December 15, 2008
VALLEY CENTER WATER DISTRICT
Regular Board Meeting
Monday, December 15, 2008
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, Stone and Haskell. Director Aleshire was absent. Staff members present were: General Manager Arant, General Counsel Cowett, District Engineer Grabbe, Director of Operations Hoyle, Director of Finance Jeffrey, Board Secretary Stetson, Manager of Accounting Pugh, Project Managers Kilwein and Williams, Pumps and Motors Supervisor Stetson, and Manager of IT Pilve. Spectators present were: Messrs. Rudolf, Mackey, Hilbig, Flynn and Ross.
CONSENT CALENDAR
1. Upon motion by Stone, seconded by Haskell and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held November 17, 2008
• Audit demand check numbers 120593 through 120887
• Treasurer’s Report and Financial Statements for the period ended October 31, 2008
• Purchase Order No. 17599 to Barrett Engineered Pump for the purchase of an emergency portable diesel engine potable water pump
• Report on antenna site license agreements
PRESENTATIONS
2. Presentation on the Proposed Valley Center Trail System:
Mr. Rich Rudolf, a representative of the Valley Center Trails Committee and President of the Valley Center Trails Association, reported to the Board that the Trails Committee is a subcommittee of the Valley Center Parks and Recreation Department formed to establish trails in Valley Center for recreational purposes. The Valley Center Trails Association is an independent tax exempt non-profit organization.
The establishment of trails had previously been a part of the County’s General Plan Update process but is now separated from that endeavor and, with approval of the Board of Supervisors, a Trails Master Plan has been created. As such, liability insurance coverage for use of the trails is provided by the County.
Mr. Rudolph reviewed the proposed Valley Center trails map noting that the Valley Center Trails Committee is currently working with property owners to secure trail easements in several areas including Keys Creek Canyon to Lilac Ranch, Hilldale Road to Lilac Road, Miller Road and Cole Grade Road, and the Heritage Trails alongside Valley Center Road. A portion of the proposed trails will cross the District’s Miller Reservoir and Pump Station properties. In discussions with the Valley Center Trails Committee representatives, staff has emphasized that the District must protect its ratepayers from any liability or loss emanating from the use of the property for public purposes other than water and wastewater services and any easement granted on District facilities would be temporary in the event there is a future conflict with the District’s use of the property. Should a future conflict develop, the District would not be responsible for the cost of the trail’s relocation.
The Board concurred with the proposal to pursue providing a temporary trail easement over a portion of the District’s Miller Reservoir and Pump Station properties that would be subject to a commitment from the county to provide liability and loss protection insurance and that the trail would have to be relocated should a future conflict arise with the District’s use of the property.
ACTION AGENDA
3. Review of the 2007-08 Comprehensive Annual Financial Report (CAFR):
The District’s financial reports for the period ended June 30, 2008, 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 2007-08, 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. Manager of Accounting Pugh provided the following summaries:
• In FY 2007-08 there was a 0.6% growth in meters in which there were 57 new meters and 39 new wastewater connections. Active meters reduced by 16 to a total of 9,696 active meters and 10,408 total meters of which 983 are fire system meters.
• Total water sales for the fiscal year were 37,636 acre feet, a reduction of 21.7% from the previous year. This reduction in water sales volume is due to the Interim Agricultural Water Program’s 30% reduction policy and rainfall of 19+ inches.
• Strategic Plan Specific Goals and their status were reviewed. They include GIS integration (scanning documents for inclusion in the document management system), SCADA improvements (radio communication established at major pump stations, reservoirs and control panels installed), Lake Turner Solar Power Project (at end of FY 2007-08 construction had begun), Corporate Solar Project (at FY end, contracting for solar power), and the Carlsbad Sea Water Desalination Project (approvals and permits from the regulatory agencies have been secured).
• 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 5.4 months operating and maintenance expenses. Including the Pumping Rate Stabilization Reserve funds, there are 7.4 months of reserve funds for O&M expenses. The Performance Standard for Fiscal Year 2008-09 for Discretionary Reserves has been revised to be “Unrestricted or uncommitted reserves not anticipated to be used in the current fiscal year equal to 6 months’ operations and maintenance budget”.
• The General Fund Equity as of June 30, 2008, was reviewed. Net assets increased $1.8 million and fixed assets increased $3.5 million. Reserves decreased $1.6 million which includes increases in the Operating Reserve of $1.1 million, and $0.2 million for vehicle reserves with decreases in the Capital Reserves of $2.0 million, the Rate Stabilization of $0.5 million, and the Pump Stabilization of $0.4 million. Reserve funds total $13.7 million.
• At the Lower Moosa Canyon Water Reclamation Plant, revenues increased 4.8% ($54,933) over the previous year with the full effect of the rate increase adopted in March 2007. Revenue from the Woods Valley Ranch Reclamation Plant increased $316,829 as a result of increases in capital contributions.
Mr. Michael Zizzi of the auditing firm Leaf & Cole, LLP, completed the audit of the District’s financial condition as of June 30, 2008, and the results of operations for Fiscal Year 2007-08. 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, 2008, 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, 2008, shows that cash and cash equivalents were $15.1 million. It was noted that cash is defined as any investment purchased that has a maturity of 90 days or less. Net cash provided by operating activities was $1.46 million.
The present value of unfunded actuarial liability for other post employment benefits was discussed which, as of June 30, 2006, was between $6.68 million and $11.75 million, with an actuarial contribution between 11.5% and 15.7%. The liability for post employment benefits will be recorded in the financial statements of the District when Governmental Accounting Standards Board Statement 45 is implemented during the year ended June 30, 2009.
The appropriations limit worksheet in compliance with Article XIIIB of the California Constitution establishes a limit on how much tax revenue can be received and reflects the District’s appropriations limit from property taxes as of June 30, 2008, at $4,375,795 million. Leaf & Cole performed a review of the District’s computation of the Article XIII-B Appropriations Limitation and the District’s Appropriations Limit Worksheet and found no exceptions as a result of their procedures.
The District’s Comprehensive Annual Financial Report, appropriations limit worksheet, and Independent Auditor’s Report for Fiscal Year 2007-08 were received.
4. Update on the South Village Wastewater Expansion Project:
The deadline for property owners to execute the Wastewater Service Agreements for a commitment of participation in the South Village Wastewater Expansion project was December 5, 2008. The participating property owners represent 81 EDUs of wastewater capacity which is not considered sufficient for the formation of an assessment district as a financing vehicle. Some property owners, including the Valley Center Parks & Recreation District, are undecided at this time; however, the additional participation will likely not be sufficient to proceed as had been planned with the property owners electing to participate in an assessment district to finance the expansion improvements. The District’s participation in the expansion project for wastewater service to its Lilac Road property will be further evaluated, which could be affected by the Valley Center Parks & Recreation District’s decision as their property is located across Lilac Road from the District’s site. Wastewater service for the District’s Lilac Road property could be deferred until a second expansion project, however, the timeline for such a project is unknown.
The expansion project proponents, Bell Enterprises represented by Steve Flynn, and Alti Corporation represented by Wayne Hilbig, expressed that they wish to move forward with the expansion project as they are not reliant upon the formation of an assessment district for financing of the wastewater improvements for their developments. Mr. Flynn and Mr. Hilbig stated that they would prefer allowing as many property owners to participate in the wastewater expansion project as is feasible.
District Engineer Grabbe reviewed possible options for the proposed South Village Wastewater Expansion Project to proceed, which include Bell/Alti proceeding alone, Bell/Alti proceeding with private participation, and other options which might include reducing the overall site capacity or providing additional time for property owners to participate without delaying Bell/Alti.
The Board directed staff to evaluate alternative options for the expansion of the South Village Wastewater Plant.
5. Amendment to the 2008-09 Budget to Provide Additional Funding for the Valley Center Road Pipeline Replacement Project:
Project Manager Williams reviewed that in 2005 the District entered into a Utilities Agreement with the County of San Diego to fund the District’s costs for the installation of approximately 18,000 linear feet of pipeline within Valley Center Road. This pipeline replacement project is being completed in conjunction with the County’s Valley Center Road improvement project. Following negotiations with the County, the District’s obligation for the pipeline improvements was reduced by $814,142 to $4,029,815. Approved change orders totaling $305,427 result in a revised obligation of $4,335,242.
The contract schedule for the Valley Center Road improvements has been extended by approximately 15 months to October 2009 due to numerous issues including construction changes, weather delays, conflicting utilities, and revised storm drain designs. District costs for the pipeline installation have exceeded initial projections due to required coordination and oversight with other utilities working in the area and increased inspection services.
An appropriation of an additional $240,000 to the Valley Center Road Pipeline Replacement Project’s budget was requested to fund anticipated costs through completion, including staff time, anticipated construction change orders, outside services, project close-out, as-builts and associated record drawings.
Upon motion by Polito, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2008-41
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT AMEND-
ING THE 2008-09 BUDGET BY APPROPRIATING AN
ADDITIONAL $240,000 FROM THE GENERAL FUND FOR
ACCOUNT NO. 01-533.78 FOR THE VALLEY CENTER
ROAD PIPELINE REPLACEMENT PROJECT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Stone and Haskell
NOES: None
ABSENT: Director Aleshire
6. Request for Award of Contract for the Paradise #2 Reservoir Roof Replacement and Repainting of the Exterior and Interior:
Bids were opened on November 18, 2008, for the Paradise #2 Reservoir Roof Replacement and Interior and Exterior Repainting Project. The lowest bid received was from Crosno Construction at $398,000. Funds are available as allocated in the 2008-09 budget.
Pumps and Motors Supervisor Stetson presented slides of the interior of Paradise #2 reservoir which showed the deteriorating roof plates and rafters. The roof replacement project specifies pre-coating of the material which will ensure sufficient protection. Also, the roof design has been modified to include intermediate support bays for improved stability of the roof structure.
Upon motion by Polito, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2008-40
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AWARDING CONTRACT FOR THE ROOF REPLACEMENT
AND REPAINTING THE EXTERIOR AND INTERIOR
OF PARADISE #2 RESERVOIR
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Stone and Haskell
NOES: None
ABSENT: Director Aleshire
7. Administrative Code Amendment to Adjust the Salary Range of the Consumer Services Supervisor:
In recognition of increased responsibilities and the work load of the Consumer Services Supervisor that have included implementation of the Interim Agricultural Water Program supply reduction plan, and processing of the IAWP/Special Agric. Water Rate opt-out transition, as well as coordinating the process for the potential
domestic and commercial usage reductions, an increase in this position’s salary range from 23 to a range 25 was recommended. Due to the state-wide water supply restrictions, it is anticipated that water reduction programs will be a part of the District’s consumer services activities for most years during the next decade requiring a high level of technical expertise in accounts management and water billing software programming. An adjustment in the salary range of the Consumer Services Supervisor to range 25 would have a total impact of approximately $3,300 in Fiscal Year 2008-09.
Upon motion by Stone, seconded by Haskell and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2008-11
ORDINANCE OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING THE ADMINISTRATIVE CODE ARTICLE 8,
SECTION 8.9(c), COMPENSATION POLICY–CLASSIFICATION
AND COMPENSATION PLAN, TO ADJUST THE RANGE
OF THE CONSUMER SERVICES SUPERVISOR POSITION
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Stone and Haskell
NOES: None
ABSENT: Director Aleshire
GENERAL MANAGER’S AGENDA
8. Review of Miscellaneous Informational Items:
• Participants in the Interim Agricultural Water Program (IAWP) had the opportunity to: opt-out of the IAWP discount program but stay in the Authority’s Special Agricultural Water Rate (SAWR) program, opt-out of both the IAWP and the SAWR and become a full-price customer, or remain in the IAWP that includes participation in the SAWR. The IAWP participants were provided option election forms with a deadline to respond by Friday, December 12, 2008, with the modification, if any, effective January 1, 2009. IAWP participants will annually have the opportunity to opt-out until the program is terminated as of January 2013. Director of Finance Jeffrey reported that preliminary results of the opt-out option responses to be effective January 1, 2009, are that 468 ag. meter accounts elected Option 2 (Opt-out of the IAWP, but stay in the SAWR), and 209 ag. meter accounts elected Option 3 (Opt-out of both the IAWP and SAWR to become full-price customers). Therefore, 1,058 accounts will remain in the IAWP that also includes participation in the SAWR.
• The solar project at Lake Turner is operating and generating electricity for the District’s Betsworth Pump Station.
• The California Coastal Commission has formally adopted all of the findings for the Carlsbad Desalination Plant to be operated by Poseidon Resources. A mitigation plan remains to be completed. There are efforts at this time to determine where the winter-time water flows will be stored.
• The District’s proposed Welk’s “Skimming” Reclamation Plant was approved for a $90,000 grant as part of the San Diego County Water Authority’s Local Investigations and Studies Assistance (LISA) funding assistance program. The LISA grant program provides matching funds for early project development activities. Board approval of the District’s share of the project will be considered at a subsequent Board meeting.
GENERAL COUNSEL’S AGENDA
9. Coordination of Water and Wastewater Agencies to Pursue Project Funding:
General Counsel Cowett stated that Best, Best & Krieger will be organizing an effort to coordinate the region’s water and wastewater agencies’ capital projects that could be eligible for funding made available through the public infrastructure program of the Economic Recovery Plan. Agencies will be encouraged to complete the environmental processes and secure permits for proposed projects to improve eligibility status. Staff noted that District projects amounting to approximately $5 million to $6 million have been identified that could be eligible for federal grants.
BOARD OF DIRECTORS’ AGENDA
10. ACWA 2008 Fall Conference:
Director Stone reported he had attended the ACWA Fall Conference in Long Beach, Shaping a Sustainable Future, which was held December 2-5. Workshops and panels he attended were: Water: A Global Priority, A Global Challenge, The Peripheral Canal: A changed Debate or Same-Old, Same-Old, Comparing Futures for the Sacramento-San Joaquin Delta, and Declaring, Implementing and Enforcing Water Shortage Emergencies and Water Conservation Programs and Adopting Drought Water Rates. Director Stone stated that a report issued by the Public Policy Institute of California and University of California, Davis, concluded that building a peripheral canal to carry water around the Delta is the most promising way to balance the Delta’s threatened ecosystem and ensure a reliable, high-quality water supply for California.
ADJOURNMENT
11. Upon motion by Haskell, seconded by Polito and unanimously carried, the meeting was adjourned at 4:16 p.m.
ATTEST:
____________________________
President
ATTEST:
_______________________________
Secretary