VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, December 17, 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 Cowett, District Engineer Grabbe, Director of Finance Jeffrey, Director of Operations Hoyle, Manager of Accounting Pugh, Board Secretary Stetson, and IT Specialist Learue. Spectators present were: Mr. and Mrs. Roland Clark, Mr. Dennis Vories, Mr. Dale Meredith, Ms. Mona Hall and Mr. David Ross, Roadrunner Newspaper.
Mr. and Mrs. Roland Clark of 15680 Rim of the Valley addressed the Board. Mr. Clark noted that he had requested additional allocation under the IAWP 30% supply reduction plan as in 2003 approximately 80% of his 5.2 acre grove burned which he replanted and now requires more water for the maturing trees than provided under the cut back program’s 2006-07 base year. Mr. Clark stated that his appeals for additional water allocation were denied as there is no additional water for reallocation at this time. HHHe asked that the status of the supply reduction plan and possible reallocation of unused agricultural water be provided monthly at a Board meeting.
Mr. and Mrs. Clark requested consideration regarding the first 26 HCF for mixed domestic-agricultural accounts participating in the IAWP that is billed at the M&I rate. Exclusion of the first 26 HCF from the agricultural usage used to determine a grower’s monthly allocation was requested. Mr. Clark added that including the first 26 HCF of full price domestic usage in a small grove owner’s agricultural water usage has a significant impact.
Director of Finance Jeffrey explained that Metropolitan Water District has deemed 26 HCF per month to be domestic use for agricultural customers with a residence. The District’s supply reduction plan with the 30% cutback has not reduced any mixed agricultural-domestic customers below the 26 HCF per month to recognize the domestic usage.
The District’s IAWP Supply Reduction Implementation Plan regarding allocation methodology with respect to the first 26 HCF domestic use for ag-domestic customers will be evaluated and presented at a future Board meeting for further consideration.
1. Upon motion by Polito, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meetings held November 19 and December 3, 2007
• Purchase Order No. 17191 in the amount of $111,544.91 to Rancho Ford for the purchase of four trucks as approved in the 2006-2008 budget
• Purchase Order No. 17193 in the amount of $61,258.53 to Hidden Valley Pump for the purchase of three replacement pumps for Old Country Club as approved in the 2006-2008 budget
• Audit demands check numbers 116091 through 116264
• Treasurer’s Report and Financial Statements for the period ended October 31, 2007
• Board of Director’s request for per diem compensation and reimbursement of expenses
2. Approval of a Reimbursement Agreement Special Service Connection Charge for the Saiki Water Line Extension Project:
Approval of a Special Service Connection Charge (SSCC) pursuant to the reimbursement agreement for the Saiki water line extension project was requested. Project Manager Kilwein reviewed that concept approval of the Saiki line extension project had been granted in July of 2003. The facility improvements consist of an 8-inch water pipeline from the connection at Lilac Road, along Via Piedra for approximately 1,900 feet. A reimbursement agreement for this project had been approved. Said reimbursement policy provides for the establishment of Special Service Connection Charges to reimburse developers (proponents of the project) for the facilities constructed that benefit properties outside of their development.
A total cost of reimbursable facility improvements was confirmed at $571,203. Cost allocations to properties in the service area were determined based on a “Reach and Capacity” technique that proportions the costs based on the total equivalent dwelling units (EDUs) served by each segment or “reach” of the line. A Special Service Connection Charge calculated for that portion of the service area served by each segment of the facility (proportionate benefit to property), that is subject to a final accounting of costs, is as follows:
Area A $ 366/EDU
Area B $12,268/EDU
Area C $23,521/EDU
Letters were mailed to property owners in the Saiki Line Extension designated service area notifying them of the proposed Special Service Connection Charge. Said charge is imposed only if the property owner installs a new meter on the line extension. Properties that have existing meters with private lines in Via Piedra are not impacted by the establishment of a reimbursement agreement SSCC, and their water meters were relocated to the new line. The Special Service Connection Charge would be in effect for 20 years and collected by the District prior to the property owner connecting to the system to be refunded to the developer in accordance with the reimbursement agreement.
Upon an inquiry from Ms. Hall, staff explained that her property (APN 185-20-019) will not be assessed the Special Service Connection Charge for the Saiki Line Extension Project unless the meter on Lilac Road serving her property is relocated to the Saiki water line. Mr. Vories of 29142 Via Piedra stated that the subject Saiki line extension project caused great inconvenience to the residents in the area as a result of digging up the private road, interruption of service and the duration of the project. He noted that at this time funds are due by the project’s proponent to Joe’s Paving. He voiced that reimbursement agreements for facility improvements, and therefore the subsequent establishment of a Special Service Connection Charge, should be addressed at the outset of the project to better inform affected property owners.
Upon motion by Polito, seconded by Stone and unanimously carried, the Special Service Connection Charges for properties within the service area of the Saiki Water Line Extension Project were approved as set forth above and as designated on the attached Saiki Reimbursement Exhibit Project Map.
3. Review of the 2005-06 Comprehensive Annual Financial Report (CAFR):
The District’s financial reports for the period ended June 30, 2007, were presented for the Board’s review, which include the Comprehensive Annual Financial Report (CAFR), Independent Auditor’s Report and Appropriations Limit Worksheet. The CAFR consists of three parts: the Introduction discussing activities of the District during FY 2006-07, the Financial Section which contains financial statements and management’s discussion and analysis, and the Statistical Section which provides a financial history of the District. Accounting Manager Pugh provided the following summaries:
• In FY 2006-07 there was a 1.3% growth in meters in which there were 124 new meters, of which 91% were domestic (a growth of 1.5% in residential meters). As a result, as of June 30, 2007, there were 9,745 active meters of which 912 are fire system meters. In FY 2006-07, there were 89 new wastewater (EDU) connections; 57 at the Lower Moosa Canyon Wastewater Plant, and 32 at the Woods Valley Water Reclamation Plant.
• Total water sales for the fiscal year were 48,085 acre feet. Of these water sales, 79% was to agricultural accounts. Water sales increased 15.3% from the previous year, which is 11.1% above the previous five year average. Rainfall was 7.5 inches compared to 13.5 inches last year. Water sales projections for FY 2007-08 are 40,678 ac. ft. and 35,128 ac. ft. for FY 2008-09.
• Strategic Plan Specific Goals and their status were reviewed. They include GIS integration (conversion to ESRI format completed), SCADA improvements (contract for construction at 14 sites was awarded), Lake Turner Solar Power Project (Power Purchase Agreement has been executed), and the Carlsbad Sea Water Desalination Project (by the end of 2006-07, permits from the State Lands Commission and the California Coastal Commission are being pursued).
• The ten Performance Measurement Standards were met with the exception of: the Operating Reserve (goal for operating reserve is equal to six months O&M expenses), which had approximately 3.7 months operating and maintenance expenses, and the Return on Investments which during FY 2006-07 was 4.837% or 0.1457% under the goal of the rolling average for U.S. Treasuries (4.960%). The Operating Reserve’s funds were reduced upon allocation toward capital projects with the plan to replenish this reserve upon issuance of debt which has now been deferred. Funding of this reserve to meet the goal or a modification of the measurement standard will be considered during the FY 2008-09 budget deliberations. The goal for Return on Investments has been met in September 2007.
• The General Fund Equity as of June 30, 2007, was reviewed. Net assets increased $3.4 million and fixed assets increased $5.0 million. Reserves decreased $1.6 million which includes an increase in the Operating Reserve of $2.9 million and a decrease in the Capital Reserves of $4.7 million. Reserve funds total $15.3 million.
• At the Lower Moosa Canyon Water Reclamation Plant, revenues increased 4.8% (almost $52,000) over the previous year. This increase is due to the service charge increase adopted and additional connections. Revenue from the Woods Valley Ranch Treatment Plant increased $115,802 as a result of increases in capital contributions, reclaimed water revenue and investment income.
Mr. Michael Zizzi of the auditing firm Leaf & Cole, LLP, completed the audit of the District’s financial condition as of June 30, 2007, and the results of operations for Fiscal Year 2006-07. Mr. Zizzi reviewed the Independent Auditor’s Report stating that the financial statements are the responsibility of the District and that the auditor’s responsibility is to express an opinion on the financial statements. The Report expresses that in the auditor’s opinion, the District’s financial statements present fairly the financial position of the District at June 30, 2007, and the results of its operations for the year then ended in conformity with generally accepted accounting principles.
The Statement of Cash Flows for the Year Ended June 30, 2007, shows that cash and cash equivalents ere $6.55 million. There was a net decrease in cash and cash equivalents of $132,579 from the beginning of FY 2006-07. This is largely attributable to the net cash used by capital and related financing activities amounting to $6.88 million. Net cash provided by operating activities was $2.33 million.
The appropriations limit worksheet in compliance with Article XIIIB of the California Constitution establishes a limit on how much tax revenue can be received reflects the District’s appropriations limit from property taxes as of June 30, 2007, at $4.1 million.
An auditor’s Management Letter was not submitted to the Board of Directors as there were no issues as a result of the audit to be addressed.
The District’s Comprehensive Annual Financial Report, appropriations limit worksheet, and Independent Auditor’s Report for Fiscal Year 2006-07 were received.
4. IAWP Water Supply Reduction Program – Guidelines and Agreement for Meter Account Groups for Lease Properties:
The District’s Interim Agricultural Water Program (IAWP) Supply Reduction Implementation Plan to be effective January 1, 2008 has the provision for properties that are under the same ownership to group accounts and therefore their water allocations are grouped on a master allocation account. Per Board direction, staff developed guidelines and an agreement form to provide for the grouping of meter accounts that are leasehold properties for the Board’s consideration.
The “Meter Account Group 2008 Guidelines” and “Authorization for Transfer of Water Allocation to a Meter Account Group & Waiver of Future Claims – Farm Management Lease Properties” form provide the procedures and authorization to effect the grouping of accounts for lease properties. Execution of the Authorization form provides assurance that the property owner who has leased to a grove management firm is aware that his/her property’s water allocation may be reallocated to another property and that there may be affects on the ownership property. To be eligible for the grouping of the lease properties, the owner of the property is required to execute the Authorization for Transfer form along with providing verification that the owner signing the document has also signed the lease agreement and that the lease of the property is through 2008.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the Meter Account Group 2008 Guidelines and “Authorization for Transfer of Water Allocation to a Meter Account Group & Waiver of Future Claims – Farm Management Lease Properties”, which are attached hereto as Exhibit “B”, were approved for the processing of meter account groups for leasehold properties.
5. Reappointment of General Manager to Fill Expiring Term for District Representative on the San Diego County Water Authority Board of Directors:
General Manager Gary Arant’s term of office as the District’s Representative on the San Diego County Water Authority’s Board of Directors will expire on January 13, 2008. Adoption of Resolution No. 2007-46 to reappoint or appoint the District’s Representative to the San Diego County Water Authority’s Board to fill the term expiring January 13, 2014, was requested.
Upon motion by Aleshire, seconded by Haskell and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2007-46
RESOLUTION OF THE BOARD OF DIRECTORS OF THE
VALLEY CENTER MUNICIPAL WATER DISTRICT
CONSENTING TO AND APPROVING THE APPOINTMENT
OF GARY ARANT AS THE REPRESENTATIVE OF
VALLEY CENTER MUNICIPAL WATER DISTRICT ON THE BOARD
OF DIRECTORS OF THE SAN DIEGO COUNTY WATER AUTHORITY
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
6. Discussion of the District’s Growth and Development Policies During a Water Shortage Period:
General Manager Arant addressed issues associated with growth and development policies considering the current and projected water supply conditions. At present, participants in the Interim Agricultural Water Program are required to reduce water usage by 30%, residential and commercial customers have been asked to conserve their water consumption by 10%, and the message that mandatory rationing may be required in the future has been communicated.
There has been a lot of discussion and inquiries concerning the continued sale of new meters at a time when the water supply to our region is tenuous. Conditional language has been added to the Project Facility Availability (PFA) and Project Facility Commitment (PFC) letters issued by the District to set forth that given the uncertainty of the water supply, water may not be available to serve the development.
Actions by the District’s wholesale water suppliers, the Metropolitan Water District and the San Diego County Water Authority, in response to the water shortage has been to call for the IAWP reduction, calling for voluntary conservation for M&I customers, interrupting replenishment deliveries, drawing on storage accounts and searching for spot market purchase opportunities. The San Diego County Water Authority has initiated discussion of implementing a water demand offset fee for new connections that will assist in the funding of conservation programs to offset the new demand on the system. The goal of both Metropolitan Water District and the San Diego County Water Authority is to avoid mandatory water rationing to firm residential and commercial customers. The San Diego County Water Authority expects to be in balance for 2008 through 2010 with 30,000 acre feet of spot market transfers and 56,000 ac. ft. of conservation.
Potential new connections to the District that are in various development stages amount to 2,712 additional meters. There are 66 projects representing 2,103 new lots of which 5 larger proposed projects will have 1,301 of the new lots. Establishing a policy that no new water meters will be installed due to the water shortage was discussed. General Counsel Cowett stated that such a policy which places a moratorium on new meter sales may not be successfully upheld if challenged as the District’s wholesale water suppliers’ position is that it can meet firm M&I and commercial demands. If it is determined by Metropolitan Water District that there are not adequate supplies to meet firm M&I demands and cutbacks (10%) are imposed, agricultural reductions will increase to 40%. Such action would heighten awareness of the water supply conditions as well as the perspective that water service to new developments should be halted. However, it is felt that water savings can best be achieved through conservation measures for both existing customers (conservation programs) and new customers such as land-use landscape ordinances (limitation of turf, efficient irrigation systems and plantings, etc.) and conservation pricing. It was concluded that the District will continue to issue Project Facility Availability and Project Facility Commitment letters that are conditional upon water availability. Staff will analyze the development process for obtaining a new meter service and determine the point in the development’s process that further processing could be halted such as in the event of a mandatory reduction in firm water supplies. Conservation measures will continue to be pursued including the proposed new water demand offset fee and enhanced public outreach efforts to support conservation throughout the region.
DISTRICT GENERAL COUNSEL’S AGENDA
7. Colorado River Contract and Decision on the Delta Pumping:
General Counsel Cowett reviewed that under the Law of the River, the Colorado River water was allocated which was to be put to beneficial use. That is, not using the full allocation did not create a credit for future years. The agreement recently executed will give California 500,000 acre feet of storage in Lake Mead. If California does not take its full Colorado River allocation, it will have a storage credit in Lake Mead.
Judge Wanger issued his written order on the Delta Pumping restrictions on December 14th. The provision was retained in the judge’s decision that this remedial order shall not prevent the Bureau of Reclamation or the Department of Water Resources from taking action in operating the projects that is reasonably necessary to protect human health or safety of the public, including but not limited to any act or omission reasonably necessary to protect the structural integrity of the Central Valley Project or the State Water Project facilities. General Counsel opined that this provision will allow the operation of the pumps if a public health situation develops.
8. A Closed Session was called by President Broomell at 4:42 p.m. per:
• Government Code §54957.5(a), Conference with Labor Negotiators
Agency Representative: Gary Arant, General Manager
Employee Organization: Valley Center M.W.D.
The Regular Board meeting was reconvened at 5:16 p.m. No action was reported.
9. Upon motion by Aleshire, seconded by Haskell and unanimously carried, the meeting was adjourned at 5:18 p.m.