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HomeMy WebLinkAboutBOARD MINUTES 03-04-04 166 MINUTES OF THE REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON MARCH 4, 2004 The District Board of the Central Contra Costa Sanitary District convened in a regular session in the Multipurpose Room at 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 2:00 p.m. on March 4, 2004. In the absence of President Lucey, President Pro Tem Hockett called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Members: Menesini, Boneysteele, Nejedly, Hockett ABSENT: Members: Lucey a. PLEDGE OF ALLEGIANCE TO THE FLAG Board and staff joined in the Pledge of Allegiance to the Flag. 2. PUBLIC COMMENTS None 3. CONSENT CALENDAR It was moved by Member Menesini and seconded by Member Nejedly, 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 Danville Lot Option LP for easements shown on the recorded final map of Subdivision No. 8000 in the Town of Danville, Job Nos. 5156 and 5252, Parcel 1; staff was authorized to record the easement acceptances with the Contra Costa County Recorder; and Resolution No. 2004-018 was adopted to that effect. Motion approved on the following vote: AYES: Members: Menesini, Nejedly, Boneysteele, Hockett NOES: Members: None ABSENT: Members: Lucey b. Public sewer improvements and an Offer of Dedication were accepted from Pulte Homes Corporation for an easement shown on the recorded final map of Subdivision No. 7964 in the Town of Danville, Job 5215, Parcel 1; staff was authorized to record the easement acceptances with the Contra Costa County Recorder; and Resolution No. 2004-019 was adopted to that effect. Motion approved on the following vote: AYES: Members: Menesini, Nejedly, Boneysteele, Hockett NOES: Members: None ABSENT: Members: Lucey fr ','\ C,:' \. } (-) -" --- () <~ 4~ c. 167 The President of the Board of Directors and the Secretary of the District were authorized to execute Quitclaim Deeds to Shapellindustries of Northern California, on behalf of the District for a sewer easement abandoned in 2003 (DP 5556, Parcels 2 and 3); staff was authorized to record said Quitclaim Deeds; and Resolution Nos. 2004-020 and 2004-021 were adopted to that effect. Motion approved on the following vote: AYES: Members: Menesini, Nejedly, Boneysteele, Hockett NOES: Members: None ABSENT: Members: Lucey d. The District Board's regularly scheduled meeting of April 1 , 2004 at 2:00 p.m. was established as the date and time or a public hearing to receive comments on the proposed Reimbursement Fees for properties that could directly connect to "Standard Facilities" sewers identified as Job 5332 (Northgate Road, Walnut Creek), Job 5427 (Camellia Lane, Lafayette), Job 5542 (Camino Monte Sol, Alamo), Job 5635 (South Avenue, Alamo), or be tributary to the "Special Facilities" sewers identified as Job 5278 (Lawrence Road, Danville), Job 5156 (Forcemain and North Lawrence Road Pumping Station, Danville), Job 5252 (Forcemain Relocation, Danville), and Job 5503 (Crestview Court, Orinda). Motion approved on the following vote: AYES: Members: Menesini, Nejedly, Boneysteele, Hockett NOES: Members: None ABSENT: Members: Lucey None a. 4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER 5. REPORTS GENERAL MANAGER 1) Mr. Charles W. Batts, General Manager, reported that Governor Schwarzenegger sold the voters on his $15 billion bond measure and balanced budget initiative. Bond firms call this a quick fix that gets California out of the woods. California has the lowest bond rating of any state due to a long-term budget imbalance. The bond measure does give the State some breathing room to work out future budget problems. Most believe around $12 billion in higher taxes and program cuts will be required. In Alameda County Court more than three dozen cities are contesting the State's right to shift sales tax money away from local government to cover the bond repayment. 2) Mr. Batts, General Manager, stated that as part of the District's National Pollutant Discharge Elimination System (NPDES) permit, the District is required to submit an annual Pollution Prevention Report to the Regional Water Quality Control Board (RWQCB). Mr. Batts introduced Senior Engineer Randy Schmidt and Communication Services Manager Harriette Heibel to present highlights of the 2003 Pollution Prevention Annual Report. Ms. Harriette Heibel, Communication Services Manager, stated that Board Members all received a copy of the Annual Pollution Prevent Report. As the Board may recall, in 2001 when the District received its new NPDES 08 04 04 168 06) ~!..J Q) permit, the District was required to have a Pollution Prevention Program even though the District has had such a program for ten years. The District is required to identify pollutants of concern, develop and implement a pollution reduction plan for each pollutant of concern, measure reduction plan effectiveness, and report results annually to the RWQCB. Mr. Randy Schmidt, Senior Engineer, stated that Pollution Prevention spans a broad spectrum. The District has a strong pretreatment effort; strong public outreach; a Household Hazardous Waste Collection Facility; influent, effluent and sludge monitoring; and involvement in special studies both on a regional and an interagency basis. Examples are the Pollution Prevention Menu and the District Dental Best Management Practices. Ten pollutants of concern were identified as 2003 priorities. The highest priority pollutants were mercury and cyanide; and medium priority pollutants were pesticides and tributyltin. Mercury is biocumulative and not biodegradable. In 2003, the District published dental Best Management Practices (BMPs) for reducing mercury, wrote an article for the Contra Costa Dental Society on mercury, and showcased a display at the Contra Costa Dental Society meeting on dental BMPs. In 2004, the District will begin Informational Permitting of dental facilities. With regard to cyanide, Mr. Schmidt stated that the District has very little cyanide in our influent, but cyanide is generated as part of the plant process. In 2003, the District worked with the Bay Area Clean Water Agencies (BACW A) on developing a cyanide site-specific objective for the San Francisco Bay, and the District Laboratory worked with the RWQCB on ambient water quality monitoring. In 2004, the District will participate with the RWQCB in evaluating ambient water quality data and the District will be investigating biological cyanide removal from multiple hearth furnace scrubber water. Multi-pollutant activities were highlighted, including the Household Hazardous Waste Collection Facility (HHWCF), public outreach, cooperative partnerships, and Source Control inspections. The HHWCF is the cornerstone of the District pollution prevention efforts. In 2003, 1.4 million pounds of HHW were collected, 125 mercury thermometers were exchanged, 2,439 pounds of mercury-containing wastes were collected, and 106,000 pounds of poisons (pesticides, tributyltin, dieldrin, copper) were collected. Multi-pollutant outreach activities included Water Wizards, Sewer Science, Integrated Pest Management, CCCSD Pipeline newsletter, and partnership activities. Water Wizards reached 1,558 students in 22 schools. Comparison of pre and post-test results indicate knowledge transfer on pollution prevention is occurring. The Sewer Science Program reached 818 high school students in eight schools in 2003. Comparison of pre and post-test results indicate students are learning wastewater treatment and pollution prevention concepts. Test results improved an average of 15 percent. Seventeen local hardware and nursery stores participate in the District's Integrated Pest Management (IPM) Program. These stores are devoting more shelf space to less toxic products. Many of the stores display fact sheets year-round. Twenty-five free public "Healthy Gardening" workshops were conducted by Master Gardeners for 548 people. 80 percent of the workshop participants said they will use fewer toxic pesticides as a result of what they learned. The CCCSD Pipeline newsletter goes to approximately 140,000 people once or twice a year. It contains articles on HHWCF, pollution prevention, and outreach programs. Survey results from 433 customers on HHW disposal, the "Our Water Our World" campaign, and toxic pest control information were included in the annual report to the RWQCB. The District participates in multi-pollutant partnership activities such as the Green Business Program, Bay Area Pollution Prevention Group, and BACW NBASMAA Media Relations Committee. Other pollution prevention reduction activities included mailing Source Control OM ".. L£ /í~\ /;4 \: ,'1 ';'-\',!,' v ..,. 169 Inspection brochures to more than 2,000 businesses, stormwater inspections, and pretreatment inspections. Mr. Schmidt stated that in 2004 the Pollution Prevention Plan focus will be to continue the existing outreach programs, to continue operation of HHWCF, to start Informational Permitting of dental facilities, and to investigate cyanide and mercury removal technologies. Following discussion of the dental mercury outreach activities and the sources of mercury, President Pro Tem Hockett thanked Ms. Heibel and Mr. Schmidt for their report. 3) Mr. Batts, General Manager, stated that several months ago, Conco Cement Company and U.S. Development individually submitted Land Use Permit applications to the County to build facilities on the former IT property north of the District treatment plant. They have also requested use of the private road, for which they have an easement, adjacent to Contra Costa Topsoil. In October 2003, Senior Engineer Henry Thorn made a presentation to the Board on this issue. Since that time, more information on the traffic estimates has been received. Mr. Batts introduced Mr. Henry Thom, Senior Engineer, who stated that Conco Cement Company has submitted a Land Use Permit application for cement trucks and an equipment maintenance yard and for pre-fabricated wood forms. The U.S. Development (USD) Land Use Permit application is for a cement plant and aggregate storage; however their web site indicates the property will be used for a future rail yard for approximately 1,200 rail cars. Mr. Thom used an aerial photograph to describe the location of the properties being discussed. Major issues for consideration include compatibility with District needs, use of the private road (Waterbird Way), long-term impacts of traffic, security, etc., approval of Land Use Permits by the County, and financial arrangements. To date, staff has responded to the County's request for input on the Conco and USD Land Use Permit applications, provided input to Conco's traffic study, and begun negotiations with Conco and USD on access. Since the October 2, 2003 Board presentation, updated traffic information has been received. Mr. Thom quoted from the Abrams' October 2003 Report, "The traffic impacts from this project will not be significant." Conco projects 320 trips each direction per day with a peak of 35 trips per hour, and USD projects 85 trips per day with a peak of 10 trips per hour for a total of 405 trips per day with a total peak of 45 trips per hour. District staff sent letters to Contra Costa County expressing concerns about traffic impacts. District staff met with USD to discuss these concerns and demanded a comprehensive traffic study. In addition, District staff suggested alternative access routes. USD is reviewing options for alternative routes. Contra Costa County is performing California Environmental Quality Act (CEQA) review and will notify the District when the hearing is scheduled. The County will incorporate "relevant" comments from the District's October 9 and 20, 2003 letters. Mr. Thom stated that the County Public Works Director believes that Conco may not significantly impact traffic, but he is waiting for the comprehensive traffic study from USD. The County will require that traffic detour around Blum Road. With regard to the issues of use and impact of the private road, the County has indicated that is a private matter between the District and Conco and USD. Mr. Thom stated that USD is presently doing the comprehensive traffic study. USD has asked the District, irrespective of the County Land Use Permit, for a construction easement and 18-month temporary use of the private road to allow for evaluation of alternative routes including a soil/geotechnical study, permit requirements, preliminary design, and cost evaluation. Mr. Thom reviewed the options available to the District, and presented the staff recommendation that the District grant the requested 18-month temporary use of access road contingency on Contra Costa County Land o, \ G~.) Vi) 04 04 170 fiG") ~ß Q) Use Permit approval, and that the overall situation be reviewed when more information on the alternate bridge route is available. In the discussion that followed, Member Nejedly suggested and the Board concurred, that U.S. Development and Conco Cement Company be asked to make a presentation to the Board of Directors with regard to their development plans and the traffic impacts. Mr. Batts stated that staff will ask Conco and USD to present development plans and the results of the traffic study to the Board. Mr. Batts noted that there is an easement in place that would allow them to use the private road. The easement was granted in approximately 1974 and is for very limited use for maintenance vehicles, etc. It would seem that the projected use would be overburdening the prior easement use. President Pro Tem Hockett thanked Mr. Thom for the update. 4) Mr. Batts, General Manager, announced that the District recently received two Notices of Violations. The first was for the gas dispensing system at CSO that operated without a permit. The historical use without a permit came to the Bay Area Air Quality Management District's (BAAQMD) attention when the new system was under design. The second Notice of Violation (NOV) was for exceeding the firing rate for the gas-fired cogeneration turbine and late report of that exceedance. Initially both the BAAQMD and District staff believed that the turbine firing rate limit was a reporting parameter, not a permit limit. The late reporting was due to not knowing the firing rate exceedance needed to be reported. The BAAQMD inspector was very helpful and recommended both how to draft the NOV response letter and how to request an increase in the firing rate limit. The current firing rate limit reduces the District's electrical power output, effectively derating the cogeneration turbine and increasing District dependence on PG&E. Staff is pursuing an amendment to the permit to increase the firing rate limit. 5) Mr. Batts, General Manager, announced that Mr. Bhupinder Dhaliwal, Laboratory Superintendent, will be attending the 4th National Monitoring Conference in Chattanooga, Tennessee, May 17-20, 2004. There are funds in the budget to cover this conference. This is the premier monitoring conference in the nation, and Mr. Dhaliwal's attendance will help the District provide guidance on the Regional Monitoring Plan for the Bay Area. 6) Mr. Batts, General Manager, announced that Dr. Gail Chesler, Associate Engineer, will travel to Phoenix, Arizona, to participate in the Water Environment Research Foundation Joint Research Council Meeting March 17-20,2004. Attendance was budgeted in the 2003-2004 Engineering Department travel and training budget. 7) Mr. Batts, General Manager, announced that Plant Operations Division Manager Doug Craig and Communication Services Manager Harriette Heibel will attend an out-of-state conference in Phoenix, Arizona on March 14-17,2004 to present a paper on the District's Continuous Improvement and Strategic Planning efforts at the annual Water Environment Federation/American Water Works Association Joint Management Conference. Funds were budgeted to cover the cost of attending the conference. 8) Mr. Batts, General Manager, provided a wet weather update. On Wednesday, February 25,2004, there was a significant and very dense rainstorm that resulted in heavy flows in the collection system. The District experienced one overflow, estimated between 1,000 and 2,000 gallons, on Camino Pablo in Orinda, between the East Bay Municipal 0" 1 tJi~ - O,,! 1,',\, l~,,',1 ' t' '£"'1" , ....:L. 9) 10) b. 171 Utility District (EBMUD) filter plant and the District's Lower Orinda Pumping Station. The Lower Orinda Pumping Station was able to deal with the large flow. The EBMUD filter plant and the area on the hill across from the filter plant were featured on the local television news. This area, primarily North Lane, was inundated with stormwater when the creek in the area essentially rerouted itself down North Lane, bringing mud and debris down to and across Camino Pablo. All in all, it was a successful day due to everyone's efforts to keep the wastewater in the collection system. The treatment plant recorded 5.5 inches of rainfall in February, with the February 25 storm contributing 2 inches. The peak flow was 150 MGD. The maximum storage in the wet weather basins was 25 MGD, and all basins have subsequently been drained back and treated. During the heavy flows some large rocks and other debris temporarily jammed the grinders but did not cause any damage or stoppages. The ultraviolet disinfection system experienced some ballast failures which staff believes were caused by moisture condensing in the control panels. New ballasts have been installed. Mr. Batts, General Manager, announced that on Wednesday, March 3, 2004, Mr. Paul Louis, Collection System Operations (CSO) Division Maintenance Supervisor, was returning from a California Water Environment Association (CWEA) meeting with two other committee members. Another car suddenly veered off the road into a ditch partially filled with water, rolling upside down. Mr. Louis saw the splash and stopped to help. When he saw the car upside down, he jumped in and worked with the lady in the car, still upside down, and managed to get her out of the car and onto the bank. Shortly after that, fire and medic response team members arrived on the scene. Member Menesini and the Board of Directors commended Mr. Louis on his heroic actions. Mr. Batts, General Manager, announced that on Tuesday, March 16, 2004 at 7:00 p.m., there will be a public workshop on the Pleasant Hill Road East Project at the Martinez City Hall Council Chambers. The Pleasant Hill Road East Project is a joint project with the City of Martinez and includes replacing sewer and water lines and installing asphalt overlay on the streets in the project area. The sewer replacement consists of approximately 6,800 feet of new sewer pipes and new manholes and lateral connections. The pipe will be installed primarily using open cut method; however, there will be a 20-foot casing that will be tunneled and 500 feet of pipe bursting. The water line replacement includes approximately 4,300 feet of pipe with various cutoff and relief valves. The project area includes Haag Road, Brackman Lane, Pleasant Hill Road East, Lander Road, Valley Road, Smith Drive, and Forrest Lane. COUNSEL FOR THE DISTRICT c. d. None SECRETARY OF THE DISTRICT 1) Ms. Joyce E. Murphy, Secretary of the District, announced that the District has been served with a Public Records Act request in an asbestos-related lawsuit relating to the 5A treatment plant construction during the 1970's. BOARD MEMBERS 1) Member Boneysteele, Chair of the Budget and Finance Committee, reported that he and Member Menesini reviewed the expenditures. O,()j '¡, ""' J~ì 04 fÍ\':¡ j~ V ':it 172 5) 6) It was moved by Member Boneysteele and seconded by Member Menesini, that the Expenditure List dated March 4, 2004, including Running Expense Check Nos. 148840-148978 and Sewer Construction Check Nos. 26488-26515, be approved as recommended. There being no objection, the motion was approved with President Lucey being absent. 2) Member Nejedly, Chair of the Personnel Committee, reported that he and President Lucey met with staff on February 24, 2004 to review the draft 2004-2005 Staffing Plan and other personnel matters. At that meeting, the Personnel Committee endorsed requests to fill the vacant Payroll Technician, Associate Engineer (Capital Projects), and Engineering Technician 1/11 (Capital Projects) positions. Member Menesini, Chair of the Outreach Committee, distributed and reviewed notes from the February 26, 2004 Outreach Committee at which topics of discussion included the proposed 2004-2005 Public Information Budget, the 2003 Pollution Prevention Annual Report, construction outreach for the 2004 season, Grease Pilot Program, the Community Outreach Report, and the Pipeline survey results. A placeholder of $10,000 was added to the 2004-2005 Public Information Budget for sponsorship of a portion of the Contra Costa Water District student education program. 3) 4) Member Nejedly, Chair of the Household Hazardous Waste Committee, stated that he and Member Hockett met with staff on March 3, 2004 to discuss issues related to household hazardous waste (HHW). Member Nejedly distributed and reviewed the notes of that meeting which focused on the HHW Collection Facility operations update, mobile events for the current fiscal year, and budgeting for future mobile collection events. The Committee endorsed budgeting for one District HHW (no e-waste) mobile collection event only in San Ramon for 2004-2005. Member Menesini announced that the March 15, 2004 Environmental Alliance Discussion Services will feature Pete White, Naturalist, discussing the human and natural history of the Farallon Islands. All those interested are invited to attend the series that will begin at noon at the John Muir National Historic Site at 4202 Alhambra Avenue in Martinez. Member Menesini reported on cooperative efforts with Hayward State University on development of an Environmental Science education program. BREAK President Pro Tem Hockett declared a recess at the hour of 3:25 p.m., reconvening the meeting at the hour of 3:30 p.m. with all parties present as previously designated. 6. ENGINEERING AUTHORIZE THE PRESIDENT OF THE BOARD OF DIRECTORS AND THE SECRETARY OF THE DISTRICT TO EXECUTE AN AGREEMENT WITH THE CITY OF MARTINEZ FOR A JOINT CONSTRUCTION PROJECT a. Mr. Batts, General Manager, stated that both the District and the City of Martinez have construction projects planned for Pleasant Hill Road East this summer. After discussing ways to coordinate construction of both projects, District and City staff agreed that combining the work into a joint project would be cost efficient for both agencies and least disruptive to residents. It was moved by Member Menesini and seconded by Member Nejedly, that the President of the District Board of Directors and the Secretary of the District be authorized to execute an agreement with the City of Martinez for a joint construction 1fÌ\ (~) '\} c..) l;\ Ii . .~ t:"...: 173 project in the Pleasant Hill Road East corridor in Martinez. There being no objection, the motion was approved with President Lucey being absent. 7. HUMAN RESOURCES a. ADD ONE MAINTENANCE COORDINATOR 1/11 POSITION G47 3047- $3.667/G51. $3.343-$4.040) AND DELETE ONE SECRETARY 1/11 POSITION ~2.906-$3.503/G~3.854): AUT!jORIZE FILLING THE MAINTENANCE COORDINATOR 1/11 POSITION Mr. Batts, General Manager, stated that expanded use of computerized maintenance management systems, tracing and processing of information gathered by field crews, and increased need for scheduling has increased the maintenance coordination work significantly. It is requested that the vacant, budgeted Secretary 1/11 position be converted to Maintenance Coordinator. Following clarification of the defined authority and responsibility of the two Maintenance Coordinator 1/11 positions, it was moved by Member Nejedly and seconded by Member Menesini, that addition of one Maintenance Coordinator 1/11 (G47, $3,047-$3,667/G51 , $3,343-$4,040) position and deletion of one Secretary 1/11 (G45, $2,906-$3,503/G49, $3,189-$3,854) position be authorized, and that recruitment for the Maintenance Coordinator vacancy be authorized. There being no objection, the motion was approved with President Lucey being absent. 8. APPROVAL OF MINUTES a. MINUTES OF ADJOURNED REGULAR BOARD MEETING OF JANUARY 29. 2004 MINUTES OF REGULAR BOARD MEETING OF FEBRUARY 5.2004 b. c. MINUTES OF ADJOURNED REGULAR BOARD MEETING OF FEBRUARY 18. 2004 It was moved by Member Menesini and seconded by Member Nejedly, that the minutes of the Adjourned Regular Board Meeting of January 29, 2004, the minutes of the Regular Board Meeting of February 4, 2004, and the minutes of the Adjourned Regular Board Meeting of February 18, 2004, be approved as presented. There being no objection, the motion was approved with President Lucey being absent. 9. BUDGET AND FINANCE a. PROPOSED SEWER SERVICE CHARGE INCREASE PUBLIC NOTICE TIMELINE AND CONTENT Mr. Batts, General Manager, stated that the Board policy of public notice requires direction to staff concerning proposed rates in March. Current reserves are adequate for existing District operations, but future reserves are highly dependent on retaining property tax revenue. Board policy decisions include what Sewer Service Charge rate is prudent, what are the impacts on future rates if tax revenue is lost, and how long does the Board want rates stabilized? Although the Proposition 218 public notice is not required for a Sewer Service Charge increase, the Board policy has been to provide such public notice. This requires 45-day notice to the ratepayers. Mr. Batts reviewed the Proposition 218 timeline that calls for Board decision on the public notice on March 18; mailing notices 45 days before the public hearing by April 19; public hearing on June 3; and submission of the Sewer Service Charges to the County Tax Collector by August 10,2004. Mr. Batts stated that funds available have been discussed a great deal. Future funds available amounts are linked to the property tax revenue. Funds available are now at $58 million. In 2004-2005 funds available could be approximately $57 million with property tax revenue and $48 million without property tax revenue, down slightly due to (J',j}\\' ç," ,;J,.' , . "" ; c:...) 0\\ /i " "-!¡:~ ..... 04 174 increased capital spending. Still both of these figures are well above the funds required number. The Governor's initial proposal calls for a $1.3 billion shift of property taxes to the Education Relief Augmentation Fund (ERAF), about 10 percent. The recommendation in the February 18, 2004 State Analyst Report is for a $400 million property tax shift from enterprise special districts, about an 80 percent reduction in enterprise special district property tax revenue. The ad valorem tax issue is now on the table in the State budget discussion. Mr. Batts stated that the 2003-2004 Capital Improvement Budget (CIB) will be underspent by approximately $3.2 million, as discussed with the Board when near-term budget adjustments were presented. The 2004-2005 CIB is budgeted at $26.6 million. As the District infrastructure continues to age and costs increase, future infrastructure spending will increase as well. Only part of the Sewer Construction Fund can be used to augment rates. Revenue from Capacity Fees, for instance, must be used for capacity-related projects. Mr. Batts stated that a Consumer Price Index (CPI) or inflationary type approach is being presented because Workshop comments seemed to favor such an approach; the Board has ensured revenue from the Sewer Service Charge to meet present needs so future expenditures would follow an inflationary format; such an approach is readily understandable to ratepayers; and it would preserve future options. Mr. Batts discussed various CPI alternatives including the Bureau of Labor Statistics based on "shopping cart" purchases, the San Francisco Construction Index from the Engineering News Record that is used for the District Capital Improvement Plan and sewer reimbursement, and the District labor factor. Member Boneysteele stated that only the shopping cart index is a true CPI, but that has nothing to do with what the District does. Member Boneysteele stated that the elements that relate to the District should be defined and the index should be called something other than CPl. Mr. Batts reviewed the impacts on fiscal years beyond 2004-2005 of four scenarios as follows: . Scenario 1 is the best case scenario and projects 10 percent loss of property tax revenue, a 3 percent inflationary Sewer Service Charge increase for three years, uses current O&M projected spending including the $1.6 million Paulsen payment, could project a 3 percent Sewer Service Charge rate increase beyond three years, and creates a "hard landing" in 2009-2010; . Scenario 2 anticipates loss of all property tax revenue during 2004-2005, uses the 2003 annual San Francisco/Oakland CPI of 2 percent for adjustment of the Sewer Service Charge, and creates a "crash landing" in 2006-2007; . Scenario 3 anticipates loss of all property tax revenue during 2004-2005, uses the Engineering News Record/District CPI of 3 percent as the basis for a Sewer Service Charge increase, and creates a "crash landing" in 2009-2010; . Scenario 4 anticipates loss of all property tax revenue, uses District labor and benefits costs as the basis for a 4 percent Sewer Service Charge increase, and creates a "crash landing" in 2009-2010. Using a chart, Mr. Batts provided a rate comparison of the scenarios discussed, noting impacts on future rate stabilization efforts. Scenario 1 recommended by staff, provides for rate stabilization through 2009-2010, while the other scenarios require fairly substantial rate increases at the end of three or four years after the loss of property tax revenue. Mr. Batts stated that Board consideration and direction is needed, but not required by March 18,2004, for timely Proposition 218 notice. The retention of property tax revenue is unlikely. It is a question of when, not if the District will lose it. Any of the CPI (inflationary) scenarios will work for the short term. If an extended Sewer Service Charge rate is desired by the Board (rate stabilization), then a 3 to 4 percent rate (J), (,) ! -" "r C' ') -' '-'" O{~ ("...\ .. ,',,' "'-/ 175 increase is recommended. Loss of the entire property tax revenue will require a major rate increase within a year of that happening. It is estimated that a $59 increase in the District's Sewer Service Charge rates would be needed to recover lost property tax revenue. Mr. Batts stated that none of the rate increases presented in the scenarios would materially impact the District's Sewer Service Charge rate relative to other agencies as shown on the listing of Sewer Service Charge rates of nearby agencies. Mr. Batts stated that future staff actions will be to continue to update the Board on State budget developments that impact the District, develop and mail the public notice of the proposed rate increase, provide rate and budget information in the spring issue of the District Pipeline newsletter, and start the appropriate budget work and rate-setting process. Mr. Batts requested any input that the Board may have with regard to proposed Sewer Service Charge rate adjustments. Staff will then use that input to develop a draft public notice for the Board approval at the March 18, 2004 Board Meeting. Member Boneysteele stated that he relies heavily on the staff who work with this everyday and have the background and practical experience and ultimate responsibility. Member Nejedly stated that staff is heading in the right direction, but he has some reservations. If and when the District loses ad valorem tax revenue, he will do something about it. If a 3 percent Sewer Service Charge increase, basically CPI, keeps the District fluid, Member Nejedly stated that he would support it. Member Nejedly stated that he does not want to keep quiet about the potential loss of ad valorem tax revenue and then hit the ratepayers when they are not expecting it. Member Menesini stated that the future is not well spelled out. The District must wait until the other shoe drops, then we will know where we are. President Pro Tem Hockett stated that by doing a very low CPI adjustment to buy time, the District would be selling itself short in terms of anticipating the future based on what we already know today. President Pro Tem Hockett stated that she would rather do an increase in the Sewer Service Charge that buys the District more time. President Pro Tem Hockett agreed with Member Nejedly, that she does not want to jump up to a $60 Sewer Service Charge increase because it looks like the District does not have any planning. The District must plan realistically. If the District does not lose property tax revenue, that is good. But good planning would be in the best interest of the public. b. RECEIVE THE 2003-2004 OPERATIONS AND MAINTENANCE BUDGET REVIEW FOR THE SIX MONTHS ENDED DECEMBER 31,2003 Mr. Batts, General Manager, introduced Ms. Deborah Ratcliff, Controller, who reviewed the financial position of the District for the first six months ending December 31,2003, and the projections for the full year. Ms. Ratcliff noted that these projections are more favorable than the projections that were shown to the Board at the Financial Planning and Policy Workshop on January 29, 2004. Ms. Ratcliff reviewed the results of operations and maintenance for the six months ending December 31,2003, reporting that actual revenues of $20,462,382 were $1,048,296 ahead of budget mainly due to ad valorem tax revenue anticipated to be eliminated but retained. For the six months ending December 31,2003, actual expenditures of $20,020,540 were $993,731 less than budget due to savings in Salaries and Benefits, Chemicals, Utilities, Hauling and Disposal, Outside Services, and Materials and Supplies. At December 31,2003, revenue over expense was $2,042,027. Ms. Ratcliff stated that there would have been a greater savings but the District had the unexpected $1.6 million payment to the Contra Costa County Public Employees Retirement Association (CCCERA) for the Paulsen settlement. Ms. Ratcliff reported that for the full fiscal year, total revenues are projected to be $44.5 million or $1.5 million greater than budget representing a 3.5 percent favorable variance, again because of the District retaining ad valorem tax revenue. Total expenses are projected to be $43.5 million or $555,000 less than budget, representing a 1.3 percent favorable variance. At June 30, 2004, revenue over expense results in a fì" 11,1,\ 6=~), ,j¡ Q..) 0" ¿J ::t t11A4 V' 176 projected increase in O&M reserves of $1 million. Ms. Ratcliff reviewed projected full- year expense variances, noting that savings are expected in Salaries and Wages, Utilities, and Outside Services, while unfavorable variances are projected in Benefits, and Repairs and Maintenance. President Pro Tem Hockett thanked Ms. Ratcliff for her report, and declared that the 2003-2004 Operations and Maintenance Budget Review for the six months ended December 31, 2003 and the projections for the full fiscal year were duly received. c. RECEIVE DECEMBER 2003 FINANCIAL STATEMENTS Ms. Ratcliff, Controller, reported that the District's temporary investments were held in commercial paper and the District's Local Agency Investment Fund (LAIF) account. The average yield of the District's LAIF account through December 2003 was 1.55 percent. Member Boneysteele asked about LAIF investments and the possibility of compounding the State financial crisis by continuing to invest in LAIF. Ms. Ratcliff stated that she could look into the portfolio and report back to the Board about how much is invested in State investments as opposed to other investments. President Pro Tem Hockett declared that the December 2003 Financial Statements and report of temporary investments were duly received. d. 2003-2004 CAPITAL IMPROVEMENT BUDGET MID-YEAR STATUS REPORT Mr. Batts, General Manager, introduced Ms. Ann E. Farrell, Director of Engineering, who stated that the 2003-2004 Capital Improvement Budget (CIB) estimate would have been $25,873.000 if the District would have known it would retain ad valorem tax revenue. Because the District anticipated the loss of ad valorem tax revenue, the 2003- 2004 CIB estimate was projected at $18.7 million and staff began deferring projects. As the fiscal year progressed and it became apparent that the District would not lose ad valorem tax revenue in 2003-2004, staff began escalating projects, but it takes some time to do that. The CIB year-end projection as of December 31,2003 is $20.6 million, approximately $5 million underspent but that was intentional because loss of ad valorem tax was anticipated. Ms. Farrell summarized CIB program components and the major differences between what the Board approved and the year-end projections, stating that at June 30, 2004, Treatment Plant Program expenditures are projected to be $437,000 less than budget and Collection System Program expenditures are projected to be $4.5 million less than budget. As stated earlier, these project savings and deferrals were intentional because of anticipated loss of ad valorem tax revenue. Ms. Farrell stated that the 2003-2004 Capital revenues are projected at $25.5 million, compared to budgeted revenues of $16.3 million, for a favorable variance of $9.3 million. At June 30, 2004, Capital revenue is projected to be $25.5 million and Capital expenditures are projected to be $20.6 million plus debt retirement of $750,000 for a net Sewer Construction Fund change of $3 to 4 million. The beginning Sewer Construction Fund balance of $48.6 million is projected to increase to approximately $52.6 million. President Pro Tem Hockett declared that the 2003-2004 Capital Improvement Budget Mid-Year Status Report was duly received. 10. EMERGENCY SITUATIONS REQUIRING BOARD ACTION None 11. ANNOUNCEMENTS/SUGGESTIONS FOR FUTURE AGENDA ITEMS Member Boneysteele commended President Pro Tem Hockett on the manner in which she conducted the meeting, and complimented staff on the prodigious work that went into this meeting. (, 1\ 6,,->,) JJù f':> ~J"._. 177 12. ADJOURNMENT There being no further business to come before the Board, President Pro Tem Hockett adjourned the meeting at the hour of 4:18 p.m. COUNTERSIGNED: (Vi,', ,;" 6"')", ", '" -' 'J (oj 0,' ¿Jo v""- O~ 1\ " ,1 " 1.1L"j , '.J1: