May 2, 2011
VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, May 2, 2011
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, District Engineer Grabbe, Director of Finance Jeffrey, Director of Operations Hoyle, Board Secretary Johnson, Manager of IT Pilve, Consumer Services Supervisor Tilley and Manager of Accounting Pugh. Spectator present was Mr. David Ross, Roadrunner Newspaper.
COMMENTS
General Manager Arant requested an amendment to the agenda be made to move Item 14 up to Item 8, following the public hearings.
CONSENT CALENDAR
1. Upon motion by Aleshire, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held April 4, 2011
• Audit demand check numbers 128579 through 128782 for March 25 through April 14, 2011 and wire disbursements for March 2011
• Treasurer’s Report and Financial Statements for period ended February 28, 2011
• Quarterly report of employees’ expense reimbursements for the quarter ended March 31, 2011
• Board of Director’s request for reimbursement of expenses and report of expenses
PUBLIC HEARINGS
2. Public Hearing to Consider Adoption of Proposed Water Meter Capacity Charges:
A public hearing to consider the proposed increases in the District’s water meter capacity charges was opened at 2:03 p.m.
District Engineer Grabbe reminded the board that the meter capacity charges are reviewed each year and adjusted for inflation per the Engineering News Record (ENR) Construction Cost Index (CCI). The last increase to the meter capacity charge was made July 2009. Calculations using the March 2011 ENR CCI result in a proposed increase of 2.4%, as shown in the following table:
Meter Capacity Charge Summary |
Meter Size |
5/8” |
3/4” |
1” |
1 ½” |
2” |
3” |
Current Capacity Charge (FY10/11) |
$2,899 |
$4,326 |
$7,355 |
$14,277 |
$22,930 |
$43,264 |
Proposed Increase -Inflation Adjustment Only |
$69 |
$105 |
$177 |
$344 |
$552 |
$1,042 |
Total Proposed Meter Capacity Charge (FY11/12) |
$2,968 |
$4,431 |
$7,532 |
$14,621 |
$23,482 |
$44,306 |
Mr. Grabbe presented a chart comparing VCMWD’s water meter capacity charge with other agencies in the San Diego County area. The chart indicated that even with the proposed increase, the District is on the lower end of the rate scale.
Notification of the proposed increases to the District’s water meter capacity charges had been published in the local newspaper. No comments were received and there were no comments from the audience. The public hearing was closed at 2:08 p.m. Adoption of Ordinance No. 2011-01, approving the proposed water meter capacity charges and amending Article 160.4 of the Administrative Code with an effective date of July 5, 2011 was recommended.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2011-01
ORDINANCE OF THE BOARD OF DIRECTORS
OF VALLEY CENTER MUNICIPAL WATER DISTRICT
AMENDING ADMINISTRATIVE CODE SECTION 160.4
INCREASING METER CAPACITY CHARGES
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
3. Public Hearing to Consider Adoption of a Proposed Wastewater Capacity Charge for the Lower Moosa Canyon Water Reclamation Facility:
A public hearing to consider an increase to the District’s wastewater capacity charge for the Lower Moosa Canyon Water Reclamation Facility was opened at 2:09 p.m.
District Engineer Grabbe reported that this public hearing was to propose adjusting the wastewater capacity charge at Moosa based on the Engineering News Record Construction Cost Index for March 2011, which equates to a 2.4% increase.
Current Capacity Charge $8,514
Proposed Increase 205
Total $8,719
A comparison of wastewater capacity charges to other San Diego County agencies ranks Valley Center at the third highest both with and without the proposed increase.
Notification of the proposed increase in the District’s wastewater capacity charge at the Lower Moosa Canyon Water Reclamation Facility had been published in the local newspaper. There were no comments received and no comments from the audience. The public hearing was closed at 2:17 p.m. Adoption of Ordinance No. 2011-02, approving the proposed wastewater capacity charge and amending Articles 171.2 and 171.10 of the Administrative Code with an effective date of July 5, 2011 was recommended.
Upon motion by Polito, seconded by Stone and unanimously carried, the following Ordinance, entitled:
ORDINANCE NO. 2011-02
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
BOARD OF DIRECTOR’S AGENDA
4. ACWA-JPIA Alcohol Policy
Director Aleshire reported that in 2004 he was elected to the ACWA-JPIA Executive Committee. It became immediately obvious to him that unnecessary expenses for lodging, limousines, meals including alcohol, and expenses for spouses and other guests were being paid for with member premium dollars. In 2008, Director Aleshire was able to convince the ACWA-JPIA Board of Directors to adopt policies that limited travel, housing, meals and other expenses of the Executive Committee. These policies, while liberal, were more in line with the policies of the expenses authorized by member agencies in ACWA.
On May 9, 2011, at the ACWA conference, the JPIA Executive Committee will vote on changes to the governing documents that will delete the restrictive language on alcohol expenses, and possibly return to the previous practice where the Chief Executive Officer can approve business related entertainment expenses. Dr. Aleshire finds this action particularly disappointing at a time when agencies statewide are being exposed for unnecessary expenditures of public funds, and are doing everything possible to save ratepayer dollars.
Director Aleshire requested that the Valley Center Board of Directors submit an amendment to retain the previous restrictions to the ACWA-JPIA Executive Board at the conference and send a letter, along with the Executive Committee Expense Reporting History, to the other ACWA-JPIA member agency directors urging them to vote no on the proposed changes.
Upon motion by Stone, seconded by Haskell and unanimously carried, staff was directed to submit an amendment limiting JPIA Executive Committee expenses, and mailing a letter to each member agency urging their JPIA representative to vote no on the EXCO proposal to revise the Governing Documents unless amended to retain the current restriction on payment for alcohol and other “business related entertainment”.
ACTION AGENDA
5. Request to Rescind Implementation of Article 230, “Water Supply Shortage Response Plan”
General Manager Arant reported that the water supply in California has turned around dramatically. Snowpack in the Sierra’s is at 160% of average and major storage reservoirs are already filled above normal with the summer melt still to come. Metropolitan lifted all Municipal and Industrial (M&I) and Interim Agricultural Water Program (IAWP) supply restrictions on their member agencies on April 12, 2011, with the San Diego County Water Authority following suit on April 28, 2011.
Adoption of Ordinance No. 2011-03 rescinding implementation of Article 230, the Water Supply Shortage Response Plan, effective immediately, was recommended. If adopted, staff will notify all District customers by billing insert of the Board’s action, thank them for their patience, cooperation and conservation efforts, and encourage them to always avoid wasting this precious and limited natural resource.
Direction was requested on how to address those customers currently over on their allocations and facing potential penalties. General Manager Arant noted that had these customers continued under the drought program they would have been able to resolve these penalties. The 22 customers with penalties currently paid on record will have them credited back to their accounts.
Upon motion by Polito, seconded by Aleshire and unanimously carried, the following ordinance, entitled:
ORDINANCE NO. 2011-03
ORDINANCE OF THE BOARD OF DIRECTORS
OF VALLEY CENTER MUNICIPAL WATER DISTRICT
RESCINDING IMPLEMENTATION OF ARTICLE 230,
WATER SUPPLY SHORTAGE RESPONSE PLAN
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire, Stone and Haskell
NOES: None
ABSENT: None
6. Review of Budget Policies:
Manager of Accounting Pugh, as part of the yearly budget process, reviewed the District’s seven budget policies. These policies are codified in Administrative Code Article 50.2.
Reserves: Mr. Pugh explained there are four categories of reserves:
• Rate Stabilization Reserves are used to level water and pumping rates. A portion of the pumping reserve will be used to fund several capital projects. The water rate stabilization reserve has been depleted for several years.
• Operating Reserves provide funds for emergencies and natural disasters. It is set at a minimum three months, maximum six months, operations and maintenance budget. The water fund operating and pump stabilization reserves make-up the Discretionary Reserves and will meet this goal. Woods Valley Ranch and Lower Moosa Canyon WRFs will also be funded.
• Restricted Reserves include the Agricultural Rebate, Benefit Plan Liability, and the Lower Moosa Canyon and Woods Valley Ranch Water Reclamation Facilities. The Benefit Plan Liability Reserve will utilize $459,521 of the balance, as planned.
• Capital Reserves provide funding for continuing budgeted capital projects, improvements funded from capacity charges, and future capital additions and replacements. It is funded by taxes and by retained earnings not otherwise reserved. $1.1 million in property tax revenues was needed to balance the budget.
Fees and Charges: Each water and wastewater system is to be self sufficient and all fees and charges from the wholesale suppliers are passed through to our customers.
Debt: Long term debt is not used to fund current operating costs. Debt issues should generally only be used for capital projects. We have no new debt anticipated.
One-time and Unpredictable Revenues: These are significant revenues that are allocated to the source of the receipt, such as capacity fees. They are not relied upon as a continual stream of revenue.
Balanced Budget: The budget shall be balanced each year from current revenues and, with Board approval, utilizing reserves.
Revenue Diversification: The District attempts to cover at least half of its fixed costs with the monthly meter service charges and property taxes.
Contingencies: This provides procedures for use during water emergencies only and is addressed in Administrative Code Article 225.
No changes to the current policies were requested.
7. Opportunity to Participate in Water Loss and Component Analysis Study and an Alternate Proposal:
Director of Operations Hoyle asked for Board direction concerning two options relating to unknown water loss. The first option is participation in a Water Loss and Component Analysis Study with the Water Resource Foundation. Staff has budgeted $105,000 to implement a full AWWA audit and component analysis study. By participating with Water Systems Optimization and the Alliance for Water Efficiency Group, the cost could be reduced by approximately $30,000. The District would receive a detailed water loss analysis and a plan to provide effective leakage control measures. However, District staff time to assist in developing the plan and capital costs in incorporating the study recommendations would be required.
Leakages fall into three categories: Background leakages occur when a pipeline is installed, building reservoirs, and pressure testing. Un-reported leakages are typically small leaks that have not yet surfaced, and Reported leakages are those that are called in. Mitigation of leaks is primarily based on improved pressure reduction within our system. This is not economically feasible because it would entail building more pump stations, reservoirs and PRV stations.
In reviewing the cost of participation in the water loss and component study, option 2 emerged as focus areas staff could implement to help reduce our unknown water loss:
• Significantly increase our leak detection program
• Increase routine field testing of high usage meters
• Explore use of flow meters or sonic listening devices
• Increase meter/appurtenance security surveillance
• Study and incorporate all real known losses in our water loss calculations
Staff recommended using the budgeted funds to implement the presented measures and strategies to identify and reduce our unknown water loss rather than participate in the water loss and component study.
A motion by Polito, seconded by Aleshire and unanimously carried, staff was directed to pursue option 2, implementing the presented measures and strategies.
8. Request to Declare MXU Devices as Surplus Inventory and Exchange them back to Aqua Metrics:
Director of Operations Hoyle explained that during the AMR change out program, meter transceiver unit (MXU) devices were difficult to obtain. Staff then pre-purchased a sufficient number of meters and MUX devices to supply the proposed developments expected to be under construction. With the economic downturn, the proposed projects were terminated or put on hold leaving the District with a surplus of MXU devices that our vendor, Aqua Metric, has requested to purchase.
The MUX devices have a 20-year useful life and battery warranty. Our MXUs are four years old and considered “used” per Aqua Metrics policy. The current MXUs cannot be used in the fixed-base AMI system and will continue to lose value given the low development rate expected in the future. Staff has negotiated a repurchase agreement with Aqua Metrics for $0.60 on the dollar for our 573 unit inventory. The District would receive $42,631.62 in credit which could be used to purchase new tamper resistant, high accuracy meters or AMI equipment.
Upon motion from Aleshire, seconded by Haskell, and unanimously carried, staff was directed to declare the MXU devices as surplus inventory and exchange them with Aqua Metrics for credit toward future equipment purchases.
9. FEMA and Cal EMA Approval of the District’s Winter Storm Damage Submittal:
Director of Operations Hoyle reported that, per Board direction, the District applied for reimbursement by the Federal Emergency Management Agency (FEMA) and California Emergency Management Agency (Cal EMA) for damages sustained during the winter storm event period of December 17, 2010 through January 4, 2011.
Of the seven damaged sites submitted for reimbursement, mostly due to easement and pipeline erosion, FEMA approved six sites for a total reimbursement of $20,710.16.
GENERAL MANAGER’S AGENDA:
10. Miscellaneous Information items:
General Manager Arant reported that almost 1,900 AF of water was sold in March. The District hopes usage will stabilize at about 25,000 AF of demand.
CLOSED SESSIONS
11. Closed sessions were called by President Broomell at 3:34 p.m. pursuant to:
• Government Code §54956.9(a), Conference with Legal Counsel, Existing Litigation
Name of Case: United States, the States of California, et al. v. J-M
Manufacturing Company, Inc.
United States District Court
Case Number: ED CV06-0055-GW
Name of Case: The State of New Mexico, et al. v. J-M Pipe
Manufacturing Company, Inc., et al.
Los Angeles County Superior Court
Case Number: BC459943
ADJOURNMENT
12. Upon motion by Polito, seconded by Haskell and unanimously carried, the meeting was adjourned at 3:37 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary