May 4, 2009
VALLEY CENTER WATER DISTRICT
Regular Board Meeting
Monday, May 4, 2009
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 Cowett, District Engineer Grabbe, Director of Operations Hoyle, Director of Finance Jeffrey, Board Secretary Stetson, Manager of IT Pilve. Consumer Services Supervisor Tilley, Manager of Accounting Pugh, GIS/Engineering Services Supervisor Garcia. Spectators present were: Ms. Keeley, Messrs. Starr, Steinbeck, Brown, Ayash and Ross.
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 April 20, 2009
• Audit demand check numbers 122120 through 122245
• Concept approval of the Marquart Ranch waterline extension project (TM 5410-1) consisting of approximately 3,200 linear feet of 8-inch water main, 9 water services and four 6-inch fire hydrants and other appurtenances
PUBLIC HEARINGS
2. Public Hearing to Consider Adoption of Resolution to Implement Level 2 of the Water Supply Shortage Response Program and Implementation Guidelines:
The public hearing to receive comments on the Declaration of a Level 2 of the District’s Water Supply Shortage Response Program, adoption of policy Implementation Plans, voluntary 8% conservation for full-price accounts and mandatory 13% conservation level for Special Agricultural Water Rate (SAWR) accounts was opened at 2:03 p.m. General Manager Arant reviewed that the San Diego County Water Authority Board had taken action at its April 23rd meeting to call for an Authority-wide 8% reduction in water usage for full-price customers (i.e. non-agricultural customers) to be effective July 1, 2009. Resolution No. 2009-17, presented for the Board’s adoption, would implement Level 2 of the District’s Water Supply Shortage Response Program, the Water Supply Shortage Alert Condition, and its water use restrictions including a restriction on new water meter sales.
Letters requesting a variance from the restriction of new meters sales in Level 2 of the Water Supply Shortage Response Program were received from:
▪ Kenneth Cramer/Neal Steinbeck, Tall Oaks, LLC – Significant investment to develop 11 lots and to not default on loans and complete the project, requires the ability to purchase meters for the lots.
▪ Karen Keeley – Requested variance to extend deadline for full payment of meter that will serve adjacent lot which is for sale to assist with a financial hardship.
▪ Charles and Teresa Ayash – Requested variance for meter purchase for a lot to be marketed that will assist with financial hardship.
▪ Alice C. Tang – Letter questions the legality of allocating 10 HCF to customers with no prior usage in the measurement period of Fiscal Years 2004-05 through 2006-07.
Resolution No. 2009-17 declaring the Level 2 Water Shortage Response Program and its implementation guidance documents sets forth the findings and determinations to take action to implement mandatory use reductions and restrictions on processing statements of ability to serve letters and new meter requests unless a service commitment had been previously issued or there will be no net water demand or the demand will be offset to the satisfaction of the District. Resolution No. 2009-17 concludes that there exists a Water Shortage Emergency in compliance with the State’s Water Code, Section 350. Implementation guidance plans for applications for new meter accounts, the mandatory water use restrictions for full-price accounts and the SAWR mandatory water use restrictions are also set forth for approval with adoption of Resolution No. 2009-17.
The policy guidance documents to be enacted with adoption of Resolution No. 2009-17 were reviewed as summarized below:
Policy Implementation Guidance Document – Applications for New Meter Accounts. Establishes the policies pursuant to water use reallocations for full-price meter accounts, IAWP/SAWR meter accounts and for new meter accounts without prior water service, which are set forth on the attached labeled Exhibit “A”.
Water Supply Shortage Alert Condition – Implementation Plan. Sets forth mandatory use restrictions for full-price customers including not washing down paved surfaces, allowable irrigation hours and days (Monday, Wednesday and Friday), repair of all leaks within 5 days of notification and use of reclaimed or non-potable water for construction purposes. The implementation plan is set forth on the attached labeled Exhibit “B”.
Staff recommended a “Voluntary Water Conservation Partnership” to achieve the 8% water use reduction in which each full-price account would receive a month to month target water allocation representing an 8% reduction from the account’s average usage during the three base measurement years (FYs 2004-05, 2005-06 and 2006-07). Accounts with no or incomplete usage histories during the base period would receive a monthly target allocation of 10 units (10 HCF). Said voluntary reduction program would be monitored, and, if the target 8% reduction is not being met, the program could become mandatory as of January 1, 2010. Water consumption under a monthly allocation would be reflected as an “allocation carry-over” and can be used to offset over-usage in successive months of the FY 2009-10 reduction program. Credits earned cannot be rolled forward into a subsequent program year. The penalty rates to be imposed if a mandatory water conservation program is adopted were reviewed. They are: usage up to 15% above the base allocation – current rate plus MWD penalty rate of 2 times the Tier II wholesale rate, and usage greater than 15% above a monthly allocation -- current rate plus MWD penalty rate of 4 times the Tier II wholesale rate. Penalties paid can be earned back with conservation in subsequent months of the FY program, but cannot be earned back with under usage in a subsequent program year.
Participants in the Special Agricultural Water Rate (SAWR) program will be required to reduce consumption by 13% compared to the Fiscal Year 2006-07 base year as called for by the Metropolitan Water District. Each account will be provided monthly water usage allocations with the SAWR combination ag/domestic accounts provided a minimum allocation of 26 units per month. Usage under the monthly allocation will be an “allocation carry over” and can be used to offset over-usage in successive months of the FY 2009-10 program. Usage credits earned in the FY 2009-10 program cannot be carried forward into a subsequent program year. The SAWR Water Supply Reduction Implementation Plan is attached hereto as Exhibit ”C”.
Adoption of Resolution No. 2009-17 to declare Level 2 of the District’s Water Supply Shortage Response Program, the policy implementation plans, voluntary 8% conservation for full-price accounts, and a mandatory 13% conservation plan for SAWR accounts was recommended. Staff further recommended that a policy proposal be presented at a subsequent meeting for the Board’s consideration for hardship cases pursuant to restriction on meter sales.
Director Aleshire stated that due to the hardships upon ratepayers in the District caused by the restrictions of meter sales as set forth in Level 2 of the District’s Water Supply Shortage Response Program, he proposed that the restriction on meter sales not be imposed until Level 3 of the Program or until conservation reduction levels are mandatory.
Audience members addressed the Board to request consideration of a variance on the restriction of meter sales. Ms. Karen Keeley of 26583 Calle De Encinas requested an extension for the payment of her water meter which is needed in order to sell the lot. Mr. Ayash of 1771 Lendee Drive requested a variance on the meter sale restriction policy noting that at present he does not have the funds to purchase a meter for a lot, but if it is marketable with the availability of a meter, it would assist his financial situation.
The public hearing to implement Level 2 of the Water Supply Shortage Response Program was closed at 2:53 p.m.
Upon motion by Aleshire, seconded by Stone and unanimously carried, Level 2 of the District’s Water Supply Shortage Response Program was declared with the exception of the restriction on meter sales, and Level 2 “Water Supply Shortage Alert” Condition Implementation Plan (Exhibit “B”), and SAWR Water Supply Reduction Implementation Plan (Exhibit “C”) were adopted. Staff was directed to develop a policy proposal that would limit water consumption for new meters to 10 HCF upon a Level 2 declaration of the Water Supply Shortage Response Program as well as a policy for the restriction of new meter sales.
3. Public Hearing to Consider Adoption of Proposed Water Meter Capacity Charges:
The public hearing to consider the proposed increases in the District’s water meter capacity charges was opened at 2:56 p.m. District Engineer Grabbe explained that the District’s meter capacity charges, a component of the cost for a new water meter connection purchased from the District, are collected and the revenue is allocated toward construction of capital facilities, such as reservoirs, pump stations and pipelines needed to provide service to the new meter accounts. The facilities to serve new developments are identified in the District’s 2002 Water Master Plan. The meter capacity charges are reviewed each year and adjustments, if necessary, are recommended to provide for cost increases due to inflation as determined by the Engineering News Record (ENR) Construction Cost Index (CCI), or revised cost estimates for listed projects. As project cost estimates had been updated in 2008, the ENR CCI for March 2009 was used for this year’s adjustment in which a proposed increase of 5.7549% due to inflation was recommended.
The proposed increases in the District’s meter capacity charges were reviewed which are set forth below:
Meter Size |
5/8” |
¾” |
1” |
1-1/2” |
2” |
3” |
Current Capacity Charge |
$2,741 |
$4,091 |
$6,955 |
$13,502 |
$21,685 |
$40,916 |
Proposed Increase, Inflation Adjustment Only |
158 |
235 |
400 |
775 |
1,245 |
2,348 |
Total Proposed Meter Capacity Charges |
$2,899 |
$4,326 |
$7,355 |
$14,277 |
$22,930 |
$43,264 |
Notification of the proposed increases in the District’s water meter capacity charges had been published in the paper. No comments were received and there were no comments from the audience. The increases in costs are substantially due to increases in construction costs that have been experienced in recent years. The public hearing was closed at 3:11 p.m. Adoption of Ordinance No. 2009-01 approving the proposed water meter capacity charges with an effective date of July 6, 2009, was recommended.
Upon motion by Stone, seconded by Haskell and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2009-01
ORDINANCE OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING ADMINISTRATIVE CODE SECTION 160.4(c)
INCREASING THE METER CAPACITY CHARGES
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
4. Public Hearing to Consider Adoption of the Proposed Lower Moosa Canyon Wastewater Capacity Charge:
The public hearing to consider an increase in the Lower Moosa Canyon Water Reclamation Facility wastewater capacity charge was opened at 3:15 p.m. District Engineer Grabbe reviewed that, at present, property owners requesting wastewater capacity from the Lower Moosa Canyon Water Reclamation Facility are required to pay a wastewater capacity charge of $8,051 per equivalent dwelling unit (EDU). The funds collected are used to construct improvements needed to expand the capacity of the treatment facility as required for new connections.
Revised cost estimates and allocations for expansion of the treatment plant had been updated in 2008. As such, an adjustment of the Lower Moosa Canyon Wastewater Capacity Charge based on the Engineering News Record – Construction Cost Index inflation amount of 5.7549% was proposed. If adopted, the proposed increase in the Lower Moosa Canyon Water Reclamation Facility wastewater capacity charge to $8,514 per EDU would become effective July 6, 2009.
Notification of the proposed increases in the District’s Lower Moosa Canyon Water Reclamation Facility wastewater capacity charge had been published in the paper. No comments were received and there were no comments from the audience. The public hearing was closed at 3:17 p.m. Adoption of Ordinance No. 2009-02 approving the proposed increase in the Moosa wastewater capacity charge to $8,514 per EDU with an effective date of July 6, 2009, was recommended.
Upon motion by Polito, seconded by Stone and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2009-02
ORDINANCE OF THE BOARD OF DIRECTORS
OF VALLEY CENTER MUNICIPAL WATER
DISTRICT AMENDING ADMINISTRATIVE CODE
SECTIONS 171.2 AND 171.10 TO INCREASE
THE WASTEWATER CAPACITY CHARGE FOR THE
LOWER
MOOSA CANYON
WATER RECLAMATION FACILITY
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
ACTION AGENDA
5. San Diego Gas & Electric’s Request for a Letter of Support of the TL688 and TL6932 Relocation and Underground Conversion Project:
Chris Brown, Service Representative from SDG&E, requested the Board’s consideration of support of its proposed project for the construction of the TL688 and TL6932 relocation and underground conversion project that will improve reliability in fire prone areas through system hardening and other enhancements. The project consists of the overhead relocation and underground conversion of existing facilities between Escondido Substation and Lilac Substation. Mr. Brown stated that the proposed project will reduce the number of customers subject to SDG&E’s 2009 Emergency Power Shut-Off Plan. Construction is expected to begin in May with completion anticipated in September 2009. The Advice Letter on this proposed project was filed with the District.
6. Overview of the Proposed Operations & Maintenance and Capital Budget for Fiscal Year 2009-10:
Manager of Accounting Pugh reviewed that the direction from the Board at the March 16th meeting in which the revenue and expense projections and revenue options for Fiscal year 2009-10 had been reviewed were that the standby water availability charge be allocated for capital, the OPEB obligation be funded and there be no rate increase for the District’s local share of the water commodity charge.
An overview of the proposed Fiscal Year 2009-10 Operations & Maintenance and Capital Budget was provided as outlined below:
▪ Water sales are projected at 33,130 ac. ft.
▪ 100% of the Property taxes to the District are expected.
▪ Availability fees will be used for capital ($490,000) and debt service ($101,000)
▪ Capital projects total $2,998,750:
Country Club Reservoir cover $1,768,750
SCADA 400,000
Emergency stationary generators 221,000
(Circle R, Red Mtn., Couser P.S.)
Reservoir recoating 180,000
(Oat Hill, West 1 & 2)
Other 429,000
▪ Return on investments is estimated at 1.5%
▪ Wholesale rates are estimated with the most current information from the wholesale suppliers with increases in September 2009 and January 2010, as follows:
|
Full Price |
IAWP |
SAWR |
Component |
Current |
9/1/09 |
1/1/10 |
Current |
9/1/09 |
1/1/10 |
Current |
9/1/09 |
1/1/10 |
VCWD |
102.41 |
102.41 |
102.41 |
102.41 |
102.41 |
102.41 |
102.41 |
102.41 |
102.41 |
MWD/SDCWA Wholesale |
872.20 |
1,053.76 |
1,098.19 |
620.69 |
735.08 |
781.16 |
752.28 |
878.43 |
888.36 |
Total |
974.61 |
1,156.17 |
1,200.60 |
723.10 |
837.49 |
883.57 |
854.69 |
980.84 |
990.77 |
Change |
|
181.56 |
44.43 |
|
114.39 |
46.08 |
|
126.15 |
9.93 |
The cumulative effect of the wholesale rate increases is anticipated to be 25.9% for full-price and IAWP customers and 18.1% for SAWR participants.
Staff recommended notices to customers in compliance with Proposition 218 include authorization to increase the local rate and monthly service charges beginning July 1, 2010 through 2014 by an amount not more than the cumulative wholesale increase percentage. Obtaining the Proposition 218 authorization for multiple year increases eliminates the need and expense of the legal notifications for several years. Such increases would only be considered as required.
Estimated expenditures are:
COLA – 1.75%
Merits/promotions – 2.4% net
Benefits increase – 12%
OPEB contribution - $705,698
Revenue and Expenditures are:
Total Water Revenues $42,410,770
Total Water Expenditures 43,238,319
Net Loss 827,549
Capital Projects 2,998,750
Additional Revenue Required $ 3,826,299
A source of additional revenue proposed in the budget is the transfer of funds earmarked for:
Upsizing Participation &
Unspecified Replacement $3,451,613
Accounting System Upgrade $100,000
Discretionary Reserve Surplus $274,686
$3,826,299
Discretionary reserves at the end of FY 2007-08 were $6,308,908. The projected 6-month reserve at end of FY 2008-09 is $5,357,124. Of the $951,784 projected surplus, $274,686 will be used for O&M or capital in FY 2009-10.
For the Lower Moosa Canyon Wastewater Treatment Plant, the monthly wastewater service charge is proposed to increase by $4.00/EDU to $44.50/EDU per month. An increase of $3.25 per month to the Low Pressure Wastewater Collection System Maintenance Fee to $36.75 per month is proposed. Due to project expenses incurred at the Moosa Wastewater Treatment Plant, the operating reserve is projected at 3.9 months O&M as of June 30, 2010. Planned increases in the service charge over the next several years will increase the plant’s operating reserve to the 6 months O&M expenses goal level. The reserve accounts for the Moosa Treatment Plant will be evaluated for the appropriate measurement goal. Notices of rate increases for the Moosa Wastewater Treatment Plant per Proposition 218 will provide for future rate increases of not more than 5% through 2014.
Capital projects proposed for the Lower Moosa Canyon Wastewater Treatment Plant total $150,000; $75,000 for the Rimrock STEP System Modification, and $75,000 (1/2 of cost) for a combination sewer cleaning truck.
The Woods Valley Ranch Treatment Plant’s monthly charge of $98.60 per unit that is collected on the tax rolls will fund operating expenses of $249,980 and contribution to the Replacement Reserve Fund of $102,620. Capital projects for the Woods Valley Ranch Treatment Plant are: Combination sewer cleaning truck (1/2 cost at $75,000), Chlorine contact basin cover ($18,000), and Installation of variable frequency drives ($5,000) for a total of $98,000.
Director of Finance Jeffrey explained that proposed water and wastewater rate increases will be presented for discussion at the next Board meeting. To be proposed is a public hearing to consider the adoption of the revised rates at a public hearing on July 20th following public notification per Proposition 218. The increased rates will be effective for the bills mailed on and after September 1, 2009 (wholesale water rate increases) and on and after January 1, 2010 (wholesale fixed charges increase) and then annually thereafter through 2014. As there is no proposed increase in the District’s share of the water rate through January 2010, the District’s share of the total domestic rate will be 8.5%.
The proposed rate increases were reviewed, as follows:
▪ Infrastructure Access Charge – An increase of 6.3% beginning January 1st.
▪ Water Rate Component - 24% increase in September 2009 and 4% in January 2010 for domestic/commercial accounts and a collective increase of 26% for IAWP participants. The Special Agricultural Water Rate will increase 18%. It was noted that the rates include only estimates of the wholesale rate increases as the San Diego County Water Authority has not yet adopted its increase for September 2009. The public notice on the water and wastewater rate increases will also include the authorization giving the District the ability to increase the local component of the commodity charge and a pass-through of energy increases starting July 1, 2010 through September 1, 2014, up to the cumulative percentage wholesale increase since January 1, 2009.
Director of Finance Jeffrey reiterated that the proposed water and wastewater rates will be reviewed at the May 26th Board meeting with notices per the requirements of Proposition 218 mailed by June 4th and the public hearing held on the proposed rates at the Board meeting of July 20, 2009.
GENERAL MANAGER’S AGENDA
7. San Diego County Water Authority’s Board Meeting:
At the San Diego County Water Authority Board meeting of April 23rd, the Board declared Level 2, “Drought Alert” Condition of the Authority’s Model Drought Response Conservation Program Ordinance. An eight percent reduction in water deliveries to member agencies was approved with the use of the Authority’s dry-year transfers estimated at 16,000 ac. ft. Its carry-over storage will not be used until FY 2011.
A letter from the San Diego County Water Authority sent to the San Diego Regional Water Quality Control Board was reviewed requesting that in their consideration of the issuance of a Waste Discharge Permit for the proposed Gregory Canyon Landfill that they include conditions necessary to address the concerns raised by the Authority in the EIR process; namely, leakage from the landfill adversely impacting groundwater supplies and protection of the 1st aqueduct.
8. Extension of the 9/80 Workweek:
The current MOU with employees included the implementation of a 9/80 workweek as of July 1, 2008 as a trial basis for one-year. General Manager Arant reported that a review of the 9/80 workweek program over the initial 10 month period indicates that public service contacts have been sustained and there has been no impact on overtime. An extension of the 9/80 workweek beyond June 30, 2009, was recommended.
Upon motion by Aleshire, seconded by Polito and unanimously carried, an extension of the 9/80 workweek was approved.
GENERAL COUNSEL’S AGENDA
9. Litigation Filed by Delta Farmers to Block the Conveyance Facility Around the Delta:
General Counsel Cowett stated that another lawsuit has been filed by farmers in Northern California challenging the transfers from the water bank on the basis of CEQA. The progress of this lawsuit will monitored and updates provided the Board.
BOARD OF DIRECTORS’ AGENDA
10. ACWA/JPIA Board of Directors Meeting:
Director Aleshire explained that he had requested that an item be placed on the agenda for the ACWA/JPIA Board of Directors’ meeting of May 18th pertaining to the insurance broker’s status and development of formal agreements with the broker for transparency of the costs of broker services. The matter was not placed on the agenda. Director Aleshire stated he will address this issue with the full Board.
CLOSED SESSION
11. A Closed Session was called by President Broomell at 4:27 p.m. pursuant to:
• Government Code §54956.9(b)&(c) – Conference with Legal Counsel,
Anticipated Litigation
Number of potential cases: 4
• Government Code §54957(b)(1) – Public Employee Performance Evaluation: General Manager
RECONVENE
12. The Regular Board meeting was reconvened at 4:50 p.m. No action was reported.
ADJOURNMENT
13. Upon motion by Aleshire, seconded by Stone and unanimously carried, the meeting was adjourned at 4:51 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary