Loading...
HomeMy WebLinkAboutBOARD MINUTES 10-30-03 77 MINUTES OF THE ADJOURNED REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON OCTOBER 30, 2003 The District Board of the Central Contra Costa Sanitary District convened in an adjourned regular session in the Second Floor Conference Room at the District Offices at 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 2:00 p.m. on October 30, 2003. President Nejedly called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Membeffi: Menesini, Boneysteele, Lucey, Hockett, Nejedly ABSENT: Members: None 2. PUBLIC COMMENTS Mr. Kenton L. Aim, Counsel for the District, announced that he will be attending the Association of Metropolitan Sewerage Agencies (AMSA) Attorneys' Conference and will be unable to attend the November 6, 2003 Board Meeting. Mr. Aim stated that he will have another representative from his firm attend the Board Meeting. Mr. Aim stated that he must leave the meeting early today and requested to be excused. Member Menesini stated that he has an appointment and may have to leave the meeting early as well. President Nejedly stated that both he and President Pro T em Lucey will be out of town and unable to attend the November 6, 2003 Board Meeting. Following a brief discussion, it was agreed that Member Menesini will chair the November 6, 2003 Board Meeting. 3. CAPITAL IMPROVEMENT BUDGET PLANNING WORKSHOP a. RECEIVE PRESENTATION AND DISCUSS DEVELOPMENT OF DRAFT 2004- 2005 CAPITAL IMPROVEMENT BUDGET AND 2004 CAPITAL IMPROVEMENT PLAN ' Mr. Charles W. Batts, General Manager, stated that this is the first workshop that begins the planning process for the 2004-2005 budgeting and rate-setting process. The Board will have several opportunities to revisit the assumptions used in the budgeting process, and comment on the capital projects component, including an April Capital Improvement Budget workshop where individual programs and projects will be discussed. Mr. Batts stated that the allocation of funds for capital projects and anticipated capital revenue fixes one point in the preliminary budget and ten-year projections. A preliminary Operations and Maintenance (O&M) Budget, along with anticipated revenue, will provide the remaining information. These will be discussed at the Board Financial Planning and Policy Workshop in January. Based on Board input, various scenarios will be developed for budgeted costs, rates, reserves, and future projections. This year's Capital Improvement Budget will be based on the District continuing to receive ad valorem tax revenue for the near future with the ability to alter project content and schedules if property tax revenue is lost. Mr. Batts introduced Ms. Ann E. Farrell, Director of Engineering, who stated that the Capital Program is approximately one-third of District spending. In January 2000, staff completed a gross estimate of the replacement value of District facilities, and calculated this to be about $600 million for the treatment plant and $1.5 billion for the collection system and pumping stations, for a total estimated replacement value of $2.1 billion in 10 30 03 78 year 2000 dollars. Assuming an average asset life of 100 years, an annual investment of $21 million was set as a target Capital Improvement Budget expenditure. Ms. Farrell stated that staff recognizes that the majority of District assets will not last 100 years, but that was used as a starting point. Staff believes that this is a modest program, given the demands on District resources and given that this does not address new regulations and capacity increases. The $21 million baseline established in January 2000 is now $23.6 million with inflation at 3 percent per year. This figure will be used as the starting point for a placeholder for the Capital Program when Accounting begins running the scenarios for Board consideration at the January Financial Planning and Policy Workshop. Ms. Farrell reviewed recent Capital Program activity, noting that since 1999-2000 capital spending excluding Dougherty Valley but including the San Ramon projects, has been in the target range of $20-22 million. This actually represents under-spending because the District had planned to spend $20-22 million baseline and fund the escalated San Ramon projects in addition. This under-spending was a conscious decision driven by the uncertainty associated with the ad valorem tax. As a result of prudent spending and borrowing $15 million to fund the escalated San Ramon projects, the Sewer Construction Fund balance at June 30, 2003 was $50 million, up from a minimum level of $37 million at June 30, 2002. This is very positive, as it provides for returning to the required baseline spending levels previously established. Ms. Farrell discussed Capital revenue, indicating that current revenue comes from a number of sources including ad valorem tax, Capacity Fees, and the City of Concord contract; but the primary discretionary source of revenue is the Sewer Service Charge that amounts to $8.4 million, about 35 percent of Capital revenue. The Sewer Service Charge increases of 2002-2003 and 2003-2004 have brought Capital revenue in line with expenditures if there is no loss of ad valorem tax revenue. The Capital component of the Sewer Service Charge in 2003-2004 is $54, up from when it was reduced from $31 to $15 to fund Operations and Maintenance in 2000-2001. Ms. Farrell stated that because of the uncertainty associated with the potential loss of ad valorem tax revenue, the 2003-2004 Capital Improvement Budget included two spending scenarios. During the spring of 2003, staff held back a number of projects to ensure that the anticipated loss of the ad valorem tax would not adversely affect District finances. When it became clear that the tax revenue would not be lost for this fiscal year, it was too late in the construction season to bid those deferred projects. Several of those projects are being bid this year, including the Lower Orinda Pumping Station Renovation Project, so they can begin construction early next season. However, significant construction spending will not occur until the subsequent fiscal year so a significant positive variance is projected for the current fiscal year. Ms. Farrell stated that staff recommends increasing the budgeted spending for fiscal year 2004-2005 approximately an additional $3 million to account for the deferred projects which would have been done in fiscal year 2003-2004. The result is a spending target of $26.6 million for fiscal year 2004-2005, then a return to the inflation-adjusted Capital Improvement Budget in subsequent years. Ms. Farrell stated that it is recommended that Capital spending average $23.6 over these two years. That will allow the District to match expenditures and revenues next year; and have sufficient funds in the Sewer Construction Fund that if the District did lose ad valorem tax revenue, the projects underway could continue and spending could be slowed down and reassessed in future years. Discussion followed with regard to Assemblyman Joe Canciamilla's statement that the State may take special districts' reserves. Mr. Kenton lo Aim, Counsel for the District, stated that current state law would not allow that; however, the legislature can change the laws. If the laws are changed, there are two issues which may still protect District funds: 1) can a portion of the funds be protected by State Constitutional provisions; and 2) whether there would be an unconstitutional interference with contract. This raises the issue of whether the District should consider more bond financing. Ms. Farrell reviewed the projected Ten Year Capital Plan program activity if the District retains ad valorem tax revenue, and if the District loses the $8 million in ad valorem tax 10 CJ, ("", .,', i)V 0"""':'\'" C,",'"",:,,' , "I ~ ¡Ù 79 revenue. A 3 percent per year increase in expenditures/revenue is assumed prior to loss of ad valorem tax revenue, and reduced expenditures and a higher rate of revenue increase is assumed after loss of ad valorem tax revenue. Ms. Farrell stated that to maintain the integrity of the Capital Improvement Program, staff recommends that the Ten Year Capital Improvement Plan reflect the January 2000 $21 million baseline, adjusted for inflation through the entire ten years of the Plan. If ad valorem tax revenue is lost, the District could then make a mid course correction. The accumulation of up to $54 million in the Sewer Construction Fund now gives the District the ability to fully fund the Capital Improvement Program at the recommended levels until ad valorem tax revenue is actually lost. Ms. Farrell stated that based on a preliminary analysis of needs by program for fiscal year 2004-2005, the allocation of the recommended $26.6 million among the four program areas is as follows: . Treatment Plant Program - $6,000,000 . Collection System Program - $18,000,000 which includes the extra $3 million from projects delayed in fiscal year 2003-2004 due to the anticipated loss of ad valorem tax revenue . General Improvements Program - $2,200,000 . Recycled Water Program - $400,000 Carryover projects from fiscal year 2003-2004 in the Treatment Plant Program include the Aeration Air Renovations, Plant Control System Improvements, Treatment Plant Protective Coatings Rehabilitation, Treatment Plant Electrical Cable Replacement, and Treatment Plant Piping Renovation and Replacement. New Treatment Plant Program projects for fiscal year 2004-2005 include Wet Weather Capacity Evaluation, Residuals Handling Assessment/Incinerator Mercury Emissions, Switchgear Reliability, and Standby Power Diesel Engine Upgrades. Ms. Farrell provided an update on the Aeration Air Renovations Project, showing photographs and describing the findings to date. No significant voids were found under the tanks. Air leakage can be reduced by sealing the expansion joints using polyurethane. The same technique may reduce leakage by sealing construction joints in the air plenums, but a cost/benefit evaluation must be done. Some leakage will remain. Ms. Farrell stated that the cost to seal all of the construction joints is estimated at $500,000. The cost for a new system is in the range of $7-10 million. At this point staff is not planning to put money in for the large project, but the situation is still being evaluated. Carryover projects from fiscal year 2003-2004 in the Collection System Program include the Happy Valley Sewer Replacement, Lower Orinda Pumping Station Renovation, TV Inspection Program, Pleasant Hill Relief Interceptor Phase 5, Martinez M4 Force Main Replacement, and the Martinez M3 Sag. New Collection System Program projects for fiscal year 2004-2005 include the Pleasant Hill Road East Trunk, Vessing Road Renovation, Walnut Creek Renovations Phase 2, Concrete Corrosion Contra Costa Boulevard, and Standby Power Diesel Engine Upgrades. Ms. Farrell provided an update on the Pleasant Hill Relief Interceptor Project, Phase 5, stating that the Contra Costa Boulevard line has adequate capacity for a 5-year wet weather event, but overflows will occur during a 20-year wet weather event. The Pleasant Hill Relief Interceptor Project, Phase 5, will provide capacity for a 20-year event. Using a map, Ms. Farrell highlighted locations of wet weather overflows depending on the magnitude of wet weather event, and the proposed alignments of the Phase 5 Pleasant Hill Relief Interceptor and Recycled Water Pipeline. In the Recycled Water Program the Pleasant Hill Phase 1 B Project - added connections were carried over from fiscal year 2003-2004. One new project is planned for 2004- 2005, the Pleasant Hill Interceptor Phase 5 - Recycled Water Line. 10 30 03 80 Mr. Kenton lo Aim, Counsel for the District, left the meeting at the hour of 2:40 p.m. Carryover projects from fiscal year 2003-2004 in the General Improvements Program include the Headquarters Office Building Facility Improvements and the Collection System Operations Division Facility Improvements. There are no new General Improvements Program projects for fiscal year 2004-2005 at this time. Ms. Farrell stated that as the Board has been hearing, significant improvements are needed at the Collection System Operations Division (CSOD) facility. The CSOD facility main office building at 1250 Springbrook Road in Walnut Creek was constructed in 1956. In 1983, Administration and Engineering moved to the new Headquarters Office Building in Martinez. In 1985, the CSOD main office building was renovated to lease the upstairs. In 1993, CalTrans widening of the 1680/SR24 interchange took 0.8 acres of the CSOD property. At that time moving CSOD to the Martinez site was evaluated and rejected in favor of keeping CSOD at its central location in the District service area. The Ducca property was purchased. In 1994 and 1995, an extensive remodel using the funds from CalTrans was planned but was scaled back significantly due to the partial loss of ad valorem tax revenue. Instead, the CalTrans reimbursement was used to build the vehicle maintenance shop. In 1995, there was a turnover in CSOD management and staff. In 2000-2001, it was again decided to keep CSOD in Walnut Creek; and in 2001-2002 a needs assessment for CSOD modifications was begun and funds were included in the Capital Improvement Budget for this work. Using a facility layout and an aerial photograph, Ms. Farrell described the locations of the various CSOD facilities. Ms. Farrell stated that CSOD Facility Improvements have been budgeted in the Capital Improvement Budget for the last three years although they were not discussed in detail with the Board. In the fiscal year 2001-2002 Capital Improvement Budget, $67,000 was budgeted and expended for the CSOD Facilities Modifications Project, DP 8175, to begin the needs assessment. In fiscal year 2002-2003, $92,000 was budgeted and $82,500 was expended for CSOD Facility Modifications, DP 8175; $138,000 was budgeted and $4,000 expended for the Collection System Operations Yard Paving Project, DP 8202; and $144,000 was budgeted and $4,000 expended for the CSO Fuel System Modifications, DP 8201. Ms. Farrell noted that the regulations driving the CSO Fuel System Modifications were known in January 2002 or before and were included in the Capital Improvement Budget; however, this was when the District began deferring projects because of the anticipated loss of ad valorem tax revenue. In fiscal year 2003- 2004, $904,000 was budgeted but no money has been expended for a new CSOD Facility Improvements Project; $141,000 was budgeted and $14,700 was expended for the Collection System Operations Yard Paving, DP 8202; $164,000 was budgeted but no money has been expended for a new CSOD Roof Replacement Project; $146,000 was budgeted and $23,700 expended for the CSOD Fuel System Modifications, DP 8201; and $475,000 was budgeted and $17,600 expended for the new Vehicle Shop Foundation Remediation Project. Ms. Farrell stated that the Five-Year Plan very preliminary estimate is $2 million. Ms. Farrell stated that staff agrees with the Board's assessment that we have been piecemealing CSOD projects. Because of the anticipated loss of ad valorem tax revenue, staff started piecemealing the smaller projects without looking at the big picture. Ms. Farrell presented the following proposed approach to CSOD projects. With regard to the Fuel System Replacement Project, the current system cannot operate after December 31,2003. There is a $5,000 per day fine for operating after that date. The fuel system was justified for emergency use and staff control. It is proposed that the District obtain a temporary (one year) closure permit, and reject all bids and fully investigate alternatives. Member Boneysteele cautioned staff to be very careful before giving up any rights or abandoning any uses for office space or the fuel system. This is a very desirable location and it could be very difficult to get those ongoing uses back. Ms. Farrell agreed that Member Boneysteele is absolutely correct and staff will keep that in mind. -"0 I.; , '""])(;)"" "', -'!, O. tr,i t~ I::.:;',~),', ~y ('~:~ 81 With regard to the Upper Yard Paving Project, Ms. Farrell stated that the project was bigger in scope than estimated. In addition, it doesn't make sense to pave the upper yard if other projects are going to be dODð, that. may require driving heavy trucks on the new paving. It is proposed that all bids be rejected and that patch paving be done as an interim measure. Ms. Farrell stated that it is proposed that a CSOD Facilities master planning effort be done, and that a comprehensive plan be brought back to the Board. Ms. Farrell stated that staff would like to take the Board on a tour of the CSOD facilities. Work is needed to bring the facilities up to an acceptable standard. The Board expressed interest in such a tour. In summary, Ms. Farrell stated that the staff recommendations/findings are as follows: . A baseline investment of $21 million per year (January 2000 dollars) for the next ten years; . Fiscal year 2004-2005 baseline expenditure of $23.6 million, approximately 3 percent per year inflation; . Plus an additional $3 million in projects deferred from fiscal year 2003- 2004; . Fiscal year 2004-2005 revenue with ad valorem tax is projected at $26.0 million; and . The current Sewer Construction Fund balance provides a short-term relief if ad valorem tax revenue is lost. Member Menesini had previously advised the Board that he had to leave at 3:00 p.m. Member Menesini complimented Ms. Farrell and staff for putting together a comprehensive view. Member Menesini left the meeting at the hour of 3:05 p.m. Discussion followed with regard to the spending targets, District reserves, whether the State will take District reserves, and what would be considered reserves if that were to happen. Member Boneysteele stated that the District should not worry about the State taking District reserves. The District has an excellent credit rating. If necessary, the District can go back to the voters. Member Lucey stated that another alternative is to spend what is needed, but do not raise the Sewer Service Charge. If it is necessary, the District can raise the Sewer Service Charge in future years. President Nejedly suggested that the reserve funds be earmarked for the various needs of the District. Member Hockett agreed, stating that is one of the purposes of the Ten- Year Capital Improvement Plan. Member Boneysteele reiterated Member Menesini's comments. The memo provided in advance of the meeting laid out the situation extremely well. It was very helpful. The Board commended Ms. Farrell on the concise and informative presentation. 4. REPORTS~NNOUNCEMENTS a. Ms. Farrell, Director of Engineering, distributed the Dental Offices and Mercury Pollution Prevention handout on best management practices that will be used at the District booth at the upcoming Dental Association Conference. b. Mr. Batts, General Manager, announced that two additional pipe segments totaling 500 feet will be included in the Walnut Creek Sewer Renovation Project since both were found to be in marginal condition and require high maintenance. The cost will be $50,000 and will be done by change order. 10 30 03 82 c. Mr. Batts, General Manager, announced that there was an article in the Contra Costa Times entitled "Samaritans Save Woman Using CPR" This article recognized Field Operations Superintendent Bill Echols who stopped and administered CPR to a woman who had had a heart attack. Mr. Echols used techniques learned at the District-provided training. d. Mr. Batts, General Manager, announced that former Board Member William C. Dalton passed away in his sleep on Tuesday, October 28, 2003. Mr. Dalton was a long-time employee and District Board Member with 40 years of service to the District. There will be a private memorial service. The November 6 Board Meeting will be adjourned in Mr. Dalton's memory. 5. ADJOURNMENT There being no further business to come before the Board, President Nejedly adjourned the meeting at the hour of 3:18 p.m. ~ &. ~,~ Pre' ent of the Board of ec ors, Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: 10 b'i),'., (\\,', "',' ijO ,1Th, i "', G,',';;-,Æ>,." () <Ctl