HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 06-01-09Central Contra
Sanitary District
BUDGET AND FINANCE COMMITTEE
Chair Lucey
Member Nejedly
Monday, June 1, 2009
3:00 p.m.
Executive Conference Room
5019 Imhoff Place
Martinez, California
INFORMATION FOR THE PUBLIC
ADDRESSING THE COMMITTEE ON AN ITEM ON THE AGENDA
Anyone wishing to address the Committee on an item listed on the agenda will be heard when the
Committee Chair calls for comments from the audience. The Chair may specify the number of minutes
each person will be permitted to speak based on the number of persons wishing to speak and the time
available. After the public has commented, the item is closed to further public comment and brought to the
Committee for discussion. There is no further comment permitted from the audience unless invited by the
Committee.
ADDRESSING THE COMMITTEE ON AN ITEM NOT ON THE AGENDA
In accordance with state law, the Committee is prohibited from discussing items not calendared on the
agenda. You may address the Committee on any items not listed on the agenda, and which are within their
jurisdiction, under PUBLIC COMMENTS. Matters brought up which are not on the agenda may be
referred to staff for action or calendared on a future agenda.
AGENDA REPORTS
Supporting materials on Committee agenda items are available for public review at the Reception, 5019
Imhoff Place, Martinez. Reports or information relating to agenda items distributed within 72 hours of the
meeting to a majority of the Committee are also available for public inspection at the Reception. During
the meeting, information and supporting materials are available in the Conference Room.
ANIERICANS WITH DISABILITIES ACT
In accordance with the Americans With Disabilities Act and California Law, it is the policy of the Central
Contra Costa Sanitary District to offer its public meetings in a manner that is readily accessible to
everyone, including those with disabilities. If you are disabled and require special accommodations to
participate, please contact the Secretary of the District at least 48 hours in advance of the meeting at (925)
229 -7303.
(925) 228 -9500
Nv%vw.centralsan.org
Recycled Paper
Budget and Finance Committee
June 1, 2009
Page 2
1. CALL MEETING TO ORDER
2. PUBLIC COMMENTS
3. OLD BUSINESS
*a. Review Outstanding Questions
4. CLAIMS MANAGEMENT
*a. Review Outstanding Claims
5. REPORTS /ANNOUNCEMENTS
*a. State Financial Crisis (letter attached from CASA discussing LAO Report)
*b. Potential Sale of Bonds
C. Review Position Paper on O &M Budget Public Hearing (Item 4.b. in Board
Binder)
d. Review Position Paper on Deferral of Connection Fees (Item 8.a. in Board
Binder)
6. REVIEW EXPENDITURES (Item 3.a. in Board Binder)
a. Review expenditures
*b. Review P -Card expenditures
7. REVIEW APRIL 2009 Financial Statements (Item 3.b. in Board Binder)
8. ADJOURNMENT
* Attachment
3.A,
Central Contra Costa Sanitary District
May 29, 2009
TO: BOARD BUDGET AND FINANCE COMMITTEE
FROM: RANDALL MUSGRAVES
DEBBIE RATCLIFF
SUBJECT: May 15, 2009 Finance Committee Meeting
There was one outstanding question from the last Board Budget and Finance
Committee meeting which required additional staff research. The question and answer
is provided below:
175628 Shapell Homes — What was this reimbursement for and why was
the interest so high?
The agreements with Shapell and Windermere BLC Land Company for planning,
design, property rights acquisition, construction and financing of the Dougherty
Valley Tunnel and Trunk Sewer required that Windemere BLC pay all project
costs. While the agreements required that Shapell pay applicable fees and
charges for capacity, these fees and charges were not to include any allocation
of Project and Trunk Sewer Connection costs. In fiscal years 2001 -02 through
2004 -05 however, the Capacity Fees charged for Shapell connections included a
component for "buy -in" to the Dougherty Valley Tunnel and Trunk Sewer. Shapell
has requested that this component of their Capacity Fees be refunded. The
current balance including the component of Capacity Fees attributable to the
Dougherty Valley Tunnel and Trunk Sewer ($83,838.00) and accrued interest
(15,800.65) in accordance with California Government Code Section 53709 is
$99,638.65. This interest amount was calculated through May 2009.
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May 21, 2009
5.01.
MIASMA ASSMIAl /ON of SASMAINS ARMS
1215 K Street, Suite 2290, Sacramento, CA 95814 PH: (916) 446- 0388 —FX: (916) 231 -2141 www.casawcltorg
TO: CASA Member Agencies
CASA Attorneys
CASA Associates
CASA Executive Board
CASA Legislative Committee
FROM: Mike Dillon, CASA Lobbyist
Christina DiCaro, CASA Lobbyist
RE: NEWS FROM THE CAPITOL
VIA ELECTRONIC MAIL
I. LAO REPORT SUGGESTS STATE COULD LOOK TO BORROW $500 MILLION
FROM WATER AND WASTEWATER AGENCIES
Shortly before noon today, the non - partisan Legislative Analyst released his "Overview of
the 2009 -2010 May Revision," which seeks to analyze the May Revision proposals
submitted by Governor Schwarzenegger last week. In addition to providing a revised
revenue estimate, the LAO also lays out some options /alternatives for the Legislature to
consider, beyond the Governor's proposals. You will recall from our memo to you last week,
the Governor is suggesting that the legislature borrow $2 million in property taxes from
cities, counties, and special districts under the terms of Proposition 1A of 2004. You may
also recall that Proposition 1A allows that up to 8% of local governments' property tax
revenues can be borrowed by the state and must be repaid within three Budget years, with
interest. The Governor suggested that local governments be given the opportunity to
"borrow against the state's constitutional obligation to repay, thereby mitigating the impact of
this reduction." (The Department of Finance tells us that they are suggesting that a
statewide JPA be created for the sole purpose of allowing struggling cities, counties, and
special districts to qualify for short-term loans.) However, the LAO is proposing a much
more onerous solution = to allow the legislature to borrow over a quarter of the total $2
billion loan amount from water and wastewater enterprise special districts.
First, the LAO issues some initial findings that "California's cities, counties and special
districts also have been experiencing fiscal stress due to the economic downturn" and
cautioned that "some of the Governor's budget solutions would exacerbate this stress..."
Thus, the LAO recommends: "the Legislature acknowledge the impact of the state's budget
solutions on local governments, implement budget solutions in a targeted fashion, and take
actions to maximize local government program flexibility and resources whenever possible."
This statement, however, is in direct conflict with their second suggestion, which is the
following:
"Proposition 1A Borrowing Could Be Adjusted. The Constitution does not require that
the property tax borrowing be implemented on an across - the -board basis as proposed by
the Governor. Instead of borrowing 8 percent from each local agency, the state could
borrow a larger percentage from agencies that have greater capacity to 1) reduce programs
or 2) replace property taxed with fees or other revenues. For example, the state could
borrow over a quarter of the total loan amount from waste and water enterprise special
districts, a group of local agencies the legislature previously directed to get off the property
tax roll entirely. (These special districts typically depend on property taxes for less than 7
percent of their operating revenues and have broad authority to increase fees or reduce
programs.) Borrowing more property taxes from waste and water enterprise special districts
would allow the state to borrow less from agencies with less fiscal flexibility." (LAO
Overview — 5/21/09)
In speaking later with a representative from the Legislative Analyst's Office for clarification,
we were informed that this could mean that if all enterprise district property taxes were
taken, which currently amounts to a little over $500 million, this figure would represent the
"quarter of the total loan amount" of the $2 billion total shift, referenced above.
Lastly, the LAO also suggests, in an appendix to their report, about 125 options, including
reductions to various state programs, fee increases, elimination of current tax exemptions,
etc. that would generate about $9 billion, if all were enacted. Included in the list are options
pertaining to the State Water Resources Control Board that we have previously reported on
such as:
• "Increase fees by expanding fee base to pay for water quality management activities.
• Increase fees in core regulatory permitting and enforcement program.
• Eliminate General Fund support for Total Maximum Daily Load Program to regulate
water pollution."
These issues will now be part of the conversations that will take place in the Budget
Conference Committee process, which commenced this afternoon.
II. BUDGET CONFERENCE COMMITTEE BEGINS WORK — A NEW APPROACH
AND MORE CUTS BY GOVERNOR REVEALED
This afternoon the powerful Budget Conference Committee held their first hearing to address
the Governor's May Revision and the Legislative Analyst's report released today. In past
years, the Budget Conference Committee has typically consisted of three members of the
Assembly and three members of the Senate. These six members typically convene in June,
after the Budget Subcommittees conclude their review of the subject matters under their
jurisdiction. However, in response to complaints from legislators and the public that the
Budget Conference Committee process and "Big 5" leadership negotiations are "done
behind closed doors' to a certain extent, the Assembly Speaker and Senate President pro
Tern are conducting a very open public process with this year's Budget Conference
Committee. The leadership has halted Budget Subcommittee hearings indefinitely and all
related discussion will now be held in Budget Conference Committee. In addition, they have
named additional members to the deliberative body, bringing the total number of conferees
to 10.
According to Budget Conference Committee Chair, Assemblywoman Noreen Evans, the
conferees will subscribe to an ambitious schedule and will be "meeting almost every day."
She noted, "We have less time and fewer and fewer options as the days go on. The outlook
is grim .... There are people who think the state needs to 'go off a cliff but I think that would
be irresponsible."
Before Assemblywoman Evans could address the schedule in some specifics, she surprised
many in the audience by noting, "We heard —just now — that the Governor has done another
May Revise. It supposedly has $5.5 billion in additional cuts. We would appreciate knowing
what it is." She then noted that the LAO and Department of Finance would make their
presentations today, followed by the State Controller and State Treasurer tomorrow. New
this year to the process is an opportunity for the public and lobbyists to comment on various
aspects of the Governor's May Revision and the LAO's recommendations. However, in
light of the Governor's newest proposal to cut an additional $5.5 billion mentioned by Chair
Evans, she is postponing public comment until those cuts come to light in a special hearing
of the Budget Conference Committee on Tuesday. (Note: The additional $5.5 billion in cuts
are the results of the Governor deciding not to issue $5.5 billion in Revenue Anticipation
Warrants because of legal issues raised as to whether they could be used to balance a
Budget versus short term borrowing needs.) There will be a day set aside for "local
government" issues, wherein CASA will testify in opposition to the property tax borrowing
proposals.
III. REVENUES DECLINE AGAIN — ANOTHER $3 TO $4 BILLION HIT TO
BUDGET?
The Legislative Analyst, Mac Taylor, in speaking to the Conference Committee this
afternoon, stated that revenues continue to lag due to: ongoing declines in the property
values statewide, and pressures brought about by workload and caseload increases.
Consequently, Mr. Taylor acknowledged that the state may have a "new budget problem' of
approximately $3.1 billion. The Department of Finance was asked to comment on this
estimate and concurred that using their "most pessimistic analysis," they agree that
revenues could be $3 billion to $4 billion worse than previously estimated. (This would bring
the total deficit to $24 -$25 billion.) This revelation prompted Senator Lowenthal, a member
of the Budget Conference Committee to ask, "Are we at the bottom and beginning to
stabilize.... or dropping at a precipitous rate ?" The DOF and LAO said that they both relied
on national economists and an intricate analysis to obtain forecast projections, but stated
that they thought that the "bottom would occur at the end of 2009, with a modest rebound at
the beginning of next year."
5,b,
Central Contra Costa Sanitary District
May 29, 2009
TO: BUDGET AND FINANCE COMMITTEE
VIA: JAMES M. KELLY, GENERAL MANAGER V
FROM: DEBBIE RATCLIFF, CONTROLLER Zl-
SUBJECT: POTENTIAL SALE OF BONDS
The potential need for issuing bonds for some capital projects has been introduced to
the Board several times in the last few months. Recently the Legislative Analyst Office
and the Governor have recommended the State suspend Proposition 1A and borrow
8% of local agencies' property taxes; the new part of the recent proposals was to take
all property taxes from special districts. This could result in the State borrowing all
twelve million dollars of the District's allotted property taxes in FY 2009 -10; this potential
loss of revenue leads staff to suggest the District should consider bond financing some
capital projects in the near future. If property taxes are lost for a year, either bonds for
capital projects, short term borrowing, significant expenditure cuts proposed in the O &M
Budget/Capital Plan or a combination of these measures will be needed. A significant
Sewer Service Charge would need to be considered next year if the property taxes are
taken for more than one year (At this time there is no known legal way for our property
taxes to be taken in back -to -back years). Staff has pursued funding from federal
stimulus monies; at this time there has been little or no progress in getting these funds
to wastewater agencies. At this time it does not appear the District can look to federal
funds for any major assistance in our capital program.
In Board meetings in March and April, Staff has stated $30 million bond financing would
reduce needed Sewer Service Charge rates for the next 3 to 4 years and would spread
the costs of capital projects to future rate payers who will benefit from the projects. A
Bond issue would also allow the District to respond to a tax take without making
significant changes to our O &M and capital expenditures. The District is in a strong
position to issue bonds based on a AAA rating with Standard and Poor's, an affluent
customer base, the ability to raise rates to cover costs and minimal outstanding debt.
Also, the current bid market for capital projects is quite favorable, and staff
recommended to the Board at the Capital Improvement Budget presentation to take
advantage of the reduced cost of construction by continuing the Capital Program as to
be considered at the Board Meeting of June 4, 2009. Several projects are underway
which make good candidates for bond funding.
C: \DOCUME— l\scrayton \LOCALS -1 \Temp \Potential Sale of Bonds.doc
Staff has not received enough information to determine if the tax take will involve one
year or multiple years or whether the taxes will be repaid. It is prudent to consider
issuing bonds to supplement capital expenditures and to relieve potential cash flow
issues in the near future. The subject of bond financing is being introduced to the
Budget and Finance Committee to discuss the need and potential schedule. Staff has
consulting with Tom Lockard from Stone & Youngberg, to have current information
about the bond market and what alternatives and issues the District should consider if
the Board decides to consider selling bonds. Tom Lockard has served as the Districts
consultant for our last 2 bond sales.
C: \DOCUME— l\scrayton \LOCALS -1 \Temp \Potential Sale of Bonds.doc
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