HomeMy WebLinkAboutBOARD MINUTES 03-17-05
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MINUTES OF THE REGULAR BOARD MEETING
OF THE DISTRICT BOARD OF THE
CENTRAL CONTRA COSTA SANITARY DISTRICT
HELD ON MARCH 17,2005
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The District Board of the Central Contra Costa Sanitary District convened in regular
session at its regular place of meeting, 5019 Imhoff Place, Martinez, County of Contra
Costa, State of California, at 2:00 p.m. on March 17, 2005.
President Hockett called the meeting to order and requested that the Secretary call roll.
1. ROLL CALL
PRESENT: Members:
Menesini, Boneysteele, Nejedly, Lucey, Hockett
ABSENT:
Members:
None
a.
PLEDGE OF ALLEGIANCE TO THE FLAG
Board and staff joined in the Pledge of Allegiance to the Flag.
b.
INTRODUCTIONS
RECOGNIZE ANDREW ANTKOWIAK ON HIS PROMOTION TO SENIOR
ENGINEER
.
President Hockett and the Board of Directors congratulated Mr. Andrew Antkowiak on
his recent promotion to Senior Engineer.
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2. PUBLIC COMMENTS
None
3. AWARDS AND COMMENDATIONS
a.
RESOLUTION COMMENDING JOYCE E. MURPHY FOR HER SERVICE AS
SECRETARY OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT
Mr. Charles W. Batts, General Manager, stated that it is with bittersweet pleasure that
this resolution is presented for the Board's consideration, commending Ms. Joyce E.
Murphy, Secretary of the District, for her public service, her outstanding service to the
Board of Directors, her accomplishments as a manager, and her personal impact in
making Central Contra Costa Sanitary District a better place to work.
It was moved by Member Menesini and seconded by Member Nejedly, that Resolution
No. 2005-013 be adopted, commending Joyce E. Murphy for her service as Secretary of
the Central Contra Costa Sanitary District. Motion unanimously approved on the
following vote:
AYES: Members: Menesini, Nejedly, Boneysteele, Lucey, Hockett
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NOES: Members: None
ABSENT: Members: None
Members Lucey and Menesini and the Board of Directors recognized Ms. Murphy for
service to the Board of Directors and the District, stating that her presence will be
missed.
Ms. Murphy thanked the Board and staff for their comments and for their support
through the years, stating that it has truly been a pleasure to work with each and every
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one. Ms. Murphy stated that the District has an excellent staff and Board, and will only
get better.
b.
PRESENTATION OF AWARD OF EXCELLENCE BY MR. DAVID
RICHARDSON OF THE WATEREUSE BOARD. RECOGNIZING THE
CONTRIBUTIONS OF MR. JAMES M. KELLY AND CENTRAL CONTRA
COSTA SANITARY DISTRICT TO WATEREUSE
Mr. Batts, General Manager, stated that Mr. David Richardson, a WateReuse
Foundation Board Member, is here as a representative of the Foundation to recognize
Mr. James M. Kelly for his extensive service as a WateReuse Foundation Board
Member. While Mr. Kelly's term ended last December, his contributions have spanned
many years, and he has achieved national recognition for his contributions to the
acceptance and use of recycled water.
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Mr. David Richardson, WateReuse Foundation Board Member, stated that by
presentation of this Award of Excellence, WateReuse wishes to recognize Mr. James M.
Kelly and the Central Contra Costa Sanitary District for their support and contributions.
What the WateReuse Foundation has been able to do, thanks in large part to Mr. Kelly
and others who started the Research Foundation over ten years ago, is to take
contributions from consulting firms and agencies such as Central San, and to leverage
them with federal and state dollars to promote water recycling research. The
WateReuse Foundation uses those funds to do research in public acceptance, public
outreach, dealing with emerging contaminants, and bringing water recycling in
California, the United States, and internationally to a new level. Mr. Richardson
presented the WateReuse Research Foundation Award of Excellence to Mr. James M.
Kelly.
Mr. Kelly thanked Mr. Richardson and the WateReuse Research Foundation.
Mr. Kelly asked that the Board allow a few moments for Mr. Richardson to recount a
Central San customer service story. Mr. Richardson reported that a large Central San
truck and crew was in his driveway this morning. His children were excited and
interested in the truck and crew, and the crew was helpful and informative. It was all
service with a smile. Mr. Richardson thanked the Board and the District as a customer
and a ratepayer.
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President Hockett recognized and commended Mr. Kelly for his quiet expertise and
contributions.
4. CONSENT CALENDAR
It was moved by President Hockett and seconded by Member Menesini, that the
Consent Calendar, consisting of Items a. through d., be approved as recommended,
resolutions adopted as appropriate, and recordings duly authorized.
a.
Public sewer improvements and an Offer of Dedication were accepted from
Standard Pacific Corporation for an easement shown on the recorded final map
of Subdivision 8624 in the Town of Danville, Job 5707; staff was authorized to
record the easement acceptances with the Contra Costa County Recorder; and
Resolution No. 2005-014 was adopted to that effect.
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Motion unanimously approved on the following vote:
Hockett, Menesini, Boneysteele, Nejedly, Lucey
AYES: Members:
NOES: Members:
ABSENT: Members:
None
None
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b.
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April 21, 2005 at 2:00 p.m. was established as the date and time for a public
hearing to receive comments on and to consider adoption of a proposed
ordinance to amend District Code Chapter 6.12, Capacity Fee Program.
Motion unanimously approved on the following vote:
AYES: Members:
I NOES: Members:
ABSENT: Members:
Hockett, Menesini, Boneysteele, Nejedly, Lucey
None
None
April 21, 2005 at 2:00 p.m. was established as the date and time for a public
hearing to receive comments on and to consider adoption of a proposed
ordinance to amend District Code Chapter 6.30, Schedule of Environmental and
Development-Related Rates and Charges.
c.
Motion unanimously approved on the following vote:
AYES: Members:
NOES: Members:
ABSENT: Members:
d.
Hockett, Menesini, Boneysteele, Nejedly, Lucey
None
None
A medical leave of absence without pay was authorized for Mr. Steve Plunkett,
Utility Worker, through June 3, 2005.
Motion unanimously approved on the following vote:
I AYES: Members:
NOES: Members:
ABSENT: Members:
Hockett, Menesini, Boneysteele, Nejedly, Lucey
None
None
5. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER
Mr. Batts, General Manager, requested that Item 7.a., Engineering, be taken out of
order to accommodate interested persons in the audience. Hearing no objection,
President Hockett proceeded to Item 7.a., Engineering.
7. ENGINEERING
AUTHORIZE THE GENERAL MANAGER TO EXTEND THE AGREEMENT
WITH THE CONTRA COSTA CLEAN WATER PROGRAM AUTHORIZING THE
SOURCE CONTROL SECTION TO CONTINUE CONDUCTING STORM
WATER INSPECTION SERVICES
a.
Mr. Batts, General Manager, stated that since 1987, the District has provided storm
water inspection services to the County's Clean Water Program and the ten cities within
the District service area. Staff from the District Source Control Program coordinates the
inspections, conducts the site visits, investigates complaints, and provides education
related to storm water discharges. Delta Diablo Sanitation District and East Bay
Municipal Utility District provide similar services to cities in east and west Contra Costa
County respectively. These site visits are conducted concurrently with the District's
pretreatment inspections which promotes an efficiency for all parties, the District, the
County, the cities, and the businesses. The District is reimbursed for the cost of the
storm water inspection portion of the inspection activities. The agreement for providing
the storm water services expires on June 30, 2005. The agreement provides for two,
two-year extensions. Staff recommends extending the agreement until June 30, 2007.
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Mr. Batts introduced Mr. Curtis W. Swanson, Environmental Services Division Manager,
who stated that the Contra Costa Clean Water Program was formed to improve water
quality in Contra Costa County creeks and ultimately the estuary where the creeks
discharge. The Program was formed as a result of the 1987 Clean Water Act
amendment that required cities, counties, and municipalities to reduce storm water
pollution. National Pollutant Discharge Elimination System (NPDES) permits were to be
issued outlining plans and activities to obtain that goal. The Country, through the Flood
Control District,is the lead agency for the Clean Water Program and all 19 cities in the
County are part of the Program. The ten cities in the District service area make use of
and benefit from the joint inspection services. The inspections and other services are
offered through an inter-agency agreement between the Flood Control District as the
agent for the County and three special districts that provide wastewater services,
Central Contra Costa Sanitary District, Delta Diablo Sanitation District, and East Bay
Municipal Utility District. The agreement expires on June 30, 2005. There is provision
for two, two-year extensions until 2007 and 2009. The District is reimbursed for costs
for the storm water portion of the joint inspection services by the cities and the County.
In the case of the District, the revenue received covers the costs of two Source Control
Inspectors on District staff. The main activity provided by the District is the joint
inspections of businesses and industries in the District service area. During 2004,
1,080 inspections were performed at 819 businesses. So far this year, a little over 800
inspections and re-inspections to follow up on problems have been done. These
inspections are joint inspections since District inspectors take care of both storm water
and wastewater issues and there are obvious benefits to that. The District provides
education to business owners and employees on storm water requirements as well as
housekeeping things businesses can do to comply with those requirements. The
District also does field investigations and follows up on complaints taken in by the cities
or the District and does enforcement activities if necessary. Mr. Swanson stated that
the benefits of joint inspections are that the businesses deal with the same inspector for
storm water and sewer service rather than two; inspections are more efficient since only
one visit rather than two visits is required saving time for the businesses; inter-agency
cooperation is fostered between the cities, county, and special districts; and state and
federal regulators have recognized this inter-agency approach, and cites it as a model
for other storm water program. In summary, Mr. Swanson recommended that a two-
year extension to the Clean Water Program contract be approved. If the contract is not
extended, staff would request that the Board consider providing a one-year grace period
for the Clean Water Program to develop an alternative process.
Member Menesini asked what kinds of concrete recognition have been received for this
program. Mr. Swanson stated much of the recognition is in the form of indirect benefits
in terms of good will and cooperation on other types of requirements that are imposed
on the District. Informal recognition is also received through public comments at
meetings. In addition, the District has received the U.S. Environmental Protection
Agency Best Source Control Program twice in the last seven years, and one component
among many factors is this inter-agency Clean Water Program.
In response to a question from Member Menesini concerning the number of inspectors
employed by Central Contra Costa Sanitary District for this purpose compared to the
other special districts in the Program, Mr. Swanson stated that the District does more
inspections in our service area compared to the number of inspections done by the
other two special districts in their service areas and the revenue covers the costs of two
inspectors although all the District inspectors are cross trained and do this work. Mr.
Swanson stated that he believes that the other two special districts perform the
inspections with their existing staff, but Mr. Freitas may be able to provide more
information in that regard.
Mr. Don Freitas, Manager of the Contra Costa Clean Water Program, stated that it was
eight years ago that he came forward to talk about this Program. At that time there was
some reluctance because such an inter-agency cooperative program was very new and
different. Rather than creating a separate entity, it was felt that special districts have
the ability to concentrate and become experts in their particular field. It made sense
that the County would join with the special districts and use the inspectors' experience
in pretreatment to provide a comprehensive inspection of facilities. One of the things
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that businesses dislike is having one inspector after another knocking at the door, and
having one inspector with the expertise as the point of contact was felt to be the best
approach. The Program has been a tremendous success. It has given the District
funding for two inspectors and provided flexibility in staffing. Delta Diablo Sanitation
District has about one half-time position and East Bay Municipal Utility District has about
one half- to third-time position. Mr. Freitas stated that the District is reimbursed for all
its costs and is not in any way subsidizing this Program. All out-of-pocket costs,
salaries, benefits, and overhead are reimbursed through the Program. Mr. Freitas
stated that the County, the cities, and the regulatory agencies believe that this has been
a successful program. Mr. Freitas requested that the Board consider approval of a two-
year extension of the Clean Water Program agreement.
Member Lucey stated that he voted against approval of the agreement previously and
will vote against it again. Member Lucey stated that he believes there are problems
with the District's inspectors based on comments from the trucking company. There is
an Outreach Committee working to improve the District's image and get the District's
message out to the public. Member Lucey stated that he does not believe that this
Program helps the District.
Member Menesini stated that he believes that there is much that can be done in
educating inspectors, although there are times when enforcement is necessary. But
when enforcement is necessary, that difficult job can be done without expressing
hostility. After considering the benefits set forth in the position paper, Member Menesini
requested further discussion or listing of the concrete benefits the District derives from
participating in the Clean Water Program, and some evidence of in-service workshops
for District inspectors showing that the District is doing inspections with a positive rather
than negative approach. Last, Member Menesini requested that the Board receive
some feedback from Mr. Freitas or others on the District inspection process.
Member Nejedly stated that he has had personal experience with the District inspection
process and found it lacking. Member Nejedly stated further that he believes that the
District is drawn into this program because it is the biggest and the best. Member
Nejedly stated that he believes the storm water inspections are the right thing to do, but
he questions why a sanitary sewer district would be inspecting storm drains. Member
Nejedly stated that he understands that the District is reimbursed for the work
performed for the Clean Water Program, but he would like to see an accounting of the
Program, including overhead. Member Nejedly stated that he will vote for the Program
because he thinks that it is the right thing to do, but he stated that he hopes that the
District will do a better job on these inspections than in the past.
Member Boneysteele stated that he appreciates the concerns expressed, but he
believes that avoiding duplication of effort and reducing the number of inspections that
the businesses must undergo would contribute to the overall needs and desires of the
people of the District, especially now when the financing the public services is coming
under a strain. Member Boneysteele stated that he believes that the overall scope of
the program is in the public interest and therefore in the interest of the District.
President Hockett stated that the Clean Water Program has been a very worthwhile
partnership. President Hockett stated that she supports building and strengthening
partnerships throughout the County in any way that the District can. President Hockett
stated that she believes that it is in the District's best interest and within the District's
expertise to fulfill the District's commitment to pollution prevention and to utilize District
staff to do so.
It was moved by Member Menesini and seconded by Member Boneysteele, that the
General Manager be authorized to extend the contract with the Contra Costa Clean
Water Program for the District's Source Control Section to continue conducting storm
water inspections in the central county cities through June 30,2007. The motion was
approved with Member Lucey voting no.
President Hockett thanked Mr. Freitas for his presentation.
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At this time, President Hockett reverted to the order of the agenda.
6. REPORTS
a.
GENERAL MANAGER
1)
Mr. Batts, General Manager, stated that each February as required by the
District's National Pollutant Discharge Elimination System (NPDES)
permit, District staff submits a report of the pollution prevention activities
for the previous calendar year. Mr. Batts introduced Ms. Melody LaBella,
Assistant Engineer, who provided an update on the District's 2004
Pollution Prevention Program. Ms. LaBella stated that the District's
Pollution Prevention Program started unofficially in the late 1980's. The
District's 1995 NPDES permit required a Pollution Prevention Program
and it has been ramped up since that time. Ms. LaBella stated that in
2004, the District did not exceed any of its NPDES permit effluent limits for
the seventh consecutive year; the District continued its award-winning
public outreach programs and operation of the Household Hazardous
Waste (HHW) Collection Facility; and the District began outreach to the
dental community in an effort to reduce influent mercury concentrations
taking a more collaborative approach than some other neighboring
agencies that require amalgam separators.
Ms. LaBella stated that the District's Pollution Prevention Program begins
with the support and direction of the Board of Directors to go forward with
the Program components: household hazardous waste collection,
pretreatmentlstormwater inspection, public outreach, and cooperative
partnerships. Staff takes this and carries out the efforts and activities that
make up the program. The Pipeline newsletter, inspections, integrated
pest management, factsheets, student education, dental outreach, HHW
collection facility, the District website, tradeshows, and monitoring are
current examples.
Ms. LaBella stated that the pollutants of concern listed in the District's
2001 NPDES permit include Acrylonitrile, Bis(2-ethylhexyl) pthalate,
copper, cyanide, 4,4'-DDE, Dieldrin, lead, 2,3,7,8-TCDD equivalent,
Tributyltin, and mercury, the highest priority pollutant. On the front page of
today's Contra Costa Times, there was a graphic on the amount of
mercury contributed to the San Francisco Bay. About 2,700 pounds were
contributed to the Bay. Of that, about 44 pounds were attributed to
wastewater, the lowest contribution to the mercury problem. The San
Francisco Bay is impaired for mercury. The pending Total Maximum Daily
Load (TMDL) for mercury, if passed, will lower the District's effluent
mercury limit and place the District in a position of potentially violating that
new limit. In order to be proactive, the District has implemented a number
of mercury reduction activities, including continuing to accept mercury-
containing wastes at the HHW Collection Facility, participation as a control
facility in the Association of Metropolitan Sewerage Agencies (AM SA)
Amalgam Separator Study, implementation of the Dental Mercury
Inventory Program, and joining the Mercury (Hg) Elimination Leadership
Program (HELP) Partnership. The HELP Partnership is an effort to
eliminate all mercury in hospitals.
Ms. LaBella reviewed highlights from the 2004 Pollution Prevention
Annual Report previously distributed to the Board. Ms. LaBella described
the various program components highlighted in the Report. In 2004 at the
HHW Collection Facility, 245 mercury thermometers were exchanged for
digital thermometers, over 2,300 mercury thermometers were collected,
26,023 feet of fluorescent lamps were collected, and almost 11,000
pounds of pesticides were collected. The result was that over 100 pounds
of elemental mercury was collected at the HHW Collection Facility and
kept out of the wastewater stream. As part of the Pretreatment and
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Stormwater Programs in 2004, 813 pretreatment inspections were
conducted at 639 businesses, 1 ,080 stormwater inspections were
performed at 819 businesses, education outreach was done at several
different events, and the Dental Mercury Inventory Program was
implemented. In 2004, public outreach was done using the Sewer
Science Program, Kids in Gardens, the Central San Water Wizards
Program, the 13th Annual Pollution Prevention Awards Program, the
CCCSD Pipeline newsletter, and the Healthy Gardening Workshops. As a
result of those outreach efforts, 2,300 students at 30 schools were
reached, 140,000 residences and businesses were reached with the
Spring 2004 issue of the CCCSD Pipeline newsletter, HHW magnets were
mailed to 20,000 residents in San Ramon resulting in a 25 percent
increase in San Ramon participation at the permanent HHW Collection
Facility in the two months that followed that mailing, and 15 Healthy
Gardening Workshops were held with 253 people in attendance. The last
component of the Pollution Prevention Program is cooperative
partnerships. In 2004, the District partnered with the Bay Area Clean
Water Agencies (BACWA), the Bay Area Stormwater Management
Agencies Association (BASMAA), the Bay Area Pollution Prevention
Group (BAPPG), the Our Water Our World integrated pest management
strategy started by the District, and the Contra Costa Green Business
Program. As a result of these cooperative partnerships, 44 pollution
prevention story placements via print articles, radio and the we~ were
made, 30 new businesses were certified by the Green Business Program
in the District's service area, and 174 stores participated in the Our Water
Our World pesticide-reduction campaign throughout the Bay Area.
Ms. LaBella stated that in 2005, the District's Pollution Prevention
Program efforts will focus on continuing existing outreach programs and
operation of the HHW Collection Facility, continuing implementation of the
Dental Mercury Inventory Program, and continuing partnerships with the
Department of Toxic Substances Control HELP Program for pollution
prevention in hospitals. Ms. LaBella stated that in conclusion, the District
is doing a great job meeting its NPDES permit pollution prevention
requirements and will continue to do so in 2005.
Following discussion of the HELP Program, President Hockett stated that
Mt. Diablo Hospital recently received a Pollution Prevention Award and
could perhaps serve in a leadership role in this program. Ms. LaBella
agreed that she would look into that.
2)
Mr. Batts, General Manager, stated that in response to several inquiries
after the Board Financial Planning and Policy Workshop, a discussion and
staff assessment dealing with the present District reserves is being
presented. In June 2004, the Board adopted an ordinance setting a three-
year Sewer Service Charge rate. The issue of reserves is a Board policy
question, and staff wishes are only to provide the information needed for
Board deliberation. Mr. Batts stated that the purpose of this presentation
is to review information presented at the Board Financial Planning and
Policy Workshop, to discuss District reserves and respond to Board
questions, to review the Capital Program and its long-term requirements,
to discuss the politics of reserves, to review the proposed Sewer Service
Charge, and to receive Board direction concerning the 2005.;2006 Sewer
Service Charge and the District Reserve Policy.
Mr. Batts stated that the District goal has been to have responsible rates.
The District is a cost effective organization, doing the right things to
manage District finances including modest annual rate increases. It has
been the Board decisions and actions over the last five years that have
changed the financial situation of this District immeasurably. The District
has implemented modest annual increases, has reliable infrastructure, has
mainly used a "pay as you go" approach, and has adequate reserves.
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Through prudent financial management, the Board has put the District in a
position to be able to consider options for the Sewer Service Charge.
A conceptual model of "funds required" and "funds available" was
introduced at the 1999 Board workshop. The basis of the model is that
"funds available" should never be less than the "funds required" to pay the
District's bills. The purpose of this model was to ensure that the District
had sufficient funds to pay its bills between receipt of revenue collected on
the tax roll in April and December. The model is just a snapshot in time
and does not account for the source of funds or limitations on their use.
As with any other model, the assumptions are important.
At the end of the Board workshop in January, staff recommended that the
Board implement the 3 percent Sewer Service Charge rate increase for
2005-2006 that was adopted in June 2004, that annual rate adjustments to
District fees and charges be considered, that a District Reserve Policy be
considered, that the current Capital Improvement Budget (CIB) based on
the long-term Capital Improvement Plan (CIP) be implemented, and that
the District position itself for the possible loss of future ad valorem tax
revenues. Going back to the model, Mr. Batts stated that the question is
what should "funds required" be. "Funds required" in the rate scenarios
has been roughly $30 to $35 million. Recently "funds available" have
been augmented by near-term savings both by a reduction in Operations
and Maintenance (O&M) expenditures of approximately $3 million last
year and deferred capital projects of approximately $12 million. "Funds
available" were also augmented by receipt of ad valorem tax for two years
that the District did not expect, increased connection fees from the
housing boom, and bond financing of the San Ramon projects. "Funds
available" are now $65 million.
With regard to the question of whether the District has an existing Reserve
Policy, Mr. Batts stated that for many years the Capital Improvement
Budget documents contained a Reserve Policy that called for a reserve of
10 percent of the total O&M Budget, 100 percent of the next year's debt
service, 75 percent of the next year's Capital Improvement Budget, and
the annual Self Insurance Fund contribution. That total is approximately
$30 million, very close to the "funds required" figure. There may be
business reasons to consider having reserves higher than the "funds
required" figure, including concern about the level of the O&M reserve and
O&M expenses, prepayment of retiree benefits, self insurance liability,
large future capital expenditures, and anticipated future debt service.
Currently the District's unfunded liability in the Contra Costa County
Employees Retirement Association is $27 million. That is something that
is paid off over the long term. The other major issue is needed large
future capital projects. The District has a conservative Capital Program
that currently meets the District's needs, but as the District infrastructure
ages and regulations require more of an asset management mode, those
expenses will go up.
Mr. Batts described the revenue received by the District including ad
valorem taxes, the City of Concord contract for both O&M and capital,
Sewer Service Charges, connection fees, and the split of those revenues
between capital and O&M. All this money goes into District reserves.
Reserves are currently $65 million, which is basically $30 million for cash
flow, $30 million for reserves, and $5 million that will be used next year for
the retiree benefits trust funds as required by the Government Accounting
Standards Board. The Board has committed ad valorem tax revenue in
part toward District debt service in an effort to protect that revenue from
taking by the State for the Education Relief Augmentation Fund (ERAF).
Connection fees are a one-time charge committed to the Sewer
Construction Fund. The policy of special districts defined by the California
Special Districts Association is that one time revenue should be used for
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one time expenses, and the law with regard to connection fees is that they
must be used for sewer construction purposes. The City of Concord
reimbursement for capital projects goes back to the Sewer Construction
Fund, and the fee paid by the City of Concord for treating Concord's
wastewater goes to O&M costs. The Sewer Service Charge revenue is
currently split between O&M expenses and the Sewer Construction Fund.
As the District service area gets closer to build out and connection fee
revenue dries up, the District must look more and more to the Sewer
Service Charge as a way to augment the Sewer Construction Fund.
Mr. Batts stated that much of the detail is in the assumptions used. At the
January 2005 workshop the following assumptions were used:
. That the State will take most of the ad valorem tax revenue from the
District for two years;
. That the three-year Board approved Sewer Service Charge is still
appropriate;
. That the prudent use of District reserves is preserved;
. That future capital funding needs are anticipated; and
. That the Board does not want large increases in the Sewer Service
Charge unless there is an evident need that would require that.
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The recommended scenario presented to the Board was a 3 percent
Sewer Service Charge rate increase for two years, that the District would
lose 65 percent ($5.7 million) in ad valorem tax revenue for two years, and
O&M spending was projected to be fairly close to the current year. One
impact the Board will see is a $5 million retiree benefits trust fund
discussed earlier.
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In response to a question from Member Lucey, Mr. Batts stated that the
District did in fact lose $5.7 million in ad valorem tax revenue; but the good
news is that even with losing $5.7 million in ad valorem tax revenue this
year and next year, the District is in a very solid financial position. Mr.
Batts stated that the recommended scenario takes in account the
acceleration of development, and connection fee revenue estimates were
increased and are reflected in the ten-year model used this year. With
regard to future expenses, benefits have been climbing and are projected
to continue to increase, and energy costs are expected to lead to a
general inflation increase. Some of that increase is being seen this year in
increased utility expenses. The Capital Improvement Budget discussed at
the November 2004 workshop, discussed future costs of regulatory
compliance and needed capital projects that were deferred in previous
years in an effort to save money anticipating the loss of ad valorem tax
revenue. The good news is that based on these assumptions, modest
Sewer Service Charge rate increases are projected even beyond the three
years covered by the ordinance adopted by the Board in June 2004. Mr.
Batts stated that it is projected that modest Sewer Service Charge rate
increases will be adequate up until fiscal year 2012-2013. Using a graph,
Mr. Batts described the District revenues and expenses, the loss of ad
valorem tax revenue, and the gradual spending down of reserves out to
the fiscal year 2012-2013.
In response to questions by Member Lucey concerning the level of
reserves at 2012-2013, Mr. Batts stated that there will be "funds available"
of approximately $40 million that that time. Currently the District has
approximately $65 million.
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Mr. Batts showed a chart to comparing the District's Sewer Service
Charge and connection fees to that of other local agencies, noting that the
District is below the median. When looking at the history of total District
revenue and expenses, the only time that revenues exceeded expenses
was in the last couple years. This is the direct result of the District
budgeting to receive no ad valorem tax revenue which was later received,
and the implementation of near term savings. The ad valorem tax
revenue received was approximately $9 million per year. Earlier this year,
it was reported that the District would go back to its normal spending
patterns. The other factor was the accelerated rate of development in
Dougherty Valley. Also, on the revenue side, the District received $9
million in ad valorem tax revenue that was not part of the model in
previous years.
In response to questions from President Hockett, Mr. Batts stated that the
dip in expenses occurred when capital projects were deferred and
approximately $3 million was saved by not filling budgeted positions, by
deferring some maintenance projects, and other O&M savings. The dip in
expenses is a combination of savings in both capital and O&M. In
response to a question from Member Lucey, Mr. Batts stated that the
additional un budgeted revenue received and funds resulting from the near
term savings were added to reserves.
Mr. Batts stated that the Sewer Service Charge is approximately 59
percent of District income and is split between O&M and capital; ad
valorem tax revenue has been about 12 percent, but the future of ad
valorem tax is unclear; capital fees account for about 9 percent and are
one time fees principally from the Dougherty Valley construction and will
be shrinking in the future as build out continues; and income from the City
of Concord contract is about 13 percent, but will be dropping in the future
as the Capital Improvement Program becomes more regulation driven with
a focus on the District collection system. Other factors with regard to
expenses, are that O&M expenses for energy, benefits, and chemicals will
be most impacted; and the Capital Improvement Budget is a fairly
conservative document. The dynamics of this is that it is expected that
approximately 7 percent will be drawn from reserves this year. One of the
things that makes modest rate increases into the future work is that over
the next ten years, the reserves are expected to drop from about $65
million to approximately $40 million.
Mr. Batts introduced Ms. Ann E. Farrell, Director of Engineering, to
discuss proposed capital expenditures and the level of reserves
anticipated to be needed into the future. Ms. Farrell stated that $55 million
of the $65 million that is currently in the bank, was collected to pay for
capital projects. The District's Capital Program at the present time is a
very basic program based on 1 percent of the District's asset value, which
means that the District is replacing its assets once every 100 years. That
is a modest program, amounting to about $250 million over the next ten
years. In addition there are other possible capital expenses that have not
been discussed in any detail. There are projects that could be required
due to regulations and there are projects that are outside the ten-year
window that don't show up in the Ten-Year Capital Improvement Plan
given to the Board. Some of the potential unfunded capital projects over
the next ten years include the nitrification process ($54 million),
metal/organics side stream removal ($10 million), effluent filtration ($135
million), air emissions control ($15 million), solids handling ($30 million),
and escalation of the collection system renovation program ($130 million)
for total unfunded potential projects of $374 million. What the District is
currently funding is not an aggressive Capital Program. Ms. Farrell stated
that large capital projects outside the Ten-Year Capital Improvement Plan
window include primary treatment expansion ($10 million), the four-phase
A-Line project ($55 million), and the Lamorinda intertie ($25 million) for a
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total of $90 million. When the flow monitoring data currently being
gathered is available, some of these projects may move into the ten-year
window and could make beneficial use of the reserves accumulated for
capital projects.
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Member Menesini stated that he sometimes hears that the District has a
large reserve. The projects just described are needed and it would be
helpful to encapsulate that information for use by the Board and staff in
responding to such questions and comments. Ms. Farrell stated that can
be discussed in more detail at the April Capital Improvement Budget
workshop.
Mr. Batts stated that in the past, the Capital Improvement Budget and Plan
budgeted funds for parturient projects but when reserves, "funds
available," were insufficient to meet monthly bills, these types of projects
were removed from the Capital Improvement Budget.
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President Hockett stated that it may be appropriate to use a different term
than reserves since that money has been allocated for specific purposes.
It serves as a cushion until revenue comes in and as work proceeds on
projects, but it is allocated for specific purposes and projects that are on
the books in the future. Mr. Batts stated that the money that is being
referred to falls into three categories as previously discussed: "funds
required" to meet the District's annual billing cycle, and the $5 million
retired employees benefits trust, leaving about $30 million that is for future
capital work. Some of that amount is already designated for the Capital
Program and can only be spent for future capital work; some of it could be
used to meet other needs of the District as directed by the Board. The
Board's policy has been that the District be a pay-as-you-go agency to the
extent possible. That does not preclude the District from using bond
financing in the future; and in fact, that may be required. President
Hockett stated that she believes the fact that the District has been a pay-
as-you-go agency has made the District shine in the past. Mr. Batts
agreed that affected the District's bond rating, allowing the District to get
the best possible interest rating. Member Lucey stated that the District
has $65 million in the bank. President Hockett stated that the District can
leverage that when necessary for needed projects. Member Lucey stated
that an alternative would be to give some of it back to the taxpayers.
Mr. Batts stated that the District does have reserves in the bank. The
question raised at a previous Board Meeting was what could happen to
that money. One of the questions was whether there was any way the
State could attach the District's funds. The State Treasurer, following the
provisions of the law, has stated that the State cannot take State pension
money, and the State cannot take money from the Local Agency
Investment Fund where a large portion of the District funds are invested.
So staff believes that the District funds are safe where they are invested.
The California State Constitution Article 16, Section 6, deals with public
funds. It says that public funds can only be used for the purpose for which
they are collected. Based on the law and court decisions, staff believes
that the funds collected for the District's sewer capital work can only be
spent for capital projects in the District's sewer system. Another question
that was raised was are there ways the County could absorb the District
and take over its reserves. Staff believes that the laws and court
decisions discussed above relating to use of public funds for the purpose
collected would apply in this case as well. The District's monies are with
the County but are held in trust for the District in the District's name. The
County could make this District a part of a county sanitation district. That
would require the District Board's approval by 4/5 vote, and again the use
of the funds collected would be limited as indicated before to the purpose
for which they were collected. The County or another agency could
petition the Local Agency Formation Commission (LAFCO) and LAFCO
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could recommend that the District combine with another agency or public
entity, but again that would require a vote of the constituents of this District
and probably the constituents of the agency to which the District would be
annexed. Of course, there is always the possibility of special legislation
which could affect this District. Normally, special legislation would require
a purpose that would be in the public good. One of the public goods could
be efficiency. Again, the limitation on the use of public funds would still
apply.
Member Menesini stated that is the reason he requested staff to
encapsulate what the monies collected are earmarked for. That would
also be helpful in identifying something concrete for which the reserves
were accumulated. Mr. Batts agreed.
Mr. Batts stated that Member Lucey is correct. Many other local
governments are suffering because they have no reserves to fall back on.
Using a chart, Mr. Batts discussed the levels of reserves of other local
special districts and the ratios of reserves compared to the annual O&M
and capital expenditures of the agencies. Those reserves range from high
of $111 million to a low of $45.3 million.
--"
Mr. Batts stated that with regard to the State's ad valorem tax proposal,
the District anticipates getting its ad valorem tax revenue back in two
years. But given the State's financial condition, the future of ad valorem
tax revenue is uncertain if the State is required to reallocate funds. To
make up for the loss of District ad valorem tax revenue would require a
$60 Sewer Service Charge increase. The future actions that the Board
may wish to discuss include options relating to the Sewer Service Charge.
The philosophy has been for modest rate increases in the future. The 3
percent Sewer Service Charge increase already passed by the Board can
be maintained or the Board can reduce or repeal the approved Sewer
Service Charge increase. The "funds required" amount of $30 million
should be continued to enable the District to pay its bills during the year.
The Board may wish to look at a Reserve Policy and try to determine what
the Board feels is a prudent level of reserves. What staff has tried to do is
to show the Board the requirements of the District's Ten-Year Capital
Improvement Plan, and to explain the advantages of remaining a pay-as-
you-go agency rather than using debt financing. In addition, a write up on
asset management was presented to the Board at the January workshop.
As discussed earlier, the District is currently funding the Capital Program
at 1 percent, which assumes that every asset of the District will last 100
years. Finally, the potential need for other long-term capital projects was
discussed. Mr. Batts stated, that as the Board can see, there are
arguments that can be made both for lowering the current District reserves
and for continuing the current level of District reserves. Mr. Batts asked
that the Board discuss the issue and provide direction to staff.
Member Lucey stated that he wishes to address the Board. The facts
provided are fine, but become less reliable when projections are made out
ten or more years into the future and beyond. Member Lucey stated that
judging from the information provided hv staff at recent Board Meetings,
the $8 Sewer Service Charge increasR will generate $1.5 million. The
District has a $65 million reserve. Member Lucey stated that he requested
the Finance Department to send him the lowest reserve on a monthly
basis for the last three years. Member Lucey stated that for the last three
years, the balance has never been below $17 million. All five of the Board
Members have said that the Board will raise the Sewer Service Charge
rate if necessary to get the job done. Member Lucey stated that it would
seem that with the pressure from the County, the school districts. and the
cities, that it might be judicious for the District to lower its reserves. If the
District lowered its Sewer Service Charge $8 it would only take $1.5
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million from reserves and the District would be letting its taxpayers keep
that money.
It was moved by Member Lucey, that the District not implement the $8
Sewer Service Charge rate increase in 2005-2006.
Mr. Kenton L. Aim, Counsel for the District, stated that reduction of the
Sewer Service Charge or not implementing the approved Sewer Service
Charge increase has not been calendared for a vote at this meeting. Mr.
Aim stated that the agenda topic is broad but he does not believe that it
fairly suggests to someone who might read the agenda that the Board was
going to modify the Sewer Service Charge. It could be more appropriately
agendized for the next Board Meeting for consideration of either not
increasing or reducing the Sewer Service Charge.
Following discussion, Member Lucey deferred to Counsel and requested
the Secretary of the District to agenda this matter at the next Board
Meeting for a vote by the Board, stating that another presentation by staff
will not be necessary.
3)
Mr. Batts, General Manager, stated that the next issue of the Pipeline
newsletter is being prepared for printing and distribution. The Board
Outreach Committee reviewed a draft at its last meeting and the
Committee Members' comments were incorporated into the draft now
before the Board for consideration. Comments from the Board are
requested.
Member Lucey stated that this discussion is premature in light of the
previous discussion, as the feature article deals with the Sewer Service
Charge rates.
Ms. Harriette Heibel, Communication Services Manager, stated that the
feature article will await further discussion and direction from the Board.
Ms. Heibel requested any Board comments on the remaining articles. The
Board provided no additional input other than what was provided by the
Board Outreach Committee.
4)
Mr. Batts, General Manager, stated that the District will be sending ten
employees to the California Water Environment Association Annual
Conference in Palm Springs from April 12 through 15, 2005. The
attendees are from the Operations and Engineering Departments. Funds
were included in the 2004-2005 training budget.
5)
Mr. Batts, General Manager, reported that Land Surveyor Liz Charlton and
Assistant Land Surveyor Kevin Collins will be attending a conference and
technology exhibition in Las Vegas from March 18 to 23, 2005. This is a
national event, jointly sponsored by the American Conference on
Surveying and Mapping, the California Land Surveyors Association, the
Nevada Association of Land Surveyors, and the Western Federation of
Professional Surveyors. Funds for attendance at this conference were
included in the 2004-2005 Engineering Department training budget.
6)
Mr. Batts, General Manager, reported that Senior Engineer Randy
Schmidt will be traveling to Nashville, Tennessee to attend the Water
Environment Federation Residuals and Biosolids Conference from April 17
to 20,2005. Mr. Schmidt is the project manager for the District's Solids
Handling Facilities Plan. This conference was included in the 2004-2005
Engineering Department training budget.
Mr. Batts, General Manager, announced that on March 15, 2005 he and
Capital Projects Division Manager Bill Brennan, Director of Engineering
Ann Farrell, Principal Engineer Tad Pilecki attended the Orinda City
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b.
c.
Council meeting. The Orinda City Council was very complimentary,
referencing the District's concern for replacement of infrastructure, work
on paving in the streets of Orinda, traffic control, and public notice on
construction projects. Mr. Brennan made a presentation on future District
capital projects in the Orinda area. A copy of the handout provided to the
Orinda City Council was distributed to the Board. Council member Laura
Abrams spoke very highly of the District and her interactions with District
staff.
8)
Mr. Batts, General Manager, announced that the District is advertising for
the Treatment Plant Protective Coating and Piping Renovations Project,
Phase 3, DP 7233. Phases 1 and 2 identified and rehabilitated several
major and minor structures. Phase 3 will complete the protective coating
work on the last clarifiers and aeration piping, apply protective coatings at
several substations, complete pressure grouting on the A/N tanks, replace
boiler blowdown pipelines in the Solids Conditioning Building, and carry
out miscellaneous piping renovations through the plant. The work will be
coordinated with Operations and will not impact operation of the treatment
plant. The engineer's estimate for the construction of this project is $1
million.
9)
Mr. Batts, General Manager, announced that the District is advertising for
the Collection System Operations (CSO) Underground Storage Tank
Removal, DP 8208. The tanks must be removed before September 2005
because the temporary closure permit extension will expire at that time.
This project will remove both the underground fuel storage tanks and will
repave the removal area. This work is included in the 2004-2005 Capital
Improvement Budget. This work is required to meet existing regulations.
The work was part of a project that went to the Board earlier when the
Board asked that staff go back and look at a Facilities Plan for CSO. The
initial work on the Facilities Plan has been completed. A presentation on
the need for future upgrades and facilities for CSO will be presented to the
Board in April or May.
COUNSEL FOR THE DISTRICT
1)
Mr. Kenton L. Aim, Counsel for the District, stated that he would like to
thank and commend Secretary of the District Joyce Murphy for her help to
him personally during the nearly 20 years he has worked with the District.
Over that period of time he has referred a number of clients and
individuals with questions or problems to Ms. Murphy, and always
received appreciation and thanks for her helping other public entities and
officials find their way.
SECRETARY OF THE DISTRICT
1)
Ms. Joyce E. Murphy, Secretary of the District, thanked the Board and
staff for their support through the years, stating that it has truly been a
pleasure to work with each and every one.
BREAK
At 3:52 p.m., President Hockett declared a recess, reconvening at the hour of 4:07 p.m.,
with all parties present as previously designated.
d.
BOARD MEMBERS
1)
Member Lucey, Chair of the Budget and Finance Committee, stated that
he and President Hockett reviewed the expenditures.
It was moved by Member Lucey and seconded by President Hockett, that
the Expenditure List dated March 17, 2005, including Self Insurance
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Check Nos. 102198-102209, Running Expense Check Nos. 154540-
154726, Sewer Construction Check Nos. 27485-27515, Payroll Manual
Check Nos. 49027-49030, and Payroll Regular Check Nos. 55352-55381,
be approved as recommended. There being no objection, the motion was
unanimously approved.
2)
President Hockett, Chair of the Household Hazardous Waste Committee
reported that she and Member Boneysteele met with staff on March 8,
2005. President Hockett distributed and reviewed notes from that
Household Hazardous Waste Committee meeting. Topics of discussion
included a staff audit of Philip Services Corporation (PSC) facilities, and a
newspaper article concerning potential safety issues associated with PSC
operations. After reviewing and considering the costs, performance, and
audit of PSC facilities, and after consideration of the recent news article
and potential impacts, the Committee endorses extension of the PSC
contract for one year through September 2006. A position paper will be
presented for the full Board's consideration at the April 7, 2005 Board
Meeting. President Hockett reported that it was the consensus of the
Committee that funds be budgeted in 2005-2006 for one household
hazardous waste only (no electronic waste) mobile collection event in San
Ramon. Funding for future mobile collection events will be considered
each year after the participation levels in San Ramon are known. The
Committee also received updates on improvements to the Household
Hazardous Waste Collection Facility, the Household Hazardous Waste
Collection Facility Operations Report, and the proposed survey for small
businesses.
3)
Member Menesini reported on the March 10, 2005 Local Agency
Formation Commission (LAFCO) election at which Discovery Bay
Community Services District Director David Piepho was elected to serve
as the special districts representative to LAFCO.
4)
Member Lucey, Chair of the Real Estate Committee, reported on the
March 15, 2005 Real Estate Committee at which topics of discussion
included an update on the Town of Danville purchase of District property
at the Danville Town Service Center, the Kiewit property fill plan and
schedule and direction to staff to proceed with the Request for Proposals
(RFP) process, the status of Conco Cement Company development, the
inquiry concerning sale of property located at 3881 Los Arabis in
Lafayette, and negotiations with Verizon for use of the tower on the hill at
the CSO property in Walnut Creek.
5)
Member Menesini announced that Contra Costa Water District Director
John Burgh will be the featured speaker at the March 21, 2005
Environmental Alliance Discussion Series. The topic of discussion will be
Options for Preserving Low-Salinity Water for Users of Delta Water. All
those interested are invited to attend the meeting at noon at the John Muir
National Historic Site at 4202 Alhambra Avenue in Martinez.
7. ENGINEERING
AUTHORIZE THE GENERAL MANAGER TO EXTEND THE AGREEMENT
WITH THE CONTRA COSTA CLEAN WATER PROGRAM AUTHORIZING THE
SOURCE CONTROL SECTION TO CONTINUE CONDUCTING STORM
WATER INSPECTION SERVICES
a.
This item was taken out of order earlier in the agenda.
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186
8. APPROVAL OF MINUTES
a.
MINUTES OF REGULAR MEETING OF FEBRUARY 17. 2005
MINUTES OF ADJOURNED REGULAR MEETING OF FEBRUARY 22. 2005
b.
It was moved by Member Lucey and seconded by Member Menesini, that the minutes
of the Regular Meeting of February 17, 2005 be approved as corrected, adding the
sentence "Mr. Bredbenner stated that the individuals he dealt with from the District were
confrontational and arrogant" to the first paragraph on page 2, and deleting and
replacing the phrase "why the District has garbage haulers under permit if they do not
haul hazardous waste" with "what other haulers are under permit" in the last full
paragraph on page 2; and that the minutes of the Adjourned Regular Meeting of
February 22,2005 be approved as presented. There being no objection, the motion
was unanimously approved. .
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9. BUDGET AND FINANCE
a.
RECEIVE THE 2004 ANNUAL REPORT OF THE DEFERRED
COMPENSATION PLAN ADVISORY COMMITTEE
Mr. Batts, General Manager, stated that the Deferred Compensation Plan Advisory
Committee is submitting its 2004 Annual Report to the Board. The Committee was
established by the Board to administer the Deferred Compensation Plan. In that role,
the Committee reviews accountability regarding the three Deferred Compensation
Program Administrators, issues a handbook, reviews emergency withdrawal requests
and makes recommendations to the Board, and reviews the investment performance of
the Plan annually. The Annual Report includes detailed results of all the investment
funds.
There being no questions, President Hockett declared that the Annual Report of the
Deferred Compensation Plan Advisory Committee for 2004 was duly received.
I
a.
10. EMERGENCY SITUATIONS REQUIRING BOARD ACTION
CONFIRM EMERGENCY REPAIR OF THE SEWER LINE IN DEL OCEANO
DRIVE IN THE UNINCORPORATED AREA OF THE COUNTY
Mr. Batts, General Manager, stated that as he announced at the last Board Meeting, the
Collection System Operations (CSO) Division discovered a sewer main that requires
emergency replacement. Work is scheduled to begin tomorrow with a directional drilling
contractor. A 4/5 Board vote is required to continue this work as an emergency project.
The estimated cost of the repair is $50,000.
Following discussion, it was moved by Member Menesini and seconded by President
Hockett, that the Board finds that emergency repair of the sewer line beginning in Del
Oceano Drive and ending in Withers Avenue in the unincorporated area of Contra Costa
County will not permit a delay resulting from a competitive solicitation for bids and that
the immediate repair or replacement work is necessary to respond to the emergency,
and that the General Manager be authorized to continue with completion of the
emergency repair. Motion unanimously approved on the following vote:
AYES: Members:
NOES: Members:
ABSENT: Members:
Menesini, Hockett, Boneysteele, Nejedly, Lucey
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None
None
11. ANNOUNCEMENTS/SUGGESTIONS FOR FUTURE AGENDA ITEMS
Member Lucey requested that a vote on the Sewer Service Charge be placed on the
next agenda.
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Member Lucey also requested that the budgets be delivered to the Board two weeks in
advance rather than one week.
Member Nejedly requested a status report on Collection System Operations (CSO)
Division staffing, workloads, and overflows.
Member Menesini requested that an update on the Lower Orinda Pumping Station
Renovation Project be presented at a future Board Meeting.
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12. CLOSED SESSION
PERSONNEL MA TIERS
a.
The closed session was held pursuant to Government Code Section 54957 to discuss
personnel matters - public employment. The title of the position to be discussed is
Secretary of the District.
Mr. Kenton L. Aim, Counsel for the District, noted that since the agenda was posted the
District was served with a complaint in the potential litigation item that was to be
discussed. The title of the matter is Suzanne Renee Brown v. Central Contra Costa
Sanitary District, Contra Costa County Superior Court Case No. CO5-00416.
b.
EXISTING LITIGATION
The closed session was held to discuss existing litigation pursuant to Government Code
Section 54956.9(a). The title of the litigation to be discussed is Suzanne Renee Brown
v. Central Contra Costa Sanitary District, Contra Costa County Superior court Case No.
CO5-00416.
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At 4:22 p.m., President Hockett declared the closed session to discuss personnel
matters and litigation as noted above. At 4:52 p.m., President Hockett concluded the
closed session and reconvened the meeting into open session.
13. REPORT OF DISCUSSIONS IN CLOSED SESSION
No decisions were made or votes taken in closed session which require reporting at this
time.
14. ADJOURNMENT
There being no further business to come before the Board, President Hockett adjourned
the meeting at the hour of 4:52 p.m.
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COUNTERSIGNED:
&!~ J j~~
resident of the Board of Directors,
Central Contra Costa Sanitary District,
County of Contra Costa, State of California
æ&~
Secretary of the Central Contra Costa
Sanitary District, County of Contra Costa,
State of California
3-17-05
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