June 17, 2002

Regular Board Meeting

Monday, June 17, 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 Operations Dacus, Acting Director of Finance Jeffrey, Water Facilities

Supervisor Stetson, Acting Water Systems Supervisor Bull, Manager of Human Resources Hale,

Information Systems Specialist Learue and Board Secretary Stetson. Spectator present was

Mr. Ross, Valley Roadrunner Newspaper.

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3. Fixed Charge Special Assessments for Fiscal Year 2002-2003:

Resolution No. 2002-25 setting the District’s fixed charge special assessments for Fiscal Year

2002-2003 for the Paradise Mountain annexation and Assessment District No. 96-1 was

presented for the Board’s consideration. The proposed assessments were explained by

Acting Director of Finance Jeffrey as summarized below:

Paradise Mountain Annexation Annual Assessment. Pursuant to annexation of 14.5 acres

on Paradise Mountain to the District in 1993, annexation charges due are paid through the

fixed charge assessment. In FY 2002-03, the charge is $4,827.80. One parcel (189-230-55)

is assessed this charge as the other four parcels have since resold and annexation charges

were paid in full. The annexation charges will be paid in full for this remaining parcel in 2007-

08.

Assessment District No. 96-1. Assessment is to meet the principal and interest obligations

in Fiscal Year 2002-03 pursuant to the Moosa Sewer Treatment Facility improvements for

properties within Assessment District No. 96-1 (Treasures at Castle Creek development). As

proposed, 203 parcels will be assessed $754.76. Annual assessment will be made against

properties within this assessment district until September 2, 2017 or until the bonded debt is

paid.

Delinquent and Unpaid Water Charges. Per the provisions of the Water Code, delinquent

and unpaid water and other charges may be collected through the property taxes of the

property using the water or service. Acting Director of Finance Jeffrey reported that there are

no delinquencies or unpaid water bills to be collected on the tax roll for 2002-2003, which is

directly attributed to the efforts of the District’s accounts receivable personnel.

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4. Allocation of Excess Funds in Improvement District No. 12 and Community Facilities

District #1:

Property taxes and water availability charges had been levied against the properties within

Improvement District No. 12 (U-12) and Community Facilities District No. 1 to meet their

respective debt service requirements. The bonded indebtedness for both U-12 and CFD

No. 1 have been paid in full. An annual assessment is collected from one parcel that had

annexed to U-12, which will continue through to FY 2007-08. Excess collections that remain

in the U-12 and CFD No. 1 funds are:

U-12 $41,304.44

CFD #1 2,275.15

Staff noted that capital improvement projects will be undertaken in the near future that directly

benefit the properties within U-12 and CFD No. 1 which include the pump replacement at

Paradise Mountain Pump Station and replacement of the Valley Center Road pipeline. As

such, it was recommended that the excess collections be transferred to the District’s General

Fund Capital Improvement Reserve to be used for the identified capital projects and that the

U-12 and CFD No. 1 funds be closed.

5. Amendment to the Administrative Code to Approve the 2002-03 Classification and

Compensation Plan and a Gift for Retiring Employees:

Amendments to Section 8.9(c) of the District’s Administrative Code, Salary Ranges, to

incorporate recommendations from the in-house salary survey and provisions of the

Memorandum of Understanding with employees (3.2% cost of living adjustment) were

presented for the Board’s consideration. New classifications include a Facilities Maintenance

Worker, GIS/Mapping Technician I, II & III and Landscape Maintenance Worker II & III.

A proposal that the District contribute toward a gift for retiring employees (minimum of

20 years of service and at least 55 years of age) at a cost not to exceed $500.00 was

presented for consideration. In addition, a clarification in Section 7.7 of the Administrative

Code, Retirement Dinner, to include that the District will pay for the dinners of parents and

grandchildren of a retiring employee was presented.

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6. San Diego County Water Authority’s Survey of Member Agencies’ Water Rates:

A statistical analysis prepared by staff of the San Diego County Water Authority’s survey of

its member agencies’ water rates was presented which is attached hereto as Exhibit A. Of

the 21 member agencies reporting, the District has the lowest domestic commodity rate and

the second lowest agricultural rate. The District’s monthly meter service charges provide a

diversification of revenue and fund 50% of fixed costs. It was concluded that the District’s

rates compare favorably with the other agencies surveyed including the commodity, meter

service and meter capacity charges.

7. Proposed Budget for Fiscal Year 2002-2003:

A presentation of the District’s operations, maintenance and capital budget for Fiscal Year

2002-2003 was given by Acting Director of Finance Jeffrey, as summarized below:

• Water sales of 39,000 acre feet have been budgeted. This is the average water sales

over the previous five years.

• No rate changes are included in the budget, however, the District’s rate structure may

be affected by Metropolitan’s and the San Diego County Water Authority’s revised

rate structures to be implemented January 1, 2003, as well as the District’s capital

financing plan.

• Installation of 170 new meters is anticipated.

• Interest income is estimated at a 4% yield (equivalent to $24 per acre foot).

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• Four new positions are being requested: Building & Facilities Worker,

Welder/Pipeline Technician, Wastewater Technician and Engineering Technician III.

• Creation of a separate Wastewater Division.

• The Project Manager position created in Fiscal Year 2001-2002 will be filled.

• The pumping rate reserve no longer has a deficit, however, SDG&E’s deferred electric

rates and the State’s electrical contracts may impact energy pumping rates in the near

future. In addition, there are indications that natural gas prices are escalating.

• Current pumping charge of $108.00 per acre foot has been budgeted. Reductions in

this charge will continue to be evaluated.

• Public opinion telephone survey - $22,500.

• Legal fees relating to the energy lawsuit (Dynegy) include a $20,000 increase.

• Budget for Economic Study Group costs increased from $20,000 to $50,000.

• Purchase of 4 new computers, 1 additional truck and replacement of 3 trucks.

(Replacement vehicles are funded by the District’s vehicle replacement reserve).

• Total new capital project requests are:

General Administration $260,000

Finance 165,500

Engineering:

Pipeline Replacement 1,432,000

PRV Replacement 190,000

GIS & SCADA 400,000

2,022,000

Field 812,400

TOTAL $3,259,900

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• General Administration capital projects include a new modular building ($225,000)

and corporate facility evaluation ($35,000).

• Finance Department capital projects are primarily for computer upgrades including

replacement of the HP server computer, computer network improvements and

software upgrades. The capital financing plan is budgeted at $40,000.

• Field Department capital projects include replacement of motors and pumps

(approximately $500,000); recoating of Burnt Mountain Reservoir ($106,200),

two generators ($55,600) and replacement of the backhoe ($68,000).

• Propose to maintain the monthly sewer service charge at the Moosa Treatment Plant

at $28.00/EDU. A reduction in the energy component of this charge by $3.70 (energy

costs at the plant have stabilized) will allow an increase of $3.70 to the operating

component to restore the operating emergency reserve.

• An increase in the Moosa Sewer Service Charge to $30.00/month/EDU to be effective

January 1, 2003, was proposed to begin funding the operating reserve. The Moosa

Treatment Plant’s operating reserve as of June 30, 2003, is projected to equal

5 months O&M expenses.

• Skyline Ranch Sewer Treatment Fund is fully funded by the Skyline Ranch Country

Club. Currently, the District is pursuing replacement of the Skyline Ranch treatment

facilities with the owner of Skyline Ranch. An option being evaluated is construction

of new upgraded facilities for tertiary treatment of the effluent that will permit reuse

of the water on the golf course. Costs associated with replacement of the treatment

facilities will be fully funded by the owners of the Skyline Ranch Country Club.

• Woods Valley Ranch Sewer Fund has been created with an operating budget as set

forth below. The hearing for the Woods Valley Sewer Service area special

assessment will be held on July 15, 2002. It is planned to collect the assessments

on the property tax bills of the properties within the designated Woods Valley Sewer

Service area.

Operating expenses $ 62,000

Operating reserve fund 56,000

Replacement reserve fund 50,000

TOTAL $168,000

Staff recommended adoption of Resolution No. 2002-29 adopting the operations and capital

budget for Fiscal Year 2002-03, and adoption of Ordinance No. 2002-03 approving an

authorized staffing level of 69 and the creation of a Wastewater Division within the Field

Department.

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In response to Director Aleshire’s inquiry as to a 12.3% increase in costs controlled by the

District, Acting Director of Finance Jeffrey explained that the District’s costs have been

impacted by increases in insurance coverage, especially workers’ compensation insurance,

and increased work loads implementing programs that had been deferred in previous years.

The District’s local share of the commodity rate has been maintained at $71.62 per acre foot.

Revenue received from new connections (meter service charge, capacity charge and water

sales) have enabled the District’s share of the commodity rate to remain stable at a time when

locally controlled costs have increased.

Director Stone asked for clarification regarding the restricted reserves of $234,202 consisting

of agricultural rebates received from Metropolitan and held for rebate to customers on

termination of the agricultural water rate. Staff explained that Metropolitan’s Interim

Agricultural Water Program providing a rebate to agricultural customers was implemented in

May 1994. Programming for District customers to receive the agricultural discount was

completed for billings in June of 1994. Participating agricultural customers receive the

rebate, and two months later the District receives a credit on its bill from Metropolitan. The

rebate funds received from Metropolitan for May 1994 ($234,202) have been reserved to fund

the rebate given to customers in the event of termination of the Program.

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8. Status Report for May 2002:

Water purchases through the end of May 2002 total 48,109 acre feet. It is anticipated that

by June 30

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

At the San Diego County Water Authority’s May 23

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June 27

11. A Closed Session was called by President Broomell at 3:47 p.m. pursuant to:

• Government Code §54956.9(b), Conference with Legal Counsel - Anticipated

Litigation

• Government Code §54957.6(a), Employee Performance Evaluation

Title of Position: General Manager

The Regular Board meeting was reconvened at 5:10 p.m., and the following action was

reported:

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