VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, Dec ember 15, 2003
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.
Board members present were: Directors Broomell, Polito and Stone. Directors Aleshire and Haskell were absent. Staff members present were: General Manager Arant, General Counsel Cowett, Director of Finance Jeffrey, Director of Operations Dacus, Project Engineer Grabbe, IT Specialist Learue and Board Secretary Stetson. Spectator present was Mr. Michael Zizzi, C.P.A. of Leaf & Cole, LLP.
1. Upon motion by Stone, seconded by Polito and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held December 1, 2003
• Concept approval of the Farmer water main extension project consisting of approximately 1,650 feet of 8-inch water main, one 6-inch fire hydrant, five 1-inch water services and other appurtenances
• Audit demand check numbers 96604 through 96913
• Board of Director’s request for expense reimbursement and per diem compensation
2. Comprehensive Annual Financial Report (CAFR) for 2002-03, Appropriations Limit Worksheet and Auditor’s Management Letter:
The District’s financial reports for the period ended June 30, 2003, including the Comprehensive Annual Financial Report (CAFR), Appropriations Limit Worksheet and Auditor’s Management Letter were presented and reviewed.
Director of Finance Jeffrey reviewed the Fiscal Year 2002-03 CAFR, as summarized below:
Meter sales continued to climb in FY 2002-03 with residential meters growing by 4.1%. The District’s total active meters increased in 2002-03 by 198 meters to a total of 7,841 active meters. Agricultural meters decreased by 35, but was offset by increases in domestic meters.
The ten top customers in water purchases received 17.17% of the District’s total water sales which were 42,071 acre feet for 2002-03. Water delivered to agricultural users represented 80% of the total water sold in the fiscal year.
General Fund net equity increased $2.5 million, of which $1.7 million was for increases in the fixed assets and remainder allocated to the operating reserve fund.
General Fund Reserves as of June 30, 2003, were:
◦ Total Rate Stabilization Reserves $4,219,696
◦ Operating Reserve 7,966,919
◦ Total Restricted Reserves 658,439
◦ Total Capital Projects Reserves 8,701,526
Strategic Plan Specific Goals and Performance Measurement Standards were reviewed, which are attached hereto as Exhibit “A”.
An appropriations limit worksheet in compliance with Article XIIIB of the California Constitution, which limits the annual increase in the property taxes public agencies can receive, shows that the District’s appropriations limit for Fiscal Year 2002-03 was $3,357,031. It was noted that the District receives only one-third the limit provided.
Mr. Michael Zizzi of the auditing firm Leaf & Cole LLP reviewed the Independent Auditor’s Report. Mr. Zizzi stated that the financial statements are the responsibility of the District and the auditor’s responsibility is to express an opinion on those financial statements. It was the auditor’s opinion that “the financial statements referred to above present fairly, in all material respects, the financial position of the Valley Center Municipal Water District at June 30, 2003, and the results of their operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America, as well as the accounting systems prescribed by the State controller’s Office and State Regulations governing Special Districts.”
Implementing the GASB 34 standards in the District’s financial reports resulted in a management discussion and analysis, restricted assets being limited to outside restrictions, new cash flow statement and financial statement formats and some changes in the footnotes. GASB 34 changed the presentation of the financial statements from a balance sheet to a statement of net assets.
The Statement of Cash Flows was reviewed which reported $15,489,849 in cash and cash equivalents and $548,399 in restricted cash and cash equivalents for a total of $16,038,248 in cash and cash equivalents at the end of Fiscal Year 2002-03. Of the net increase in cash and cash equivalents of $1,359,834 since the beginning of 2002-03, approximately $.5 million are the funds from sewer capacity charges collected that will be used to repay a portion of the debt for improvements at the Lower Moosa Canyon Water Reclamation Plant. The remaining $800,000 is the increase in the operating reserve to cover budgeted expenses.
The net accounts receivable, water and sewer, was $3,745,946, which is approximately $1.1 million less than last year. This is largely the result of a decrease (30%) in water consumption in May and June of 2003 compared to May and June of 2002. The decrease in accounts payable (-$870,000) can be attributed to decreased water purchases. A review of the Statement of Revenues and Expenses and Changes in Net Assets indicates that water sales went down $3.8 million. A comparison of operating revenues and operating expenses resulted in an operating revenue loss of $1,757,258 which indicates that the District’s rate structure is not covering operating costs. However, there are other nonoperating revenues such as property taxes and assessments, investment income and energy settlement funds.
Mr. Zizzi reviewed the Management Letter in which it is stated that no exceptions were noted as a result of the District’s procedures. Two comments were noted in the Management Letter which were:
1. Separation of Duties. Noted that customer service personnel have access to the cash payment as well as ability to adjust a customer’s account. Revised procedures have been adopted in conjunction with staff in which a report will be generated that identifies and numbers credits issued on customer accounts that will be reviewed by management.
2. Construction-In-Progress. A review of requests for progress payments for capital projects indicated that dates or the period covered for the request for payment were not always included. The District will require all requests for progress payments document the period covered by the request.
Director of Finance Jeffrey and Accountant Pugh were commended for their outstanding efforts in developing the District’s CAFR for Fiscal Year 2002-03. General Manager Arant noted that the CAFR will be reviewed by analysts for the District’s credit worthiness in the event that the District issues debt for capital improvements.
3. Request for Award of Contract for the PRV and Large Meter Upgrades Project:
Project Manager Williams addressed the Board explaining that bids were received for the PRV and Large Meter Upgrades project which consists of three construction sites. They are:
▪ Adams PRV – Project upgrade will remove the existing PRV located in a manhole and in an intersection and bring it aboveground and enclosed in a 6 ft. high block wall enclosure. This will eliminate the confined space maintenance and operational issues encountered at present.
▪ Champagne Village Meter Assembly (8-inch combination meter) – Located in the Lawrence Welk complex on the executive golf course. The meter assembly is currently below ground which is proposed to be moved and placed aboveground and enclosed in a 6 ft. high block wall enclosure.
▪ Circle R Meter and PRV (8-inch combination meter and PRV station). Currently located on Circle R Road housed in vaults adjacent to the District’s Moosa Treatment Plant. Facilities will be installed on the eastern edge of the property and the PRV and existing meter will be removed. Separate meters will be installed to serve the properties of the Circle R Homeowners’ Association and Castle Creek Townhome Association. The Associations will reimburse the District for the cost of the additional meter.
Adoption of Resolution No. 2003-42 awarding the contract for the PRV and Large Meter Upgrades project to Excel Commercial Constructors for their low bid of $282,300 was recommended.
Upon motion by Stone, seconded by Polito and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2003-42
RESOLUTION OF THE BOARD OF DIRECTORS
DISTRICT AWARDING CONTRACT FOR THE
PRV & LARGE METER UPGRADES PROJECT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito and Stone
ABSENT: Directors Aleshire and Haskell
4. Award of Contract for the
Pipeline Replacement Project:
Bids for the Charlan Road Pipeline Replacement Project were received on December 3rd. Project Manager Grabbe reported that the lowest bid was received
from Excel Commercial Constructors at $197,803. Award of bid to Excel Commercial Constructors was recommended.
Upon motion by Polito, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2003-43
PIPELINE REPLACEMENT PROJECT
ABSENT: Directors Aleshire and Haskell
5. Amendment to Classifications in the Engineering Services and
General Manager Arant explained that action on the request to amend the District’s Administrative Code to expand positions in the Engineering Services and GIS/Mapping divisions will be deferred to January pending completion of the job descriptions. Expansion of classifications in these divisions will be requested in recognition of the increased technical responsibilities for the affected positions and the growth in the organization and work load demands.
6. Approval of Purchase Order for Purchase of New Vehicles:
On December 2nd, bids were received for seven ½ ton extended cab trucks. Director of Operations Dacus reported that eleven bids were received with the lowest acceptable bid received from Lake Chevrolet at $20,573.79 per truck. Approval of Purchase Order No. 15786 to Lake Chevrolet for the purchase of the 7 new vehicles was recommended.
Upon motion by Polito, seconded by Stone and unanimously carried, Purchase Order No. 15786 to Lake Chevrolet for the sum of $144,016.50 for the purchase of seven ½ ton, full size extended cab trucks was approved.
GENERAL MANAGER’S AGENDA
7. Review of Miscellaneous Informational Items:
~ Economic Study Group. General Manager Arant reported that negotiations are ongoing regarding the governance issue at the San Diego County Water Authority. AB 1385 that was introduced would implement the SANDAG Governance model at the Authority. Under this provision, each item at the Authority would pass upon a dual standard; majority of the weighted vote, and majority of the popular vote. A tentative offer from the City of San Diego is being considered that would establish a voting procedure at the Authority requiring approval by obtaining 55% of the weighted vote and an affirmative vote from the City of San Diego and ten other member agencies. Also, it has been proposed that the Chair of the Authority would be rotated between the agencies of the North County, South County and the City of San Diego.
~ Recreational Development at Lake Turner. The Lease Agreement between the District and the Valley Center Parks & Recreation District for recreational development, operations and maintenance of Lake Turner is being reviewed by the Parks & Recreation Department. In response to questions that needed clarification, amended language was drafted and forwarded to them for consideration. Upon their approval, District legal counsel will review the agreement prior to final approval by the Board.
~ Notice of Retirement. General Manager Arant reported that a notice of retirement to be effective as of December 30, 2004, has been submitted by Mike Pumar, Project Manager. Upon a retirement of personnel in key positions, the District will endeavor to fill the position so that there is not an interim period with the position unfilled.
~ ACWA Restructuring. General Manager Arant reported he has been requested by the new President of ACWA to Chair the Communications Committee. He has served as Chair of the Local Government Committee and requested Board consideration of acceptance of appointment as Chair of the Communications Committee noting it would require a continued commitment as an ACWA Board member. The Board supported General Manager Arant’s appointment as Chair of the ACWA Communications Committee.
~ San Diego County Water Authority’s Regional Facilities Master Planning Process. The preferred alternative is desalination, but there remain issues to be resolved between Poseidon Resources and the Authority. In addition, environmental and regulatory issues will need to be resolved.
BOARD OF DIRECTORS’ AGENDA
8. 50th Anniversary:
Director Stone noted that on July 12, 2004, the District will be celebrating its 50th anniversary. He inquired as to plans for recognition of this anniversary. General Manager Arant responded that several ideas have been discussed including publishing and mailing a newsletter to highlight the history of the District and its impact on the community, media coverage, 50th year stickers or emblems for the District’s letterhead and service trucks, and water bottles with a label indicating 50 years of service. Director Polito suggested conducting an open house for the community to familiarize themselves with District operations. Proposals for the District’s 50th anniversary celebration will be presented for the Board’s consideration at a subsequent meeting.
9. Upon motion by Stone, seconded by Polito and unanimously carried, the meeting was adjourned at