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HomeMy WebLinkAboutBOARD MINUTES 06-10-93 127 MINUTE$ OF THE ADJOURNED REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON JUNE 10, 1993 The District Board of the Central Contra Costa Sanitary District convened in an adjourned regular session at its regular place of meeting, 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 3:06 p.m. on June 10, 1993. President Clausen called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Members: Dalton, Hockett, Rainey, Clausen ABSENT: Members: Menesini Member Menesini entered the meeting at the hour of 3:15 p.m. 2. PUBLIC COMMENTS None a. 3. HEARINGS CONDUCT A PUBLIC HEARING ON THE DRAFT FISCAL YEAR 19~3-1 994 CAPITAL IMPROVEMENT BUDGET (CIBHDRAFT 1 993 TEN-YEAR CAPITAL IMPROVEMENT PLAN (CIPL APPROVE THE 1993 tiP. AND APPROVE THE CIB FOR INCLUSION IN THE 1993-1994 BUDGET b. CONDUCT PUBLIC HEARINGS TO RECEIVE PUBLIC COMMENT ON THE 1 993- 1994 OPERATIONS AND MAINTENANCE BUDGET AND THE SELF-INSURANCE FUND BUDGET AND FOR THE ESTABLISHMENT OF THE 1993-1 994 SEWER SERVICE CHARGE RATES. AND ON PLACING CURRENT AND DELINQUENT SEWER SERVICE CHARGES ON THE COUNTY TAX ROLL FOR COLLECTION By way of introduction, Mr. Roger J. Dolan, General Manager-Chief Engineer, provided background with regard to the District's budgeting process. Mr. Dolan stated that the District has two budgets, one for operations and maintenance (O&M) and one for capital programs. The funding sources for these two budgets historically have been different and separate. O&M is funded primarily from Sewer Service Charge collection on the tax bill, revenue from the Concord and Clayton contracts, and other minor sources of revenue such as operating fees. The Capital Improvement Budget (CIB) has been funded primarily by ad valorem tax revenue. The District has a $250 million capital improvement plan over the next ten years. Secondary sources of revenue for the CIB are interest on accumulated reserves and connection fees for capacity to homes connected into the District. Mr. Dolan stated that he believes that two separate budgets will be maintained on into the future although this year there has been a major impact on revenue that has caused realignment of funding for the two budgets. Mr. Dolan stated that over a year ago, the District first became aware that the State might take all or a portion of the District's ad valorem tax revenue. In 1992-1993, the District actually lost $3.2 million, 40 percent of the District's ad valorem tax revenue. Aware that this was a likely possibility, staff began scaling back expenses last year, in spite of the fact that the District is under various federal and state mandated requirements. Although further loss of ad valorem tax revenue is anticipated this year, the District budgets are based on the premise that the District's remaining 60 percent of ad valorem tax revenue will be retained. Even so. drastic cuts have been made to both the O&M and Capital Improvement Budgets. Mr. Dolan introduced Ms. Deborah Ratcliff, Controller, who stated that this year the budgeting mission was to develop a flat budget with no increase in net expenses over last year's budget. The proposed 1993-1994 O&M Budget of $27,455,000 is $54,000, or 06 10 93 128 .2 percent, less than the 1992-1993 O&M Budget of $27,509,000. Ms. Ratcliff stated that based on contractual obligations, 1993-1994 salaries will increase by 3.2 percent and employee benefits will increase by 6.3 percent. Therefore, to accomplish the goal of a flat budget, it was necessary to eliminate vacant staff positions and also reduce expense categories. Budget reductions of $1.2 million were made by eliminating nine vacant positions and reducing other expenses. Ms. Ratcliff reviewed the major expense category reductions and highlighted the effect of budgeted increases in salaries and employee benefits on the 1933-1994 Sewer Service Charge. Member Menesini entered the meeting at the hour of 3: 15 p.m. In response to a question raised by President Clausen at the last Board Meeting, Ms. Ratcliff stated that the County Retirement Board reduced the cost-of-living contribution in 1993-1994 for all employers in the entire County Retirement System because revenue from investments earned more than enough to meet obligations. Ms. Ratcliff stated that at the last Board Meeting, information was given on District memberships in outside organizations. Approximately $101,000 is budgeted for District memberships. Of that amount, the District's membership in the Contra Costa Solid Waste Authority of approximately $14,000, will be recovered through the franchise fee. Ms. Ratcliff provided an overview of the current Self-Insurance Fund Budget compared to last year. Revenues over expenses are anticipated to be $60,000, increasing reserves to $5.9 million in 1993-1994. Mr. Dolan described the budgeting process, noting that all budgets begin with staff preparation and review, proceed through Board Committee review, to review and then approval by the full Board. This year because of the integration of the approval process for both the O&M Budget and the Capital Improvement Budget (CIB), the CIS was not formally submitted for approval by the full Board in May, but was held for consideration with the O&M Budget and Sewer Service Charge. Mr. Dolan introduced Mr. Robert A. Baker, Deputy Chief Engineer, who presented an overview of the Capital Improvement Budget (CIS) and Ten-Year Capital Improvement Program (CIP), stating the CIB is the program for capital spending over the next year 1993-1994, and the CIP is the program for capital spending over the next ten years. The CIB/CIP was distributed to the Board previously and has been reviewed with the Board Capital Projects Committee and the full Board. Mr. Baker stated that Board approval of the CIB will authorize an additional $28,918,000 from the Sewer Construction Fund for a total funding authorization of $76,778,000 for planning, design and construction of capital improvement projects and will constitute approval of the projects listed in the budget document as exempt under the California Environmental Quality Act (CECA). Mr. Baker stated that the balance in the Sewer Construction Fund at July 1, 1993 is expected to be $66 million. It is projected that the Sewer Construction Fund balance will be drawn down to approximately $50 million by July 1, 1994. There is sufficient dependable revenue to cover expenditures for the CIB during the 1993-1994 Fiscal Year regardless of the action taken by the State Legislature with regard to ad valorem tax revenue. Mr. Baker stated that debt financing will be required within two years to continue the capital program. The key issue before the Board at this time deals with the CIP and spending over the ten-year period for improvement of the collection system and treatment plant. Mr. Baker stated that in 1991-1992, the District received $8 million in ad valorem tax revenue. In recent years that money has been used only for capital improvements. In the current fiscal year, $3.2 million in ad valorem tax revenue was taken by the State. In the next fiscal year, there is a strong possibility that the District could lose all ad valorem tax revenue, an additional $5 million. That is the major source of funding for the Capital Improvement Program. District staff has prepared a plan for the Board's consideration that includes a combination of program cuts and a Sewer Service Charge rate increase to offset the $3.2 million loss of funding from ad valorem taxes. Mr. Baker recommended that the possible loss of a further $5 million in ad valorem tax not be considered in rate setting this year, but instead be dealt with next year. All the scenarios presented include some amount of debt financing during the next ten years. Using Attachment 3 to the position paper, Mr. Baker reviewed the ten major environmental goals of the" 1992 Capital Improvement Plan Extended," which provides a baseline from which the program cuts can be evaluated. If capital funds had not been taken, these goals and the projects 06 10 93 129 to achieve them would have been recommended to the Board. Mr. Baker described the capital improvement program reduction alternatives and the impacts of each as described in the position paper. Mr. Baker presented the staff recommendation that Scenario A, with a $25 million program cut and a $20 Sewer Service Charge increment, be approved. As a backup option if the ad valorem taxes are taken by the State, the Board could later select Scenario B. Each successive scenario would have larger capital program cuts, a lower amount of debt issuance, a lower Sewer Service Charge replacement increment, and a progressively more serious impact on the ability of the District to meet environmental goals. In response to a question from Member Dalton, Mr. Baker stated that staff plans to recommend that connection fees be increased over a three-year period. A proposal will be presented to the Board for consideration later this summer or fall. Mr. Dolan directed the Board's attention to the loss of $3.2 million in ad valorem tax revenue in 1992-1993. That amounts to $23.40 per customer. The $20 Sewer Service Charge increase recommended in Scenario A would not be sufficient to cover that loss. If the State takes an additional 40 percent, that would amount to $47.95 per customer; and if the State takes all the ad valorem tax revenue, that would amount to $84.78 per customer. Staff recommends that the Sewer Service Charge be incremented by $20. If the State taking is greater than $3.2 million, the District would have to deal with that next fiscal year. If additional ad valorem tax revenue is lost, staff would recommend that - it be made up in two ways: 1 ) 2) Further Capital program cuts; and Increasing the Sewer Service Charge to recover a portion of the loss. Member Hockett stated that there is a vicious cycle. The State of California is in an economic downturn. Businesses are leaving the State and taking their tax dollars with them. This is a bureaucratic issue, but it is also an issue relating to the cost of doing business. Member Hockett cautioned the District against becoming economically prohibitive. At 4: 12 p.m., President Clausen opened the public hearing to receive public comments on the Draft Fiscal Year 1993-1994 Capital Improvement Budget and Draft 1993 Ten- Year Capital Improvement Plant. Mr. Parke L. Boneysteele, resident of Walnut Creek and former Member of the Board of Directors, addressed the Board with regard to the water reclamation component of the CIB and tiP. Mr. Boneysteele stated that the District received federal and state grants for the construction of the District treatment plant. Under the Clean Water Act, the District was one of the first to receive such grants conditioned on the fact that the District is a treatment plant and a water reclamation plant, close to industry and an abundant source of water that could be used again. At that time, the Board of Directors considered this very carefully. Bechtel was hired and advised the District against proceeding with a water reclamation plant. As a result of that advice, a public hearing and study session was held. At the hearing, a representative of the State Water Resources Control Board, Mr. John O. Nelson, Manager of the Clean Water Grant Program for the Board, said that should the Board decline to go through with the water reclamation plant, the grant would not be given. Consequently, the Board made a commitment to proceed with construction of this plant which is designed as a water reclamation plant in addition to a treatment plant. Mr. Boneysteele stated that Bechtel was correct however. The economics were not there, conditions on quality of discharge were relaxed, there was friction with the District's water reclamation partner Contra Costa Water District, and the District never proceeded with full-scale water reclamation. Mr. Boneysteele stated that the District is now coming to a point where it appears that water reclamation will be economically feasible not only because of the increased cost of water but the fact that water may not be available at all. Mr. Boneysteele urged the Board to remember that the District has a commitment to proceed with water reclamation, and Mr. Boneysteele urged that funding be provided for the water reclamation projects that are necessary to fulfill that commitment. By eliminating that funding, the District will have violated a fundamental commitment. Mr. Boneysteele stated that this is not just an 06 10 93 130 economic issue, it is a moral issue. The District has agreements with the federal and state governments. The District should take no action that would prevent reclaiming water in the future. President Clausen thanked Mr. Boneysteele for his comments. Mr. Baker described the water reclamation projects that would be impacted by the cutbacks proposed in each scenario presented to the Board for consideration. There being no further comments, President Clausen closed the public hearing at the hour of 4:21 p.m. and returned the matter to the Board for deliberation. President Clausen stated that he began his consideration with Scenario E but came to the conclusion that Scenario E is totally unacceptable, Scenario D is unsatisfactory, Scenario C is extremely risky, Scenario B is risky as well, and Scenario A is less risky and President Clausen considers it to be safe. Extension of the 1992 CIP is too costly and in President Clausen's opinion cannot be considered. He indicated that a $20 increase in the Sewer Service Charge does not even recover last year's tax loss and the salary and benefit obligation of the third year of the Memoranda of Understanding. Member Menesini stated that he would like to respond to the letter from the Contra Costa Taxpayers Association dated June 8, 1993. Member Menesini stated that the theme of the letter makes sense. The O&M Budget should be essentially flat; however, this may not be the right time to maintain a flat budget because the economic situation could get worse. If that happens and the District is not supporting some improvements and programs contained in Scenario A, the District would be abdicating some of its responsibility to the public. There may be some loud cries if the Sewer Service Charge rate is raised, and that is to be expected. The public elected the Board to make decisions to keep prices down but also to make decisions to protect the public health and the environment. Member Menesini stated that he believes that if the public were sitting here considering these cutbacks and what $20 per year will buy, the public would make the decision to protect the public and the environment. Member Menesini stated that the Board must look to its stewardship of public safety and protection of the environment. To that end, Member Menesini voiced support for Scenario A. Member Rainey concurred with President Clausen's analysis of the scenarios presented for Board consideration, noting the agony, the hard work, and the staff's professional judgment that went into development of the various scenarios. Member Rainey expressed concerns about cutbacks to water reclamation. Member Rainey noted that at the workshop held on the CIB/CIP, increased costs to the District based on mandated programs due to regulatory agencies were discussed. While the District continues to cut back, there are additional requirements being mandated. Member Rainey stated her preference for Scenario B; but because of her concern for water reclamation and the risk to the East Bay Municipal Utility District watershed by cutting too severely, Member Rainey stated that she could support Scenario A. Member Hockett thanked Mr. Baker for the clear and informative presentation and for the addition of the environmental goals. Member Hockett stated she believes strongly that the District must adhere to the environmental goals and that there will likely be additional mandates from regulatory agencies requiring additional expenditures to achieve compliance. Member Hockett expressed support for Scenario A because the District's primary mission, protection of the public, is very clear in Scenario A and the $20 Sewer Service Charge increment recommended in Scenario A does not even recover the ad valorem tax revenue taken by the State. Member Hockett underscored the importance of water reclamation and commended staff for the prioritization and cuts made to the CIB/CIP. Member Dalton expressed support for water reclamation, stating that reclaimed water is a valuable resource and could be very beneficial to the District's citizens in the future. Member Dalton complimented Mr. Baker and District staff for the review and the financial information provided. In the past, the District has maintained an ongoing capital improvement program taking advantage of Federal and State grants. Member Dalton stated his preference for maintaining funding for the program to the extent possible. 06 10 93 131 Member Menesini stated that the District is manufacturing reclaimed water and doing what we are obligated to do. The ball is in someone else's court at this time. The District has done an excellent job planning what we think is the future for that reclaimed water resource. The District must impress on Contra Costa Water District that they have a part in this with the delivery of the reclaimed water. Member Menesini agreed that the District cannot provide reclaimed water unless the water can be transported from the plant to the residents. It was moved by Member Hockett and seconded by Member Menesini, that the 1993 Capital Improvement Program be approved, that the 1993-1994 Capital Improvement Budget be approved for inclusion in the 1993-1994 District Budget, and that Capital Program Reduction Alternative Scenario A, with a $25 million program cut and the associated $20 Sewer Service Charge increment, be selected. Motion unanimously approved on the following roll call vote: AYES: Members: Hockett, Menesini, Dalton, Rainey, Clausen NOES: Members: None ABSENT: Members: None b. CONDUCT PUBLIC HEARINGS TO RECEIVE PUBLIC COMMENT ON THE 1993- 1994 OPERATIONS AND MAINTENANCE BUDGET AND SELF-INSl)RANCE FUND BUDGET AND FOR THE ESTABLISHMENT OF THE 1993-1994 SEWER SERVICE CHARGE RATES. AND ON PLACING CURRENT AND DELINQUENT SEWER SERVICE CHARGES ON THE COUNTY TAX ROLL FOR COLLECTION Mr. Dolan, General Manager-Chief Engineer, stated that staff recommends adoption of the Operations and Maintenance (O&M) and Self-Insurance Fund Budgets as presented. At 4:26 p.m., President Clausen opened the public hearing to receive public comments on adoption of the 1993-1 994 O&M and Self-Insurance Fund Budgets and on establishment of the 1993-1994 Sewer Service Charge rates. Receipt of the following correspondence was noted: 1) Letter dated May 25, 1993 from Dr. John N. DeBoice, 4716 Tahoe Circle, Martinez, CA 94553, objecting to any rate increase; and 2) Letter dated June 8, 1993 from Mr. John I. Wolfe, Jr., Executive Vice President of the Contra Costa Taxpayers Association, Box 27, Martinez, CA 94553, commending the District for staffing and other cutbacks and for maintaining a flat O&M Budget but objecting to a rate increase to pay for capital improvements. There being no other comments or correspondence, President Clausen closed the public hearing at the hour of 4:27 p.m. and returned the matter to the Board for deliberation. Member Rainey complimented staff for the hard work that went into presenting a flat budget in the face of increased regulatory requirements, noting that nine vacant positions have been eliminated and the Board has instituted a hiring freeze. Member Rainey supported the O&M Budget as presented. It was moved by Member Rainey and seconded by Member Hockett, that the 1993-1994 Operations and Maintenance Budget and Self-Insurance Fund Budget be approved for inclusion in the 1993-1 994 District Budget. Motion approved on the following roll call vote: AYES: Members: Rainey, Hockett, Menesini, Dalton, Clausen NOES: Members: None ABSENT: Members: None 06 10 93 132 President Clausen suggested that the following phrase be added to the third paragraph of the proposed ordinance establishing the Sewer Service Charge rates, "and to partially fund the Capital Improvement Budget to replace a portion of the ad valorem taxes taken by the State of California in 1992-1 993." It was moved by Member Rainey and seconded by Member Hockett, that Ordinance No. 186 establishing the Sewer Service Charges to be billed by the Central Contra Costa Sanitary District to all served properties for 1993-1994, be adopted with the proposed addition noted above. Motion unanimously approved on the following roll call vote: AYES: Members: Rainey, Hockett, Menesini, Dalton, Clausen NOES: Members: None ABSENT: Members: None At 4:42 p.m., President Clausen opened the public hearing to receive public comments concerning collection of the 1993-1994 Sewer Service Charges on the County tax roll. There being no comments, President Clausen closed the public hearing. Following discussion of the County cost for collection of Sewer Service Charges on the County tax roll, it was moved by Member Menesini and seconded by Member Dalton, that Resolution No. 93-055 be adopted, authorizing collection of the 1993-1994 Sewer Service Charges on the County tax roll. Motion unanimously approved on the following roll call vote: AYES: Members: Menesini, Dalton, Hockett, Rainey, Clausen NOES: Members: None ABSENT: Members: None At 4:47 p.m., President Clausen opened the public hearing to receive public comments concerning collection of delinquent Sewer Service Charges on the County tax roll. There being no comments, President Clausen closed the public hearing. It was moved by Member Menesini and seconded by Member Dalton, that the 1992-1993 Delinquent Sewer Service Charge Account Report dated June 1 993 be adopted pursuant to Section 5473 of the Health and Safety Code, that collection of that delinquent Sewer Service Charge on the County tax roll be authorized, and that Resolution No. 93-056 be adopted to that effect. Motion unanimously approved on the following roll call vote: AYES: Members: Menesini, Dalton, Hockett, Rainey, Clausen NOES: Members: None ABSENT: Members: None 4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER None a. 5. CORRESPONDENCE NOTE RECEIPT OF LETTER DATED MAY 27. 1993 FROM ASSEMBLYMAN ROBERT J. CAMPBELL ACKNOWLEDGING CCCSD'S CORRESPONDENCE REGARDING CALIFORNIA'S 1993-1994 BUDGET 06 10 93 b. 133 NOTE RECEIPT OF POSTCARD RECEIVED MAY 28. 1993 FROM GOVERNOR PETE WILSON ACKNOWLEDGING CCCSD'S CORRESPONDENCE REGARDING CALIFORNIA'S 1993-1994 BUDGET Receipt was noted of letter dated May 27, 1993 from Assemblyman Robert J. Campbell and postcard received May 28, 1993 from Governor Pete Wilson, both acknowledging CCCSD's correspondence regarding California's 1993-1994 budget. None a. b. c. d. 6. EMERGENCY SITUATIONS REQUIRING BOARD ACTION 7. REPORTS GENERAL MANAGER-CHIEF ENGINEER 1 ) Mr. Dolan, General Manager-Chief Engineer, stated that a couple months ago as a cost-saving measure, an analysis was done of the potential costs and benefits of having the District offer two years service credit to employees who may wish to retire early in 1993-1994. There were some concerns with the first review of the economics and a more detailed review was done by Controller Deborah Ratcliff in conjunction with the County Retirement Office. The analysis of the options including positions that may have to be refilled will be presented at the June 17, 1993 Board Meeting. Member Rainey reported that this matter was reviewed with the Board Personnel Committee. Mr. Paul Morsen, Deputy General Manager, stated that he will contact the bargaining units to meet and confer on this issue unless the Board objects. The Board voiced no objection. 2) Mr. Dolan announced that staff will make a presentation to the Grand Jury on Tuesday, June 15, 1993. The Grand Jury has an obligation to oversee special districts. As partial fulfillment of that charge, when a new Grand Jury is convened, the District routinely makes a presentation. COUNSEL FOR THE DISTRICT None SECRETARY OF THE DISTRICT None BOARD MEMBERS 1 ) President Clausen congratulated Mr. David R. Williams, Planning Division Manager, on his hiring by East Bay Municipal Utility District and indicated that the District will miss his knowledge and expertise. Mr. Williams thanked the Board for their good wishes. 2) 3) Member Rainey announced that the Fiscal Unity Committee has disband. Member Rainey, member of the Personnel Committee, reported that she and Member Dalton met with staff on June 4, 1993. A number of key employees, including Planning Division Manager Dave Williams, Public Information/Graphics Coordinator Colleen Camicia, and Accounting Technician II Gayle Turnage, have announced their resignations. The Board of Directors has instituted a hiring freeze and requested that each position that becomes vacant be reviewed. Because of the payroll responsibilities of the Accounting Technician position, staff has requested that it be refilled. Upon review, the Personnel Committee concurred and agreed to recommended to the Board that the position be refilled. It was moved by Member Rainey and seconded by Member Dalton, that an Open/Promotional recruitment be authorized to refill the Accounting 06 10 93 134 Technician 1/11 position in the Accounting Office. There being no objection, the motion was unanimously approved. 8. ANNOUNCEMENTS Member Menesini announced that on June 5, 1993 he attended the hearing on the San Francisco Estuary Project Comprehensive Conservation and Management Plan. Mr. Charles W. Batts, Plant Operations Department Manager, is to be commended for his efforts in that regard and for being one of the signatories on the Plan. . Member Menesini announced that Mr. Ben Griffanti, a long-time community leader, passed away recently. He will be sorely missed. 9. CLOSED SESSION None 10. ACTIONS RESULTING FROM DISCUSSIONS IN CLOSED SESSION None 11. ADJOURNMENT There being no further business to be come before the Board, President Clausen adjourned the meeting at the hour of 5:02 p.m. si of the Board of Directors, Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: (L CÞ. t . ( Se re of the Central Con ra Cos Sanitary District, County of Contra Costa, State of California 06 10 93