VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, March 15, 2004
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 De Sousa, Director of Finance Jeffrey, Director of Operations Dacus, District Engineer Jewell, IT Specialist Learue and Board Secretary Stetson. Additional staff members present were: Pumar, Williams, Grabbe, Gootee, Castaing, Jones, Hoyle, Tilley, Baker, Bush, Pugh, Rivard and Shough. Spectator present was Mr. Dave 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 1, 2004
• Audit demand check numbers 97920 through 98116
• Treasurer’s Report and Financial Statements for the period ended January 31, 2004
ACTION AGENDA
2. Review of Process Evaluation Results:
An evaluation of several important activities or processes to determine if there may be a more cost effective method to accomplish the task(s) while maintaining a high degree of responsiveness and customer service was undertaken. The tasks or functions selected for evaluation were:
New Meter Application Process
Meter Reading – Bi-monthly
Employee Recruitment, Interviewing and Pre-employment Screening
Automated Cash Receipt Processing
Meter Service Installations
Capital Project Design Process
Customer Service Scheduling
The evaluation results were reviewed and recommendations or conclusions presented as follows:
New Meter Application Process – Team leaders were Pat Jewell and Bill Jeffrey with team members consisting of Chris Gootee, Cristi Bush, Jim Pugh and Eric Rivard. Following their extensive review of the processes to establish a new meter service, the following recommendations were proposed:
• Eliminate the requirement that a property that does not front on the water main have a Temporary Service Agreement recorded against the property. This agreement had established that if a water main is constructed where the meter service can be installed in the permanent location, that the property owner agrees to pay for the meter relocation, and therefore would replace many spaghetti lines for remote meters. However, the agreement has not been uniformly enforced as developers installing a new line have been required to relocate remote meters and the district has relocated water meters at no cost to the customer with a District installed line to treat customers equitably. In place of the Temporary Service Agreement, an Offsite Meter Relocation Agreement was proposed that would limit the customer’s responsibility to reconnecting the private system to the new meter location in the future. This proposed agreement will be incorporated into the new meter electronic application process and subsequent owners will be so notified.
• Eliminate the Proof of Ownership requirement as part of the application process for a new meter service for subdivisions and lots that front on the water line easements.
• Expand Large Meter Approval, which currently requires approval by the District Engineer of a meter that is 1-1/2” and larger, to include the supervisor level for such approval. The approval requirement by the District Engineer had been implemented as there had been large meters requested on mains that could not provide adequate pressure during peak periods. Service locations of larger meters can be determined to be adequate at the supervisor level with questionable ones further analyzed by the District Engineer.
• Notices of Low Pressure are required to be recorded against the property when the calculated pressure is below 25 psi on any part of the property. Because property evaluations and thus pressure calculations can change, it was proposed to require the Notice of Low Pressure when the pressure is below 25 psi at the meter rather than at any point of the property. Notices of Low and High Pressures will be expedited once the new electronic meter application process is developed.
Meter Reading – BiMonthly - Team leaders were Chuck Dacus and Bill Jeffrey with team members consisting of Bob Jones, Debbie Tilley and Chris Castaing. Following review of initiating a bi-monthly meter reading and billing for all or a portion of the District’s metered accounts rather than on a monthly rotation, it was recommended that monthly meter reading and billing be retained but that the issue be re-examined in 5 years. The team had concluded that because of cash flow and potential revenue loss considerations, large agricultural meters would be maintained on a monthly read and billing cycle. Cost savings were identified if domestic meters were shifting to bi-monthly reading which were: $9,500 in annual labor costs, $2,500 per year for billing processing, and $7,500 for postage and bill printing. However, changing to bi-monthly billing would likely result in higher delinquency and uncollected bill rates, increased complexity having some meters billed monthly and some bi-monthly and that meter services such as detection of leaks (meter and on customer side) and stuck meters could be undetected for an extended period of time compared to when meters are serviced monthly. Due to these aforementioned potential negative financial and operational impacts, maintaining a monthly meter reading schedule was recommended.
Employee Recruitment, Interviewing and Pre-Employment Screening - Team leader was Irene Frantz with a team member consisting of Fran Shough. Procedures for employee recruitment were reviewed; including, the posting and advertisement requirements, review of applications, interview process, and the pre-employment screening. Recommendations forthcoming from a review of the processes were to expend more time initially in evaluating the specific characteristics, skills and experiences desired in a prospective employee for an open position and to maintain a 2 year eligibility list for future openings from among the candidates ranked high but not selected for hire which will maximize the benefit from the investment in the recruitment process. Further, specific and time certain schedules for completion of the review and selection of prospective candidates for interviews will be established and adhered to.
Automated Cash Receipt Processing - Team leader was Bill Jeffrey with team members consisting of Debbie Tilley, Barbara Baker and Eric Rivard. This team evaluated alternative methods and technologies to automate the processing of cash to reduce labor involved in the current manual process. At present, labor costs to enter cash (41 minutes per day) and opening and reviewing payments (38 minutes per day) total $973 per month. The current process for entering cash has a 99.98% accuracy rate. Two potential automated processes, a wand and an OCR machine, were reviewed along with the use of a lock box to process cash receipts.
With a computer wand, bar codes are scanned rather than keying in account numbers which would save $251 per month in labor costs and increase accuracy. Payback for the cost of the equipment ($2,000) would be in 8 months. However, many payments (approximately 25%) are received without the bill stub to scan such as with multiple bills and one payment or those issued from a bill paying service.
An OCR machine would scan all items (stub and check) and encode the checks in a batch process. Benefits with the use of an OCR machine are savings in labor and bank charges ($720 monthly) and increased accuracy, but the initial cost of $25,000 plus an annual maintenance fee of $4,000 results in a payback of 5-1/2 years which is approximately the life of the OCR machine.
A lock box for the processing of cash receipts would result in an increased cost of approximately $732 per month as well as a delay in posting and reduced customer service.
From the review of automating cash receipt processing, it was recommended that automation of this process is not warranted at this time considering the minimal time currently spent on the processing of cash and high accuracy rate. Reconsideration of the wand option could be undertaken in the future when work load levels warrant.
Meter Service Installation Process - Team leader was Chuck Dacus with team members consisting of Bob Jones and Greg Hoyle. A comparison of costs for private contractors to install meter services and alternative methods and technologies for meter installations were analyzed. Bids for meter installation costs were solicited from several construction companies, but only one responded. The bid received showed a significant price advantage for District customers by having the District complete the meter installations. Cost comparisons were:
Construction District’s Average
Company Bid Installation Cost
Standard 1” install on short side $6,407.40 $2,066.80
Standard 1” install on long side $8,547.00 $2,631.00
Bids from the construction company do not include a District inspection fee or labor/material for meters and backflow devices to be assembled and installed at the angle meter stop. In addition, most construction companies include a rock clause which could substantially increase charges.
The use of boring machines for service installations as an alternative to an open trench cut method was evaluated. Boring costs exceed the cost of open cut trench installation as the cost ranged from $3,000 to $4,000 per day, or assuming two service installations in one day, a cost of $1,500 to $2,000 per service.
It was recommended that the District continue to install new meter services due to the significant price advantage compared to having it done by the private sector and the scheduling convenience for the District customers. In addition, the open cut trench method would be continued though, under certain situations such as a service across a newly paved or heavily traveled roadway, boring may be arranged.
Capital Project Design Process - Team leader was Pat Jewell with team members consisting of Wally Grabbe, Dennis Williams and Mike Pumar. A re-examination of the design process for capital projects to compare using outside consultants to in-house design was undertaken. Currently, the majority of engineering design is done by outside engineering firms. A review of the consultants’ design costs for 4 recent projects compared to estimated in-house design expenses revealed a potential savings with in-house design of over $100,000.
It is felt that with an expanded and accelerated capital improvement program for an extended period of time, such as the improvement projects identified in the Water Master Plan Update, expanding in-house project design would provide an overall savings in engineering design. An evaluation of in-house design and outside consultant design services will continue.
Customer Service Scheduling - Team leaders were Bill Jeffrey and Chuck Dacus with team members consisting of Bob Jones and Debbie Tilley. Methods for scheduling in-field customer service were examined. The current process schedules and dispatches customer service requests depending on the nature and urgency of the request. Emergencies, such as a lack of water, leaks and water quality issues, have the highest priority and the nearest available person is dispatched. Customer service requests that are less urgent, such as a request to test water pressure, are dispatched to the customer service worker nearest the customer and they respond directly or when other customer service tasks bring them closer to the area. Calls are also handled by the swing shift operator or duty person or, at a minimum; the customer’s call is addressed the next day.
The team concluded that the scheduling of customer service requests is very efficient. However, a change will be implemented to provide after-hours duty operators with access to the customer service tracking software to include calls received after hours. Also, in the future, the use of an electronic dispatch and a satellite-based vehicle tracking system will be investigated.
The Board expressed their thanks to the staff members who participated in the process evaluations and noted that the review revealed that cost effective and sound business practices are in place while preserving a high level of customer service. Process evaluations will continue as areas are identified for further review.
3. Annual Review of the District’s Investment Policy:
Per the District’s investment policy procedures and the Government Code, the Board of Directors shall, annually, review the District’s investment policy, which is set forth in Section 50.3 of the District’s Administrative Code. Further, Government Code §53607 requires the delegation of investment authority by the Board to be confirmed annually. The Board has delegated the authority to invest and reinvest District funds to the Treasurer of the District, William Jeffrey.
Director of Finance Jeffrey stated that the District’s investment policy was reviewed and there are, at this time, no recommendations for change. Adoption of Resolution No. 2004-09 was requested to approve the District’s Statement of Investment Policy without modification and to reaffirm the authority delegated to the Treasurer to invest and reinvest District funds.
Director Aleshire suggested that a subcommittee be formed to review and oversee District investments. He noted that the authority for the investment of surplus District funds rests primarily with the Board of Directors and that more Board involvement in the investment and reinvestment of funds, which has been delegated to the Treasurer, would be prudent. Director Aleshire stated he would like to be more informed regarding District investments and its financial statements which could be accomplished through the formation of a Finance subcommittee. The District’s Treasurer’s Report for the period ended January 31st was reviewed. All investments of District funds are per the Board adopted investment policy and guidelines. These investments include funds in the Local Agency Investment Fund, Wachovia Securities and with Western National Trust Company. Investments made by these firms are reviewed to ensure compliance with the District’s investment policy. President Broomell expressed that formation of a subcommittee could be onerous and it was suggested that whenever there is a question on the District’s financial statements that the matter could be reviewed with staff.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2004-09
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT TO
APPROVE THE STATEMENT OF INVESTMENT POLICY
AND TO RENEW THE DELEGATION OF INVESTMENT
AUTHORITY TO THE TREASURER OF THE DISTRICT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
4. Modifications to 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 modification. A change in the Pumping Rate Stabilization Reserve was recommended to establish that the reserves can be used for replacement of pump facilities with Board approval, but such use cannot reduce the reserve level below 25% of budgeted pump charge revenue. Also, a modification of the section on the Operating Reserve was recommended to reflect the adopted Strategic Plan’s Performance Measurement Standard that operating reserves shall be maintained at six months operations and maintenance budget rather than one year’s O&M.
Director Aleshire requested that the reserve limits be clarified to be a percent of the annual revenue or sales; i.e. that use of the Pumping Rate Stabilization Reserve for pump facilities would not reduce the reserve below 25% of the “annual” budgeted pump charge revenue.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following ordinance, as amended, entitled:
ORDINANCE NO. 2004-02
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 Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
5. Resolution Establishing Date of Public Hearing to Consider Assessment of Water Availability Charge for Fiscal Year 2004-2005:
Resolution No. 2004-08 was presented for the Board’s consideration to set June 7, 2004, at 2:00 p.m. as the date and time of the public hearing for the proposed water availability charge for Fiscal Year 2004-2005. Continuation of the District-wide water availability charge levied since FY 1995-1996 of $10.00 per acre with a $10.00 per parcel minimum was proposed. Proceeds from the $10.00 per acre water availability charge are expected to be used as follows:
Revenue Debt Service $ 86,977
Ongoing Capital Requirements 502,023
Total Availability Charge $589,000
A Notice of the Public Hearing on the proposed District-wide water availability charge will be published in the Valley Roadrunner Newspaper for two successive weeks prior to the hearing and property owners who changed ownership since the last availability charge was fixed will be mailed a written notice.
Director of Finance Jeffrey reported that a public hearing will also be conducted at the June 7th Board meeting on the assessment of the Woods Valley Sewer Service Standby Fee and Service Charge. A Notice of the Public Hearing for the Woods Valley Ranch Sewer Standby Fee or Service Charge will be published in the newspaper.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2004-08
RESOLUTION OF THE BOARD OF DIRECTORS OF VALLEY
CENTER MUNICIPAL WATER DISTRICT SETTING
FORTH
A
SCHEDULE OF WATER AVAILABILITY CHARGES PROPOSED
TO BE ESTABLISHED FOR ALL PROPERTY WITHIN THE
DISTRICT FOR 2004-2005 FIXING THE TIME AND PLACE OF
HEARING AND GIVING NOTICE OF HEARING
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
GENERAL MANAGER’S AGENDA
6. Review of Miscellaneous Informational Items:
Draft Agreement with San Pasqual Band of Indians – A draft agreement was prepared by General Counsel between the District and San Pasqual Band of Indians regarding water supply to its property located outside of the District’s boundaries. The agreement provides that as long as the Band negotiates in good faith concerning a conveyance agreement, the District will provide interim water service per the terms of the agreement. A surcharge for 2003-04 of $124.35 per acre foot is proposed and the Band’s obligation to pay the District’s legal expenses for negotiating a Conveyance Agreement will be discussed.
ERAF Shift – A letter was forwarded to several State Senators and Assembly Members to convey the District’s position of opposing an additional shift of the District’s property tax revenue due to the State’s budget deficit. The proposed ERAF shift would result in an additional $200,000 loss of property tax for the District.
Governance Issue at the San Diego County Water Authority – Approval of a change in the voting structure at the San Diego County Water Authority is in question. The ESG’s members’ support of labor has become an issue as all ESG members voted against the agreement stipulating that the SDCWA would enter into project labor agreements for the Emergency Storage Project, which had became a component of the agreement for funding for the lining of the All American Canal. The City of San Diego delegates voted to not support a governance change at the Water Authority. This matter will continue to be pursued both at the San Diego County Water Authority and through Legislative action.
Cal-PERS Rate – In response to the letters mailed to Cal-PERS concerning a request for consideration of either reducing or restructuring the District’s PERS rate, which will increase effective July 1, 2004 from 24.4% to 36.2% of payroll, an actuary from Cal-PERS called and offered to extend the amortization period for the District’s unfunded liability for the prior service purchases over a 30-year period. This would decrease the District’s PERS rate to approximately 26% of payroll. This proposal will be analyzed further for its interest costs.
CLOSED SESSION
7. A Closed Session was called by President Broomell at 3:59 p.m. pursuant to:
▪ Government Code §54956.9(a), Conference with Legal Counsel – Existing Litigation
Name of Case: David West v. Valley Center Municipal Water District, et al.
Case No. GIC 821769
RECONVENE
8. The regular Board meeting was reconvened at 4:05 p.m. and the following action was reported:
The Board unanimously denied the claim for damages by the
County
of
Sa
n Diego
pursuant to the litigation David West v. Valley Center Municipal Water District, et. al. (Case No. GIC 821769).
9. Jesmond Dene Pipeline:
The Board was informed that an agreement has been reached with the contractor of the Jesmond Dene Pipeline Replacement Project to excavate a section of the pipeline where rocks were found.
ADJOURNMENT
10. Upon motion by Aleshire, seconded by Polito and unanimously carried, the meeting was adjourned at
4:14 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary