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HomeMy WebLinkAboutBOARD MINUTES 01-25-07 MINUTES OF THE SPECIAL MEETING OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT BOARD OF DIRECTORS HELD ON JANUARY 25, 2007 The District Board of the Central Contra Costa Sanitary District convened in a special meeting at its regular place of business, 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 2:00 p.m. on Thursday, January 25, 2007. President Nejedly called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Members: Hockett, Lucey, McGill, Menesini, Nejedly ABSENT: Members: None a. PLEDGE OF ALLEGIANCE TO THE FLAG Board and staff joined in the Pledge of Allegiance to the Flag. 2. PUBLIC COMMENTS There were no public comments. 3. CONSENT CALENDAR It was moved by Member Lucey and seconded by Member Hockett to approve the Consent Calendar, consisting of Items a. and b. as recommended. Motion passed by unanimous vote of the Board. a. Award a construction contract to Contra Costa Electric, Inc., in the amount of $39,839, and authorize the General Manager to execute contract documents for the installation of the network fiber optic cable and wire runs for the Plant Control System Improvements Project, District Project No. 7204. b. Adopt Resolution 2007-002 appointing Michael C. Scahill to the position of Communication Services Manager, M-35 ($7,433-$9,035) effective February 20, 2007. 4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER None. Book 56 - Page 17 Board Minutes of January 25, 2007 5. OPERATIONS a. ACCEPTANCE OF THE 2006 NATIONAL POLLUTANT DISCHARGE ELIMINATION SYSTEM (NPDES) REPORT General Manager James Kelly stated that Director of Plant Operations Doug Craig will provide a brief overview on the District’s Annual National Pollutant Discharge Elimination System Report, which summarizes the District’s 2006 performance. Mr. Kelly noted that the 2006 submittal should lead to the District’s ninth consecutive gold award. This record is the result of dedicated employees, outstanding operations, excellent facilities and a sense of teamwork between the Operations Department, the Engineering Department, the Administrative Department, and with the foresight and support of the Board. Mr. Craig presented a report, stating that in 2006, 18.7 billion gallons of wastewater were treated, which is an average daily flow of 51.4 million gallons. 4,928 tons of wet ash were produced. 15,200 analytical tests were completed, which comprised approximately 11,000 hours of laboratory work. The District was in 100 percent compliance with NPDES permit requirements. He stated that on two occasions peak limits were approached: once with copper and once with enterococcus. The new permit will eliminate the prior peak number for enterococcus and utilizes an average peak number instead. He stated that he and District Counsel attended Regional Water Quality Control Board hearing regarding the District’s Tentative Order, and staff will report to the Board on February 1 to announce the results. He thanked staff for their work and the Board Members for their support. 6. BUDGET AND FINANCE a. FINANCIAL PLANNING AND POLICY WORKSHOP General Manager James Kelly stated that the purpose of the presentation today is to review the “State of the District,” discuss rate-setting philosophy used by the cash flow model, discuss future budgets and rate impacts, and to receive input from the Board. He stated that the District is in a strong financial position with stable and predictable revenue sources. Expenses have increased greater than the Consumer Price Index. Capital budget spending will increase and reserves will be reduced. The District also has some unfunded liabilities. The District has achieved a successful workforce transition, has $69.7 million in reserves, and a low debt level. Future financial impacts anticipated by the District include unfunded liabilities, such as post-retirement health care; pending regulations; and possible economic downturn. Book 56 - Page 18 Board Minutes of January 25, 2007 He stated that the first budget workshop was held in 2000, when the District, with limited financial reserves, faced difficult financial issues, including the loss of ad valorem tax, economic downturn, and an expanding regulatory role. In response to these issues, the Board developed cost-saving strategies, deferred certain capital projects, and raised rates. He described the model rate-setting philosophy: ?? Reserves should always be adequate to cover upcoming cash flow needs. ?? A ten-year planning horizon is adequate for most financial planning purposes. ?? Debt service should be reserved for major financial issues, such as major capital projects and plant expansion. ?? Fees and charges should reflect the full cost of service. ?? Modest annual sewer service charge increases may be preferred over large, periodic rate increases. ?? District reserves will be drawn down to funds required in nine years (smooth landing approach). Mr. Kelly presented a general discussion of rate-setting history. Items that impact rates include expenses for capital projects and operations and maintenance, funding liabilities, and regulations. Future debt financing, or pay as you go, will also affect rates. He described the history of sewer service charge rates and historic property tax and capacity fee trends. He stated that he is recommending an $11 increase for this year, which is $1 more than the Consumer Price Index. He described the past ten years of budget spending and the history of capital expenditures. Employee costs have been increasing by a little more than 4% per year for salaries, and approximately 8% per year for benefits. Outstanding liabilities include pension fund liability of approximately $40 million. GASB 45 unfunded liabilities are approximately $65 million; outstanding debt is approximately $40 million, and terminal pay is approximately $5 million. Future projects are projected to be approximately $300 million over the next ten years. He described the significant liabilities in more detail. He stated that, with regard to GASB 45, last year the District set aside $5 million, $2 million of which went immediately to pay for retiree benefits, and $3 million was set aside for future costs. The GASB 45 issue needs to be addressed as long term liability, and further information will be presented to the Board in the fall of 2007. He stated that, in 1996-97, retirement costs were 19% of salary costs. In 2006-07, it is projected to be 37%. An additional $800,000 is paid by the employees, which makes a total of about 41% of salary costs being paid for retirement. With regard to regulations, the money has been well spent, but more funding will be needed for mercury control, sanitary sewer overflows, EPA requirements, and greenhouse gas reduction. He stated that staff recommends a two-year rate increase of $11 per year, which would increase the rate from $289 to $300 per year in 2007-08. The need for an $11 increase for 2008-09 will be re-evaluated in January 2008. An annual increase for other fees and Book 56 - Page 19 Board Minutes of January 25, 2007 charges is also recommended and will be brought to the Board for consideration at a subsequent meeting. He stated that future actions by staff include providing budget information to the City of Concord to coordinate with their budgeting process. If the Board agrees to consider a rate increase, staff will need to proceed with sending Proposition 218 notices to notify residents of a public hearing on the proposed rate increase in early March. He concluded his report, stating that staff recommends planning to implement the $11 sewer service charge increase; adoption of annual increases to fees, rates and charges; proceeding with District rate-setting process and adoption of budget and rates in June 2007. This would result in a public hearing on the proposed rate increase on June 7, 2007. A separate presentation will be made regarding OPEB funding. In response to a question from Member Hockett, Director of Engineering Ann Farrell responded that projects previously deferred are included in the ten-year plan. Member McGill stated that he is impressed with the number of awards received by the District. He asked questions regarding EPA standards relating to capital items, and if the District is familiar with how other agencies are addressing GASB 45 issues. Member Hockett stated that agencies are struggling with the matter. CASA will be arranging presentations on the topic at future conferences. Member Lucey thanked staff for presenting information regarding the impact of the ad valorem tax on District sewer service charge rates. President Nejedly requested information regarding to what extent other districts’ rates are augmented by garbage fees. He stated that he supports regular CPI rate increases rather than sporadic, large increases. Director of Public Works Qamar Khan stated that the City of Concord is increasing its rate by $36 this year. 7. REPORTS a. General Manager General Manager James Kelly announced that the District has had an Employee Wellness Program for a number of years, showing substantial improvement in several areas of employee health. One of the major elements of the Program is an annual health screening. This year, the District is sponsoring a Health and Wellness Expo on January 30th and 31st. There are still a few open appointment slots that will be made available to spouses. This will be the first time that spouses have been invited to participate in the Wellness Program activities. Spouses will pay $75 for the health screening, which is the full cost of the screening. Book 56 - Page 20 Board Minutes of January 25, 2007 b. COUNSEL FOR THE DISTRICT No reports. c. SECRETARY OF THE DISTRICT Announced upcoming Board and Committee meetings for the following week. d. BOARD OF DIRECTORS 1) Member Lucey reported on the January 23, 2007 Personnel Committee meeting. 2) Member Lucey stated that a report on the January 24, 2007 Real Estate Committee meeting will be presented at the February 1, 2007 Board meeting. 8. EMERGENCY SITUATIONS REQUIRING BOARD ACTION None. 9. ANNOUNCEMENTS/SUGGESTIONS FOR FUTURE AGENDA ITEMS Member McGill announced that he is unable to attend the February 1, 2007 Board meeting. 10. ADJOURNMENT There being no further business to come before the Board, President Menesini adjourned the meeting at 3:03 p.m. ~ C; ~~_~ Pres' t of the Board of rector. , Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: Secretary of the Central Contra Costa Sanitary District, County of Contra Costa, State of California Book 56 - Page 21