchrist, Steen, Stanfield & Newquist to complete
the audits for FY 2001-02 noting that their work is of high quality and of minimal disruption
to the District’s staff at a time of transition with the retirement of the Director of Finance.
Further, it would allow for continuity in closing out the final audit of the retirement plan as a
new auditor would have significant one-time costs.
Director Aleshire expressed that extreme caution needs to be taken when handling the
public’s money. The District depends on its audits to verify conformance with proper
accounting standards. Director Aleshire stated that it is prudent to periodically change
auditors and suggested that proposals from auditing firms be solicited for audit of the District’s
financial records for Fiscal Year 2002-2003.
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Upon motion by Aleshire, seconded by Polito and unanimously carried, the following
resolution was adopted approving award of contract to Gilchrist, Steen, Stanfield &
Newquist to perform the audit of the District’s financial records for Fiscal Year 2001-02,
and staff was directed to solicit proposals from auditing firms to perform the financial
audit for Fiscal Year 2002-2003:
RESOLUTION NO. 2002-13
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
ENTERING INTO AN AGREEMENT WITH GILCHRIST,
STEEN, STANFIELD & NEWQUIST TO AUDIT THE
FINANCIAL RECORDS OF THE DISTRICT FOR THE
YEAR ENDED JUNE 30, 2002
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
7. Review of Budget Policies:
Budget policies for the District were adopted in March of 2000 which govern the budgeting,
rate setting and reserve accounts. These policies are set forth in Section 115.8 of the
District’s Administrative Code and were presented for the Board’s review.
Four general reserve categories are Rate Stabilization, Operating, Restricted and Capital
which were reviewed as summarized below:
Restricted Reserve - Consists of the Agricultural Rebate, Replacement, Debt Service and
the Lower Moosa Canyon Replacement Reserves. The District currently has no debt
service, and, therefore, this reserve is not being funded. Replacement Reserve funds
are allocated for vehicle replacements and the Skyline Ranch Sewer Treatment Plant
(depreciation reserve funded by the property owners). The Lower Moosa Canyon
Replacement Reserve has been unfunded as funds have been used for construction
improvements to the existing plant and operating costs.
Operating Reserve - Created for use in emergencies with a limitation of one year’s
operating expenditures.
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Rate Stabilization Reserve - Includes Rate Stabilization, Readiness-to-Serve Charge
and Pumping Rate Stabilization Funds. These funds are used to level water rates,
pumping rates and the Readiness-to-Serve Charge from Metropolitan Water District of
Southern California. The Pumping Rate Stabilization funds were used to offset the
substantial increases in electrical rates in 2001 which allowed pumping rate increases
to be deferred.
A refund of $358,000 from SDG&E to be credited, if approved by the Board, to the Pumping Rate Stabilization fund along with the District’s pump zone
charges will replenish this fund
. The Pumping Rate Stabilization Fund will be discussed further during deliberations of the 2002-2003 budget. Status of the
Readiness-to-Serve Charge will be evaluated upon determination by the San Diego
County Water Authority on implementation of Metropolitan’s new water rate structure.
Staff recommended that the amounts in excess of policy limits in the Rate
Stabilization and Readiness-to-Serve Reserves be transferred to Capital
Improvements Reserves, if not needed to balance the 2002-2003 budget
. Capital Project Reserves include Continuing Projects, Capacity Charges, Capital
Improvements and Master Plan System Improvements Reserve funds, which were reviewed
as follows:
Continuing Projects - Appropriations for approved projects.
Capacity Charges - Fund to segregate capacity charges collected and accounting of
expenditures.
Capital Improvements - Is funded through a component of the District-wide availability
charge for capital improvement projects and funds said future projects.
Master Plan System Improvements - Funded by earnings not reserved for other purposes
for projects outlined in the Master Plan document. An updated Water System Master
Plan is being prepared in which it is anticipated that approximately $50 million in capital
improvement projects will be identified for the next 20 years.
Staff recommended that the refund of $571,500 from Metropolitan Water District of Southern California and
the anticipated refund from the San Diego County Water Authority of $600,000-
$700,000 be allocated to the Master Plan System Improvements Reserve to fund
capital construction.
Director Stone inquired as to the source of the refunds received from both Metropolitan and
the San Diego County Water Authority in which staff explained the funds result from an
overcharging of the commodity rate by its wholesale water suppliers. The philosophy of
rebating the refunds to the water ratepayers was discussed. Considering the substantial
capital improvement needs ($50 million) over the next 20 years, financial planners have
recommended it would be more prudent to earmark the funds for identified needs rather than
issue rebates and then raise rates for projects. A proposal to retain the services of a
Financial Consultant to prepare a Financing Master Plan is included in the budget for the
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Board’s consideration for FY 2002-2003. If bonds are to be issued in the future for District
capital improvement projects, it would be advantageous to have the refund money from
Metropolitan and the Water Authority in a reserve fund as it would be considered security for
the loan. Also to be considered will be implementation of the San Diego County Water
Authority’s new water rate structure, which includes the elimination of the readiness-to-serve
charge on agricultural sales.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the District’s
budget policies were reaffirmed and the following approved:
• If not required to balance the 2002-2003 budget, transfer amounts in excess of
policy limits in the Rate Stabilization Reserve and Readiness-to-Serve Reserve to
the Capital Improvements Reserve
• Allocate the $358,000 received from SDG&E to the Pumping Rate Stabilization
Reserve
• Allocate the $571,000 refund from the Metropolitan Water District of Southern
California to the Master Plan System Improvements Reserve
• Allocate the refund expected to be issued from the San Diego County Water
Authority in an amount estimated between $600,000-$700,000 to the Master Plan
System Improvements Reserve
GENERAL MANAGER’S AGENDA
8. Municipal Service Review:
The District is nearing completion of the Municipal Service Review questions which is a
component of the Sphere of Influence Study that has been undertaken for the City of
Escondido. Per State statute, prior to, or in conjunction with, establishing or updating an
agency’s sphere of influence, LAFCOs shall conduct a service review of municipal services
within geographic areas. The document was distributed to the Board for their review.
9. Bi-National Pipeline:
The Economic Study Group’s efforts are now largely concentrated on the San Diego County
Water Authority’s proposed Bi-National Pipeline project. Consultant services are being used
to develop a media program to educate the public on this proposed project.
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BOARD OF DIRECTORS’ AGENDA
10. San Diego County Water Authority - Imperial Irrigation District Proposed Water Transfer
Agreement:
Discussion ensued at the March 28
th
San Diego County Water Authority Board meeting concerning the quantification settlement agreement and the interim operating criteria of the
Colorado River if the SDCWA-IID water transfer agreement is not successful. The Authority’s
position is that, if the water transfer agreement is not executed, Southern California’s water
supply from the Colorado River will be reduced by 700,000 ac. ft. However, it is widely felt
such a water supply reduction will not be imposed due to improved conservation practices
and water development efforts of both Metropolitan and the Authority which can be
demonstrated to state and federal entities. All Colorado River water users could be affected
if quantification of the Imperial Irrigation District’s water usage is not completed.
Quantification of IID’s use of the Colorado River was pursued due to a ruling of the State
Water Resources Control Board that IID was not making reasonable and beneficial use of all
the water it was drawing from the Colorado River.
11. Urban Water Institute Conference:
Director Aleshire provided a summary of the Urban Water Institute’s Conference he attended
on March 21
st
and 22
nd
. Topics included: ~ Water supply assessments for developments with 500 or more residential units per
SB 221 and SB 610. A concern is that litigation could result from an agency’s water
supply assessment. Certifying that there is water availability will be challenged by
environmentalists, and a suit by the developer may result if certification of water
availability is denied. Costs for water supply assessment certification requested by a
developer can be recovered from the developer.
~ Mr. Gastelum of the Metropolitan Water District of Southern California acknowledged that
there is a concern regarding the use of misleading language to describe Propositions
being considered for adoption by the voters but action by Metropolitan was not offered.
~ Kathy Cole, Legislative Representative from Metropolitan, discussed the initiative
expected to be on the November 2002 ballot for $3.44 billion that would provide some
funding for CalFED and reclamation projects. The majority of the funds, however, would
be earmarked for environmental protection measures. A more active role by Metropolitan
in legislation affecting the water industry was encouraged.
~ State Senator Johannessen is working on a bill (SB 2070) that, if adopted, will provide
funding for water related projects, though it was felt that there are not enough provisions
for additional supply and storage projects.
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12. Deferral of Removal of MTBE in Gasoline:
MTBE, a chemical compound, was added to most of the gasoline sold in California in
response to a federal mandate to use “oxygenates” to promote cleaner fuel burning and less
pollution. However, because MTBE has been found to be polluting California’s water system,
removal of MTBE from gasoline was approved to be effective January 1, 2003. Governor
Davis has deferred MTBE elimination in gasoline until January 1, 2004 citing the substitution
of ethanol would raise gasoline prices.
The Board agreed that the water industry needs to become active in opposing the deferral of the elimination of MTBE in California’s
gasoline. This issue will be brought to ACWA’s attention.
ADJOURNMENT
13.
Upon motion by Polito, seconded by Aleshire and unanimously carried, the meeting was adjourned at 4:25 p.m.
ATTEST: ATTEST:
______________________________ _______________________________
Secretary President