VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, April 16, 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.
Board members present were: Directors Broomell, Polito, Aleshire, Stone and Haskell. Staff members present were: General Manager Arant, General Counsel deSousa, Director of Finance Jeffrey, District Engineer Grabbe, Director of Operations Hoyle, Board Secretary Stetson, Manager of Accounting Pugh, Project Manager Carrillo and IT Specialist Rivard. Spectator present was Ms. Friehauf of the San Diego County Water Authority.
APPROVAL OF AGENDA
Upon motion by Polito, seconded by Stone and unanimously carried, consideration of the District’s position on pending legislation (AB 503, AB 964, SB 1029 and SB 59) was added to the agenda per Government Code §54954.2(b)(2).
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 19, 2007
• Quitclaim of easement to Kensal Court, Inc. – that portion of the 20 foot easement of Document No. 127452, recorded July 16, 1965
• Audit demand check numbers 112744 through 112968 and wire disbursements for the period January 1, 2007 through March 31, 2007
• Treasurer’s Report and Financial Statement for the period ended February 28, 2007
• Board of Director’s request for per diem compensation and reimbursement of expenses
• Quarterly report of expense reimbursements per Government Code §53065.5
2. Presentation on the San Diego Integrated Regional Water Management Planning:
Dana Friehauf of the San Diego County Water Authority’s Water Resources Department provided a presentation on the Integrated Regional Water Management Planning (IRWM) activities in the San Diego region. She explained that the IRWM is a comprehensive effort to effectively coordinate water supply, water quality, and natural resources planning and projects to benefit the San Diego region. The genesis of the San Diego region’s IRWM Planning was the passage of Proposition 50 which approved grants for projects included in an IRWM Plan and that the Department of Water Resources update of the California Water Plan in 2005 included implementing IRWM planning to ensure reliable water supplies.
Ms. Friehauf stated that the Proposition 50 IRWM first funding cycle awarded $307 million to 16 regions primarily in Northern California. The majority of the funds available in the second funding cycle (approximately $64 million) is expected to be awarded for Southern California projects as there is a $25 million cap per region. The San Diego region should be awarded funds for its projects as many other regions in Southern California already were fully funded in the first funding cycle. Anticipated application date for the second funding cycle is August 1, 2007.
Proposition 84 passed by the voters in November 2006 provides $1 billion for IRWM Planning projects in which the funds will be allocated by region. The San Diego region has been designated as the Regional Water Quality Control Board’s Region 9 that also includes portions of Orange County and the Upper Santa Margarita area. Under Proposition 84, the Region 9 area will have $91 million available for projects.
A Regional Advisory Committee has been formed in which the current focus is completion of San Diego’s IRWM Plan, applying for Cycle 2 Proposition 50 funding and preparation of the Department of Water Resources Proposition 84 guidelines. Ms. Friehauf explained that the Regional Advisory Committee is comprised of diverse stakeholders representing water supply, water quality, natural resources/watersheds and other interested parties including the Farm Bureau. The Regional Advisory Committee stakeholders have and will continue to provide input on key issues in developing San Diego’s IRWM Plan and formulate a long-term structure for successful IRWM Planning.
The desired goals of the San Diego IRWM Plan over its planning horizon are to:
Optimize water supply reliability
Protect and enhance water quality
Provide stewardship of our natural resources
Coordinate and integrate water resource management
The planning schedule of the San Diego IRWM Plan is the release of the Plan’s draft for public review in June with the close of public comment period in July 2007. Applications for Proposition 50 funds will be in August 2007 and the draft guidelines for Proposition 84 funds released in September 2007. San Diego’s IRWM Plan will allow access to state funding for projects identified in the Plan.
3. Revisions to Administrative Code Article 190, Developer Project Requirements:
District Engineer Grabbe explained that Article 190 of the District’s Administrative Code provides requirements for the processing of developer projects. The proposed modifications include:
▪ Sewer Terminology – Replace the word sewer with “wastewater”
▪ Low Income Housing – Provides for modification of the Preliminary Design Report to identify if the project qualifies as a lower income housing development
▪ Performance Bond Requirement – Establishes bond requirements proposed of the applicant prior to issuing a Notice to Proceed
▪ Reimbursement Agreement Duration – Extends the term of the reimbursement agreement with project developers from ten to twenty years
▪ Miscellaneous modifications which include an increased number of copies of the Preliminary Design Report to be submitted, and change in terminology to “Warranty” Bond rather than “Performance” Bond
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2007-06
ORDINANCE OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING ADMINISTRATIVE CODE ARTICLE 190 TO
COMPLY WITH CURRENT PRACTICES AND TERMINOLOGY
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
4. Establishment of a Special Service Connection Charge for the Lackritz Wastewater Line Extension Project;
District Engineer Grabbe stated that Mr. Lackritz installed approximately 1,265 feet of gravity wastewater line extension in Mountain Meadow Road to serve his development which has a capacity requirement of 15 EDUs. The installed wastewater facilities also have capacity for the designated service area that has the potential of approximately 500 additional EDUs. District Engineer Grabbe noted that the District’s policy provides for the establishment of Special Service Connection Charges to reimburse developers for facilities they construct that benefit properties outside of their development.
Of the $451,000 total cost of the constructed wastewater facilities, $434,024 was confirmed for potential reimbursement to the developer by property owners within the designated service area that connect to the wastewater collection system within twenty years of the reimbursement agreement’s duration. Cost allocations to properties in the service area were developed based on a “Reach and Capacity” technique that proportions the costs based on the total EDUs served by each segment or reach of the line. Current land use designations were used to determine capacity requirements. A Special Service Connection Charge was developed for that portion of the service area served by each segment of the facility, as follows:
Area A $303/EDU
Area B $544/EDU
Area C $672/EDU
Area D $780/EDU
Area E $932/EDU
Notification letters were mailed to the property owners in the Lackritz reimbursement service area informing them of the proposed establishment of the special service connection charge.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the Special Service Connection Charges for properties within the service area of the Lackritz Wastewater Line Extension Project were approved as set forth above and as designated on the attached Service Area Map.
5. Amendment to the Contract with Dudek and Associates, Inc. for Construction Inspection Services:
In 2005, the District entered into an agreement with Dudek & Associates, Inc. to perform construction inspection services for the Couser Pump Station and Woods Valley Ranch Water Reclamation Facility projects. The contract amount was for $219,000 for the two projects.
Inspection services budgeted for the District’s Couser Pump Station capital improvement project were $56,600. To date, a total of $16,992 has been spent in inspection fees and it is anticipated that an additional $12,000 will be needed for completion of the project. As such, no additional funds for inspection services fees for the Couser Pump Station project are needed.
The Woods Valley Ranch Water Reclamation Facility (WVRWRF), which began in October 2005, had an original contract duration of 10 months and $162,400 budgeted for inspection services. Construction of the project has taken longer than anticipated and additional inspection charges are being incurred. The project’s developer, Newland Communities, deposited $137,600 to fund the additional inspection costs increasing the budget to $300,000. To date, $287,185 has been spent in inspection fees. The remaining balance in the inspection services budget should be sufficient to complete the work. Adoption of Resolution No. 2007-20 to amend the contract with Dudek & Associates for construction inspection services to approve an additional $137,600 for inspection services at the Woods Valley Ranch Water Reclamation Facility was recommended.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2007-20
RESOLUTION OF THE BOARD OF DIRECTORS OF
APPROVING AMENDMENT NO. 1 TO THE
DUDEK & ASSOCIATES CONTRACT FOR INSPECTION
SERVICES AT WOODS VALLEY RANCH WATER
RECLAMATION FACILITY AND COUSER PUMP STATION
6. Transfer of Funds from the Woods Valley Ranch Water Reclamation Facility Operating Reserve to Reimburse the Developer for Plant Operational Costs:
Operational costs for the Woods Valley Ranch Water Reclamation Facility are funded through: the District’s assessed sewer service fees paid by the residents of the development, sewer standby fees paid by Newland Communities on unoccupied lots in the development, and reclaimed water sales to the golf course. Newland Communities has requested reimbursement of $274,000 for their operational
expenses of the Woods Valley Ranch Interim Plant during the period of May 27, 2005 and November 30, 2005. Upon an analysis of the costs incurred by Newland Communities to operate the interim plant from May 27 through November 30, 2005, the following operational costs were recommended to be reimbursed:
Operations contract $81,000
Sludge hauling 8,000
Lab testing 2,000
Regulatory fees 10,000
Power costs 23,000
In addition, electrical power expenses funded by Newland Communities since November 2005 will be submitted to the District for reimbursement. Once the plant is operational and accepted by the District, which is expected by May 2007, Newland Communities will submit the paid invoices for the electrical costs to the District and request reimbursement. The electrical costs are projected to be $43,200. Adoption of Resolution No. 2007-21 was requested to approve the transfer of up to $167,000 from the Woods Valley Ranch Operations Reserve to the Woods Valley Ranch Project Development to reimburse Newland Communities for approved operating costs ($124,000) and electrical power expenses.
Upon motion by Polito, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2007-21
VALLEY CENTER MUNICIPAL WATER DISTRICT TO
TRANSFER FUNDS FROM THE WOODS VALLEY WATER
RECLAMATION FACILITY OPERATING RESERVE ACCOUNT
TO THE WOODS VALLEY RANCH WRF PROJECT ACCOUNT
FOR PREVIOUSLY PAID OPERATING COSTS
7. Acceleration of the Automated Meter Reading Project and Augmentation of the FY 2007-08 Budget:
Board approval to accelerate full implementation of the Automated Meter Reading (AMR) project by mid Fiscal Year 2009-10 and augment the FY 2007-08 budget to allocate an additional $769,000 to the AMR Project’s budget were requested.
At the current funding of the AMR project, full implementation would have been completed in seven fiscal years. The request to accelerate the project was based on:
~ Labor and Efficiency Savings - The full labor savings and efficiency benefits of the AMR program will be realized sooner. Due to the labor savings from the meters already converted, a retiring meter department worker will not be replaced. This savings in staff and benefit costs will offset the additional labor costs for temporary personnel to install the AMRs under an accelerated program as proposed.
~ Reduction in Unaccounted for Water Deliveries – Completing the change-out to AMRs should reduce unaccounted for water deliveries by an estimated ½ of 1%, or an increase of $247,000 in increased revenues over the 30-month term of the project.
~ Value of Fixed Prices on Meters and MXUs – Sensus Technologies has committed to a fixed price for meters and MXUs over a 30 month period beginning July 1, 2007. Assuming a 4% annual price increase, the savings is estimated at $522,000.
The net cost of the accelerated project beginning in Fiscal Year 2007-08 to mid Fiscal Year 2009-10 is $2,402,000. Applying the cumulative value of reduced water losses ($247,000) and the value of the fixed price on meters and MXUs ($522,000) results in a total net project cost of $1,633,000.
Upon motion by Aleshire, seconded by Stone and unanimously carried, an acceleration of the Automated Meter Reading project to be completed by mid Fiscal Year 2009-10 was approved, and staff was directed to seek augmentation of the Fiscal Year 2007-08 budget during the mid-term budget review for an additional $769,000 for the AMR project.
8. Funding Requests from the Association of California Water Agencies:
General Manager Arant informed the Board that ACWA has nearly completed the filming of the Phase 1 “California’s Water Series” which has 15 segments. The ACWA Board has authorized a fund raising effort to finance production of up to 10 additional segments. They are seeking to raise $500,000 to fund the Phase II water series. A contribution of $1,000 from the District was recommended.
An annual “ACWA Water Law and Policy Scholarship” is being established to recognize and honor ACWA’s Executive Director Steve Hall, who has been stricken with ALS and is retiring. The scholarship will recognize graduate students who are majoring in law, policy or public administration and have a focus or concentration in water resources. A contribution from the District of between $250 and $500 was recommended.
Upon motion by Aleshire, seconded by Stone and unanimously carried, contributions of $1,000 for Phase II of the ACWA California’s Water Series and $500.00 for the ACWA Water Law and Policy Scholarship were approved.
9. Annual Review of the District’s Investment Policy:
A review of the District’s investment policy by the Board is required annually per the District’s Administrative Code, and Government Code §53607 requires the delegation of investment authority by the Board to be reconfirmed annually.
Director of Finance Jeffrey reviewed the District’s investment policy which has 3 objectives, which are: 1) Safety, 2) Liquidity and 3) Yield. Currently, the District’s investments are in three portfolios of LAIF, Wachovia Securities and Contango Capital Investors. Also, there is a small investment in mutual funds. The investment policy also allows investment in U.S. Treasury Bonds, the San Diego County Investment Fund and a Joint Powers Authority. Director of Finance Jeffrey noted that investments are limited to five years.
The District’s Strategic Plan’s Performance Measurement Standard for return on investments seeks to meet or exceed a “twelve-month rolling average rate of return on one-year U.S. Treasury Bonds” weighted by book value each month. Director of Finance Jeffrey reported that in calendar year 2006, the District’s yield on investments was 4.15% compared to 2.88% the previous year. The Performance Measurement Standard benchmark of the 12-month rolling T-bond was 4.5%. The benchmark standard was missed by 0.35% primarily due to investments made in 2003 and 2004 when rate yields were lower. The District’s rate of return should improve next year as these investments mature. No changes in the District’s investment policy were recommended.
RESOLUTION NO. 2007-19
APPROVE THE STATEMENT OF INVESTMENT POLICY
AND TO RENEW THE DELEGATION OF INVESTMENT
AUTHORITY TO THE TREASURER OF THE DISTRICT
GENERAL MANAGER’S AGENDA
10. Review of Miscellaneous Information:
~ San Diego County Water Authority Board Meeting – Authorization to restart work on the All American Canal Lining Project was given following the court’s decision to lift the stay on the project. The Water Planning Committee’s goals and objectives for 2007 and 2008 were adopted which includes seawater desalination promotion and working to amend the Authority’s policy to facilitate the delivery of the desal. water in the aqueduct system.
11. Support of AB 1260 to Clarify Noticing and Protest Procedures in Compliance with Proposition 218:
AB 1260 (Caballero) has been introduced which, if adopted, will clarify the procedures for noticing and counting written protests, as well as establish a statutory time frame for legal challenges to water and wastewater rate increases, to be in compliance with Proposition 218 adopted by the voters. General Manager Arant clarified that AB 1260 is an ACWA sponsored bill that seeks to clarify some of the ambiguities created by Proposition 218. AB 1260 will be heard by the Assembly Local Government Committee on April 25th.
Upon motion by Aleshire, seconded by Stone and unanimously carried, a position of support for AB 1260 was approved.
12. Proposed Legislation and the District’s Position of Oppose or Support:
AB 503 (Swanson), as proposed, would require a local entity to provide employees with 8 hours written notice of the requirement to work overtime. A position of oppose for this bill was recommended as it would interfere with the need for flexibility in work schedules to accomplish critical needs and jeopardize maintaining reliable water and wastewater services.
AB 964 (Romero), if adopted, would prohibit deliberations by a majority of the members of a legislative body including deliberations that advance or clarify an issue, facilitate agreement, or advance ultimate resolution of an issue unless the data is included in the agenda package for public review. A position of oppose was recommended.
SB 1029 (Ducheny) will allow the State of California to adopt Federal Drinking Water Standards by reference that do not include maximum contaminant levels. As such, the time consuming and costly process to develop state standards could be avoided. A more stringent standard can be adopted by the State and SB 1029 prohibits the state from weakening a federal maximum contaminant level.
SB 59 (Cogdill), the Reliable Water Supply Bond Act of 2008, would provide approximately $4 billion for surface water storage and $1 billion for Delta conveyance enhancements. A position of support was recommended
Upon motion by Aleshire, seconded by Stone and unanimously carried, the positions of oppose of AB 503 (Swanson) and AB 964 (Romero) and support of SB 1029 (Ducheny) and SB 59 (Cogdill) were approved.
13. Notification to Interim Agricultural Water Program Customers:
A judge has issued an order that the Delta pumps near Tracy are to be shut down if the state cannot obtain the proper permits to kill fish, an action that could reduce water supplies to 25 million people from Livermore to Los Angeles. Department of Water Resources Director Lester Snow has asserted that the court’s filing underscores a long-term strategy to restore the Delta while ensuring future water supplies. The State has reasserted its claim that older agreements allow it to kill fish at the Banks Pumping Plant even without an official permit under state law. The court’s ruling provided a 60 day period, or until the end of May 2007, for the Department of Water Resources to secure permits to operate the pumps on the south end of the Sacramento-San Joaquin Delta.
The General Manager further reported that the snow pack in the Sierras is 50% below normal levels though there is sufficient water in storage to satisfy demands. If there is another dry year through February 2008, supply cutbacks may be imposed for agricultural deliveries. Metropolitan Water District has said that if the pumps supplying water to the State Water Project are not interrupted, they will be able to meet all their demands through early 2008. If the pumps are shut off, an interruption in agricultural deliveries of 30% will be imposed upon a 60 day notice.
The possibility of mailing an advisory to IAWP customers to notify them of the potential of supply cutbacks and review the IAWP program and its interruptible status, including the parameters to withdraw from the program, was recommended. A participant in the IAWP during the base year of a water supply cut back will be subject to cut backs even if they are no longer participants in the program. The advisory will also be mailed to the Farm Bureau for their distribution and newsletters.
The merits of also providing information to residential customers regarding the impact on water supplies should the pumps that supply water to the State Water Project be shut down was discussed. Since any cutbacks to residential customers is
not expected in the next year, such an advisory will be deferred until a later time when its impact can be better assessed and customers so informed.
GENERAL COUNSEL’S AGENDA
14. Report on the Wholesale Electricity Litigation:
General Counsel de Sousa reviewed that the Wholesale Electricity Antitrust cases will not be pursued further following the Court of Appeals decision to dismiss the case. General Counsel Cowett’s correspondence reported that the nine water district plantiffs in the electricity litigation recovered 75% of their estimated damages. The District received $1.7 million in settlement funds plus attorneys’ fees. All settlement proceeds must be spent on energy efficiency and/or reduction of pollution associated with the consumption of energy.
15. Resolution Approving Increase in Legal Fees From Best, Best & Krieger:
The Board had directed staff to annually place on the agenda consideration of an increase in legal services fees based on the Consumer Price Index change, with any change approved to become effective July 1st. The CPI for the San Diego area for the year ending December 31, 2006, increased 3%. A 3% increase in the legal fees is comparable to legal fees paid by other agencies.
RESOLUTION NO. 2007-08
ADOPTING AN AMENDMENT TO THE AGREEMENT
WITH BEST, BEST & KRIEGER, LLP, TO APPROVE
AN INCREASE IN THE FEES FOR LEGAL SERVICES
BOARD OF DIRECTORS’ AGENDA
16. ACWA Board of Directors’ Meeting:
Director Aleshire stated that he had participated in the ACWA Board members’ tour of the proposed Sites Reservoir located north of the Delta. This reservoir will augment the State Water Project’s surface storage capacity and reduce Northern California’s demands on the Sacramento River. Also viewed was a fish screen constructed at a cost of $76 million on the Sacramento River and a wetlands restoration project.
17. Ad Hoc Committee Meeting with the San Luis Rey M.W.D. Committee Members:
Director Stone reported that a meeting had recently been held of the Ad Hoc Committee members evaluating water and sewer service for the San Luis Rey area. Items discussed were the status of the San Luis Rey M.W.D.’s EIR, groundwater rights, and annexation issues. It is anticipated that by the fall of 2007, the San Luis Rey M.W.D.’s EIR will be certified and a determination made by LAFCO on the Municipal Service Review for water and sewer service to the area.
18. Upon motion by Aleshire, seconded by Stone and unanimously carried, the meeting was adjourned at 4:27 p.m.