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HomeMy WebLinkAboutBOARD MINUTES 02-01-01 23 MINUTES OF THE REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON FEBRUARY 1, 2001 The District Board of the Central Contra Costa Sanitary District convened in a 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 February 1, 2001. President Hockett called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Members: Nejedly, Menesini, Lucey, Boneysteele, Hockett ABSENT: Members: None a. INTRODUCE NEW EMPLOYEES . DONALD PARKER. ELEÇTRICIAN . JEREMIAH WALSH. VEHICLE AND EQUIPMENT SERVICE WORKER Mr. Donald Parker, Electrician, was introduced and welcomed to the District by President Hockett and the Board of Directors. Mr. Jeremiah Walsh, Vehicle and Equipment Service Worker, will be introduced at a future Board meeting. 2. PUBLIC COMMENTS None 3. AWARDS AND COMMENDATIONS a. RESOLUTION COMMENDING BOARD MEMBER GERALD R. LUCEY FOR HIS SERVICE TO THE CENTRAL CONTRA COSTA SANITARY DISTRICT AS PRESIDENT OF THE BOARD OF DIRECTORS It was moved by Member Menesini and seconded by Member Boneysteele, that Resolution No. 2001-007 be adopted, recognizing Board Member Gerald R. Lucey for his service to the Central Contra Costa Sanitary District as President of the Board of Directors. The motion was approved by unanimous acclamation. President Hockett presented a framed resolution to Member Lucey and was joined by the Board and staff in commending him for his leadership during the past two years. Member Lucey accepted the proclamation on behalf of the entire Board of Directors, stating that these successes are a credit, not to the chair or anyone person, but everyone working together. Member Lucey stated that he believes the greatest thing that the Board did over the past two years was to hire the new General Manager and Director of Engineering. 4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER None 5. REPORTS a. GENERAL MANAGER 1 ) Mr. Charles W. Batts, General Manager, stated that each year the District must publish a notice in the newspaper of those commercial and industrial dischargers to the District in significant noncompliance with Federal source control regulations. Mr. Batts introduced Ms. Roberta Peterson, Senior 02 01 01 24 02 Source Control Inspector, who stated that federal regulations require that all Pretreatment Programs publish a list of industrial users in significant noncompliance for the previous calendar year. Ms. Peterson stated that the handouts provided to the Board include a copy of the notice which will be published in the Contra Costa Times on February 6, 2001. The criteria for determining significant noncompliance status are defined in Federal regulations and include discharge limit violations, reporting deadlines, and compliance schedules. Ms. Peterson stated that there is one more subjective criteria, and that is if the discharger is found to have a pattern of noncompliance that could also put them into the category of significant noncompliance. In response to questions from Member Menesini, Ms. Peterson stated that fines and Notices of Violation are not necessarily part of this requirement for publication of a list of those in significant noncompliance. There are other parts of the District Source Control Program which require compliance and failure to comply could result in fines or issuance of Notices of Violation. The publication of the notice of significant noncompliance is not an option. The District is required to publish this list at least annually and it must be in the largest newspaper in the area where the District is located. In recent years the District has followed the practice of listing businesses separately that fail to meet reporting requirements as opposed to those businesses that have actual discharge limit violations. Proof of publication is included in the annual report. Ms. Peterson stated that the following are businesses with discharge quality violations: . Contra Costa Radiator - Discharge limit violations relating to copper, lead, and zinc; . Excel Linen Supply - Discharge limit violation relating to oil and grease Ms. Peterson stated that the following businesses have reporting violations: . Benson's Radiator Service - Failure to submit required report within 30 days after the due date; and . Varian, Inc. - Failure to submit required report within 30 days after the due date. In closing, Ms. Peterson stated that these four business are currently in compliance. Ms. Peterson stated that in the nearly ten years she has been working in this area, this is the shortest list the District has had. Following discussion of the nature of the discharge limit violations and the follow up action taken, President Hockett thanked Ms. Peterson for the report. 2) Mr. Batts, General Manager, stated that with the changing energy situation, the Board asked for an update to be scheduled for each Board meeting to keep them apprised of the general situation and the District's energy position. Mr. Batts stated that he has asked Messrs. Kelly and Belcher to provide the Board with an update on the sources and uses of energy at the Treatment Plant, and how the District is responding to the ongoing energy crisis. Mr. Batts introduced Mr. James M. Kelly, Director of Plant Operations, who stated that the District has a long history of trying to conserve energy and electricity. In 1984, the District received an award for its electrical conservation efforts. Between 1985 and 1995 there were a number of projects that included energy conservation components. In 1995 cogeneration came on line. Early last year, flourescent lights were exchanged for more energy efficient lights. Mr. Kelly stated that the Treatment Plant is very energy flexible so it is possible to use primarily electricity or natural gas. Even with that flexibility, the District is not protected against the energy crisis California is facing today. Mr. Kelly 01 01 25 displayed and described the Treatment Plant energy model for natural gas, landfill gas, electricity and steam. Use of the standby generator is limited by regulation to about 300 hours per year, which is enough for emergencies but not much if the District wants to produce power routinely. Mr. Kelly reviewed 2000-2001 budgeted and actual, and 2001-2002 projected electrical (PG&E Import), natural gas, and landfill gas costs stating that the totals are projected to increase from $2,370,220 to $5,160,000. EJectrical costs are projected to increase by 30 percent. Mr. Kelly cautioned that electrical costs are extremely volatile now and the estimated percent increase is just a guess on th.e part of staff. Natural gas is expected to increase two and one-half times. Staff believes that is a fairly accurate estimate. Landfill gas will be covered later in this agenda. Mr. Kelly stated that the annual energy budget for the current fiscal year, 2000-2001, is expected to be significantly over budget. Natural gas is projected to be $2,600,000 or 65 percent over budget, landfill gas is projected to be $800,000 or 20 percent over budget, electrical is projected to be $575,000 or 15 percent over budget, for total energy costs of $3,975,000 or nearly double the amount budgeted. Mr. Jim Belcher, Senior Engineer, reviewed natural gas purchasing strategies. In the past, the District was able to get good prices and long- term contracts. Last year the District was not able to get a long-term natural gas contract that met the District's price objectives and so the District went on a month-to-month index. The District began purchasing winter strip which runs from November 1 through March 31. Part of the monthly use was purchased as prices went down from $5.87 per decatherm to $5.52 per decatherm, and finally to $5.35 per decatherm, until the end when 25 percent of the gas purchased was on the index. This is called hedging and it has protected the District during the winter. The last natural gas purchased was for $14. Mr. Belcher stated that the contract was held by the District for a month and later sold for $19 on the open market because it made more sense to sell it than burn it to make energy. In looking toward the future, Mr. Belcher stated that the District is trying to come up with a natural gas strategy to look at both short- and long-term buying options. It is planned to use a team approach. Team members will include Purchasing and Materials Manager Victoria Lamica, Director of Plant Operations Jim Kelly, Plant Maintenance Division Manager John Pearl, Plant Operations Division Manager Doug Craig, Director of Engineering Ann Farrell, Capital Projects Division Manager Bill Brennan, Senior Engineer Jim Belcher, Senior Engineer Randy Schmidt, and District Counsel Kent Aim. The team will explore long- and short-term buying strategies. Mr. Belcher requested the Board's support for the District remaining flexible in this area in order to respond to the volatile marketplace. Mr. Belcher stated that over the coming summer the District is looking at $8.45 per decatherm natural gas. The District hopes to bid natural gas contracts at some point. The price for natural gas is almost at the District's breakeven point where making power at the plant is equal to the new higher electrical rates. Mr. Belcher reviewed the estimated future "burner-tip" natural gas costs from 2001 through 2006 and beyond. Mr. Belcher stated that the District must continue to look at the lowest cost alternative. Currently, the District's energy expert indicates that natural gas prices will remain high for the next two years but should go down after that. Mr. Kelly stated that the District is also using a team approach in looking at electrical strategies to see if electrical costs in the plant can be reduced. The energy team will explore alternate suppliers for long-term, low-cost electrical contract. Another strategy would be to produce as much cogeneration power as possible. This would be a good alternative because it is unlikely the electrical prices are as high as they are going to go. The team is also going back and revisiting energy efficiencies and conservation measures in light of higher costs. Mr. Kelly showed San Diego electric bill 02 01 01 26 02 01 comparisons from July 1999 to July 2000. Residential rates increased from $ 50 to $100; small business rates increased from $166 to $334, school rates increased from $4,441 to $8,691, supermarket rates increased from $19,204 to $41,868; and hospital rates increased from $79,072 to $173,048. Mr. Kelly stated that the hospital rate is most representative of what might happen to the District. When residential rates are frozen, commercial and industrial customers make up the balance. Mr. Kelly reviewed current electric rates, comparing 2000 rates against rates on January 4, 2001. Residential rates increased from 10.7ë/kWh to 11.6ë/kWh or 8 percent; small business rates increased from 11.7ë/kWh to 12.7 ë/kWh or 9 percent; medium business rates increased from 9.6ë/kWh to 10.6ë/kWh or 10 percent; agriculture rates increased from 8.3ë/kWh to 9.3ë/kWh or 12 percent; large business rates increased from 6.4(:/kWh to 7.4(:/kWh or 14 percent; and the system average rate increased from 9.4<;/kWh ti 19,4<;/kWh or 11 percent. Mr. Kelly stated that at the recent California Association of Sanitation Agencies (CAS A) Conference, one of the best attended sessions was on energy. Two speakers talked about what agencies might want to do to protect themselves in these times of change. Mr. Dave Reardon, of HDR, recommended that agencies: . Have an energy team with a champion; . Get the information you need from the bill and rate schedule, and know your rate schedule; . Train your staff so they know what to do; . Figure out where the energy goes and monitor power use in real time; . Analyze "how to reduce" demand, do "what if" analyses, and run only the equipment you need; . Get help from outside experts on how to reduce HVAC, lighting, etc.; . Create an incentive program; i.e., time off or gifts for people who have good energy saving ideas; and . Invest in electrical technology to ensure your equipment is cost effective. Mr. Kelly stated that the presentation by Ms. Shelly Malekos, Director of Rates for PG&E, was excellent. Ms. Malekos recommended that agencies: . Understand the market and know your options; . Reduce demand - the least expensive resource is the one you don't need; . Become more energy-efficient - energy efficiency may be worth more to you now than ever before; . Determine your ability to curtail load voluntarily or via a curtailment program; and . Explore purchasing options through gas and/or electric energy service providers. Mr. Kelly stated that many of these recommendations the District is already doing in large part through the leadership of General Manager Chuck Batts and Senior Engineer Jim Belcher, and Mr. Batts' work with the Electric 01 27 Power Research Institute (EPRI), but the District must look carefully and continue to manage its power and associated risks. President Hockett thanked Messrs. Belcher and Kelly for their presentations. 3) Mr. Batts, General Manager, stated that after the Financial Planning and Policy Workshop last week, thought was given to condensing the information into a summary overview. The purpose of the workshop was to provide information to the Board and to stimulate dialogue on the District's rate setting process. The proposed outcome was for the Board to consider future rates and provide staff direction for future actions. Mr. Batts stated that because there was so much information presented at the workshop and because discussion got sidetracked on the energy situation, he would like to go back to last year's scenario and look at where the increases or changes occurred. Mr. Batts stated that utilities, that is energy, increased from $2.8 million to $5.4 million, repairs and outside services increased from $4.2 million to $5 million. Those two categories, an energy increase of $2.6 million and an increase in repairs and maintenance of $0.8 million equate to a $24 increase on the Sewer Service Charge. The recommended Sewer Service Charge increase of $24 was based primarily on those two items. In summary, Mr. Batts requested that the Board consider: . Raising Connection Fees as recommended; . Providing ratepayer notice for a Sewer Service Charge increase of up to $24 annually for three years; and . Raising the Sewer Service Charge between $18 and $24 annually for the next three years with the stated goal of bringing District revenues to equal expenses within the next five years by continuing to control costs and enhance revenue. Mr. Batts reviewed the next steps and schedule for considering an increase in the Sewer Service Charge, including providing any additional information requested by the Board to assist them in this process, presenting possible Sewer Service Charge rate scenarios at February 15, 2001 Board Meeting, authorizing staff to mail public notice on proposed rate hearing at March 15, 2001 Board Meeting, setting rates and approving budgets at May 24, 2001 and June 21, 2001 Board Meetings. Discussion followed with regard to increases in wages and benefits costs, and the fact that this year because of projected District staff vacancies during the year, approximately $800,000 in avoided costs was used in the expense projections. 4) Mr. Batts, General Manager, announced that the Hartz Avenue Storm Damage Repair Project has been completed with the exception of the slurry seal of the parking lot and driveway. That should be completed by the end of March. The agreement calls for the slurry seal to be completed by the end of April. The work must be done on a Sunday to avoid interruption to the laundry business, and temperature and weather conditions must be taken into consideration as well. The contractor has complied with the schedule established by the District for this project. 5) Mr. Batts, General Manager, announced that work at the Pulley residence in Lafayette has been completed with the exception of the flooring which the Pulley's have chosen and cannot be installed until the end of February. The Pulley's should be back in their home at that time. 6) Mr. Batts, General Manager, introduced Ms. Debbie Ratcliff, Controller, who reported that there was a meeting of the Contra Costa County Employees' 02 01 01 28 02 7) 8) 9) Retirement Association Board (CCCERA) regarding use of $344 million surplus earnings on investments. Ms. Ratcliff stated that the article in the Contra Costa Times on January 31 was confusing and contained some inaccuracies. Ms. Ratcliff stated that the CCCERA Board decided: . Set aside $127 million to enhance the benefit to current retirees in the amount of $200 per month. Legislation must be passed to enable such an increase. If the legislation is passed, all retirees as of the date of the legislation passing would get an additional $200 per month. If the legislation does not pass, these funds will go toward employer costs. . Set aside $73 million for potential impacts from the Ventura decision to keep employer costs from increasing. . Set aside $47 million to cover cost of living adjustment for both employers and employees. . Set aside $20 million to prefund to new dollar power the benefit to be provided to older retirees who retired prior to 1981 to offset differences between cost of living increases and inflation rates. This will pull in another year of retirees so now those retired before 1982 will receive this. Ms. Ratcliff stated that no decision was made with regard to the remaining $144 million, which will continue to sit in reserves until a future date. Mr. Batts stated that the Board of Supervisors adjourned their regular meeting to this meeting and asked the CCCERA Board to help bailout the County's deficit. Mr. Batts, General Manager, announced that the Assembly Local Government Committee will hold an informational hearing on the Little Hoover Commission Report on Special Districts Financial Reserves, as a possible way to help the California energy crisis. Mr. Batts, General Manager, announced that on January 23, 2001, two District vehicles had an accident while leaving a job site in Walnut Creek. During rainy conditions a vehicle pulled in front of a District truck, requiring it to stop suddenly. It was struck from behind by a second District truck. There were minor injuries and approximately $5,000 damage to vehicles. Mr. Batts, General Manager, announced that Ultramar Diamond Shamrock (formerly Tosco Refining) has made an initial inquiry about the long-term use of up to eight (8) MGD of recycled water in its cooling towers. Staff will meet with Ultra mar representatives and will advise the Board of any developments. Mr. Batts stated that on a similar note, Calpine has contacted the District to determine if there is interest in siting an electrical power generation facility on the treatment plant site. 10) Mr. Batts, General Manager, announced that the 28th Annual California Water Environment Association (CWEA) Industrial and Hazardous Waste Conference will be held February 7-9, 2001 in Oakland, California. Several District employees, including Pollution Prevention Program Administrator Bart Brandenburg, Associate Engineer Gail Chesler, Source Control Inspector II Beverly Baclig, and Source Control Program Superintendent Tim Potter, will be making presentations or moderating discussions at the conference. Director of Collection System Operations John Larson will also be in attendance as incoming President of CWEA. 01 01 b. c. d. 29 COUNSEL FOR THE DISTRICT 1 ) Mr. Kenton L. Aim, Counsel for the District, stated that several months ago there was an incident where the District was asked to assist the City of Antioch with a major sewer overflow problem. The subject of mutual aid agreements was raised. Mr. Aim stated that since that time he has obtained forms and held discussions to ascertain the level of interest on the part of cities. They were courteously interested but this may be of interest to other public utility agencies in the area. The sample agreements define lender and borrower of property or personnel. In cases such as this, the lender does not have to lend. The lender would be reimbursed for rental value or use of equipment and could be compensated for the cost of personnel. Insurance is required. Workers' Compensation is required. The idea is that the borrower would assume all the risks. Unless the Board directs otherwise, Mr. Aim stated that he and District staff will go out and seek interest in this sort of program. Member Lucey stated that he would be interested in whether there is any interest from Delta Diablo Sanitary District, Mt. View Sanitary District, Dublin San Ramon Services District, West County Wastewater District, and other nearby sanitary districts. Mr. Aim stated that he believes other utilities will be interested but he is not sure if the cities will see this as necessary if they do not do sewer work. Member Menesini suggested that when appropriate a more definitive proposal and presentation be made at the Mayors Conference. Mr. Aim agreed and thanked the Board for their input. SECRETARY OF THE DISTRICT 1 ) Ms. Joyce E. Murphy, Secretary of the District, distributed updated organization charts. 2) Ms. Murphy, Secretary of the District, announced that the District failed to meet the Friday, January 26, 2001 deadline for advising the Local Agency Formation Commission (LAFCO) of the District's designated voting representative to the Independent Special Districts Association for purposes of voting by mail or fax for the March 19, 2001 election of the special districts representative to LAFCO. LAFCO will be advised of the District's representative immediately following the Board Committee appointments today and the District's representative will be able to vote in person at the election on March 19, 2001. Ms. Murphy stated that the timing of the election of the District Board President in January and the fact that Board Committee appointments are effective February to February each year, make it difficult to comply with this deadline. Ms. Murphy suggested that the Board may wish to consider moving the annual election of the District Board President and President Pro Tem to a December Board Meeting and making the Board Committee appointments effective in January of each year. The Board voiced no objection. BOARD MEMBERS 1 ) Member Boneysteele introduced Mr. James M. Kelly, Director of Plant Operations, who distributed and summarized conference materials from the January 17-20, 2001 California Association of Sanitation Agencies (CASA) Conference. Topics of discussion inc;luded biosolids disposal, petitions to allow use of standby generators above 200-hour per year air permit operating limit during stage three electrical supply alert, controls on all new and existing diesel engines and vehicles, electric power issues, infrastructure issues including the Environmental Protection Agency (EPA) proposed rule 02 01 01 30 . 02 on CMOM (Capacity, Management, Operations, and Maintenance) and Total Maximum Daily Loads (TMDL), Update on State Water Resources Control Board issues, and a report on the Vallejo Sanitation and Flood Control District design of a wet weather strategy involving an $80 million capital program that will be put in place over the next five years to reduce sewer overflows. Mr. Kenton L. Aim, Counsel for the District, stated that the agenda for the CASA Attorneys Committee Program was also distributed to the Board. Mr. Aim reported that CASA joined in support of the District's suit against the City of San Ramon and authorized filing an amicus brief. Mr. Aim stated that he put this forward as a conditional request since he believes this issue is better resolved as a local issue with the facts of this particular matter rather than becoming a statewide issue. The authorization was that if there is an amicus brief filed by a statewide organization, CAS A would also file an amicus brief, otherwise CASA would not file. 2) President Hockett distributed the draft notes and reported on the January 25, 2001 Sanitation and Water Agencies meeting at which the importance of asset management was discussed as a means of minimizing costs while addressing the EPA proposed rule on CMOM (Capacity, Management, Operations, and Maintenance), Governmental Accounting Standards Board Statement No. 34 (GASB 34), and issues raised by the Little Hoover Commission relative to special district reserves. Member Lucey referenced the January 30, 2001 Contra Costa Times article on the need for repairs to the City of Richmond plant, indicating that the plant has not been adequately maintained. The Sewer Service Charge rates were raised from $166 to $397 to help pay for this. 3) Member Menesini stated that the tour of the Aqua-Science Laboratory was postponed. 4) President Hockett presented the Board Committee assignments for 2001 as follows: Budget and Finance Committee . Gerald R. Lucey James A. Nejedly Personnel Committee . Mario M. Menesini Parke L. Boneysteele Capital Projects Committee . Parke L. Boneysteele Barbara D. Hockett Household Hazardous Waste Committee . James A. Nejedly Barbara D. Hockett First named Member will serve as Committee Chair. 01 01 31 Board Liaison to Cities and County Concord, Pacheco James A. Nejedly Danville, Alamo & San Ramon Barbara D. Hockett Lafayette, Walnut Creek Parke L. Boneysteele Martinez, Contra Costa County, Pleasant Hill Mario M. Menesini Orinda, Moraga Gerald R. Lucey California Special Districts Association Contra Costa Countv Chapter Mario M. Menesini Barbara D. Hockett - Alternate Friends of the San Francisco Estuary Mario M. Menesini Sanitation and Water Agencies of Contra Costa County Gerald R. Lucey Barbara D. Hockett - Alternate 5) Member Lucey reported that he toured the Moraga Pumping Station last week. Both the Orinda Crossroads and Moraga Pumping Stations are undergoing rehabilitation to more fully serve the communities. Moraga is in an attractive residential area on a creek. Construction is proceeding rapidly to put in much bigger pumps to allow larger capacity, efficiency, and compliance. Pumping Stations Superintendent Steve Considine and Senior Engineer Ron Klimczak conducted the tour. Member Lucey stated that construction is progressing well and the District continues to get nothing but praise from many of the residents. 6) Member Nejedly noted that he will have to leave the meeting at 4:00 p.m. 6. ENGINEERING a. AUTHORIZE THE GENERAL MANAGER TO EXECUTE AN AMENDMENT WITH THE FIRM OF TALAVERA AND RICHARDSON FOR MODIFICATION OF CAPITAL PROGRAM SOFTWARE Mr. Batts, General Manager, stated that one of the critical planning tools for the District is the Capital Improvement Plan and Budget. Over the years the Engineering Department has coordinated the input from all departments into this process. Revisions in the current software are needed to improve both the transfer of information and to incorporate efficiencies related to this task. In response to questions from Members Lucey and Nejedly, Director of Engineering Ann E. Farrell stated that the contract has been in place since May 1997. To date, Talavera and Richardson have billed the District $55,500. Ms. Farrell stated that the Board did not approve the original contract and that is an issue that has been discussed at the staff level. Some people had the impression that as long as the amendment was less than $50,000 it did not require Board approval. Ms. Farrell stated that Member Lucey's point is well taken and it will not happen again in the future. The Capital Program software is specialized software developed by Talavera and Richardson using Access. Talavera and Richardson's help is needed for these changes and modifications, but staff will be going through a process to understand the software to determine if this work can be done by 02 01 01 32 District staff in the future or if an off-the-shelf program might serve the District's needs. Ms. Farrell stated that MIS was not asked to do this work because they are currently fully occupied and it would have required that they learn the software so there would be no savings. Originally, Talavera and Richardson were hired to do a set piece of work for the Capital Improvement Budget. As District staff has used the system, it has been recognized that enhancements would help staff to better utilize the information in the data base. By using Talavera and Richardson, time and expertise are being leveraged. Staff does not anticipate coming back for any further amendment to this contract. It was moved by Member Menesini and seconded by Member Lucey, that the General Manager be authorized to execute an amendment to increase the cost ceiling to $110,500 and extend by 21 months the current agreement with Talavera and Richardson for capital software programming services. There being no objection, the motion was unanimously approved. b. ADOPT A RESOLUTION REVISING CONTRACTUAL ASSESSMENT DISTRICT POLICY Mr. Batts, General Manager, stated that on November 30, 2000, a Board workshop was held to evaluate the effectiveness and discuss the continuation of the District Contractual Assessment District (CAD) Program. The Board provided guidance to staff on improvements and changes to the CAD Program. District staff and Counsel for the District Kenton L. Aim have worked together to review the CAD Policy that was distributed to the Board. Mr. Batts stated that staff believes that the proposed revised policy addresses the Board's concerns while conforming with the legal requirements of the state assessment district laws that govern the District's CAD Program. Mr. Batts stated that if the Board has any changes or input, staff will be coming back to the Board later this year to incorporate the CAD reimbursement policy into the District Code. Mr. Batts introduced Mr. Curtis W. Swanson, Environmental Services Division Manager, who reviewed the proposed policy changes to the District CAD Policy. Mr. Swanson stated staff and District Counsel tried to make the CAD Program, definitions, and process clearer; so in addition to recommending additions and changes, clarification and expansion of the existing policy and procedures is recommended. In looking at the CAD Policy, the following policy considerations were kept in mind: . Keep simple and flexible; . Beneficial to have more properties; . Limit participation of owners of multiple properties; and . Need to comply with assessment district laws. The CAD Policy revisions clarify and expand on: . Purpose and intent of CAD's, that is for residential areas with failing or inadequate septic tanks, primarily owner-occupied, and not commercial properties; . Modify CAD formation criteria to allow up to two (2) dwellings for one (1) property; . Modify CAD assessment process to require that the same person or persons may take advantage of the 10-year assessments for only one (1) property at a time; . Specify a time limit of 18 months between initiation of the CAD and submittal of all information and documents necessary to prepare the Engineer's Report; 02 01 01 33 . Specify a process for property owners to appeal staff decisions regarding formation and administration of proposed CAD projects; . Expand the scope of the CAD project public hearings to include receiving public comments about the annexation of CAD properties to the District; and . Continue the overall budget of $1 million per year for the CAD Program through 2002-2003. Mr. Swanson stated that in order to be eligible for participation in the District's CAD assessment financing program, the proposed sewer extension project must meet the District CAD formation criteria. District staff will make a threshold eligibility determination and will provide proponents with a written determination of eligibility. The following revised CAD formation criteria are proposed for Board consideration: . A minimum of five (5) properties; . A minimum of 60 percent of the properties must have existing homes served by septic tank systems; . A participant parcel may not have more than two (2) dwellings; . Notwithstanding the above-listed criteria, the District's decision to form a CAD will be determined on a case-by-case basis and is at the sole discretion of the Board of Directors. The Board may consider technical, economic, staffing and budgetary, environmental, and other factors in its consideration of whether to form a CAD. Member Nejedly requested to be excused and left the meeting at the hour of 4:00 p.m. Discussion followed with regard to the definitions of the criteria, particularly environmental. Mr. Kenton L. Aim, Counsel for the District, stated that there has been an issue of whether the CAD formation criteria should be limited to only owner-occupied homes. Mr. Aim stated that has not been included in the proposed CAD formation criteria at his direction. It is hoped that by including criteria that would require that the same person or persons may take advantage of the ten-year assessment option for only one property at a time and that there can be no more than two dwellings on a participating CAD property would be a solution to that. In assessment district law there is no distinction between owner-occupied or not. Mr. Aim stated that another issue came up in terms of review of the reimbursement fee calculation. There are some inconsistencies between this reimbursement fee calculation and other District reimbursement fees. That is something that should be addressed in the future. Mr. Swanson stated that there are still two CAD payment options: 1) annual assessments over ten years, or 2) lump sum. Participants would be limited to using the 10-year assessment for a single parcel at any given time. Mr. Swanson reviewed the proposed appeal process as follows: . Staff makes determination whether a proposed sewer extension project is eligible for participation in the District's CAD Program based on the CAD formation criteria. . Property owners may appeal that staff decision to the Board of Directors. . The appeal procedure set forth in the District Code would be followed except as modified in the CAD Policy. . Property owners would be allowed 30 days to request an appeal of a staff decision. 02 01 01 34 . The Board of Directors conducts a hearing and decides whether or not to uphold or to modify the staff decision. Mr. Aim stated that inherent in this is that staff would adhere to the CAD formation criteria rigidly and there would be appeals to the Board only if the proposed project did not meet the CAD formation criteria. Following discussion, it was moved by Member Menesini and seconded by President Hockett, that Resolution No. 2001-008 be adopted, revising the District Policy regarding the Formation and Administration of Contractual Assessment Districts with the proviso that up to $1,000,000 per year may be authorized for the CAD Program. Motion approved on the following vote: AYES: Members: Menesini, Hockett, Lucey, Boneysteele NOES: Members: None ABSENT: Members: Nejedly 7. TREATMENT PLANT a. REVIEW LANDFILL GAS AGREEMENT AND USE STATUS Mr. Batts, General Manager, introduced Mr. James M. Kelly, Director of Plant Operations, who stated that the District has used landfill gas in its furnaces and auxiliary steam boilers since 1983. The contract for landfill gas has been revised four times, primarily to adjust the discount as natural gas prices declined. The current landfill gas contract with Acme Landfill expired on July 1, 1999. The District is operating under the contractual 90-day evergreen extensions. At the September 7, 2000 Board Meeting, the Board authorized a new five-year landfill gas contract with an effective date of August 1, 2000. The landfill gas discount was set at 30 percent (from burner tip natural gas costs) with a floor of $2.50 per decatherm. For natural gas costs above $5.00 per decatherm, the 30 percent discount would increase to 50 percent of the incremental increase above $5.00. Mr. Kelly stated that projected annual savings in landfill gas over natural gas under the old contract are estimated at $60,000 at $5.00 decatherm and $186,000 at $8.00 per decatherm; and under the contract provisions approved by the Board in September 2000, the projected annual savings would be $150,000 at $5.00 per decatherm and $378,000 at $8.00 per decatherm. As stated earlier, the estimated future burner tip natural gas costs are expected to decrease from $8.45 in 2001 to $5.15 in 2006. Mr. Kelly stated that he does not project that the cost of landfill gas will be $8.00, but it could be. Mr. Kelly made the following observations: . Landfill gas will save money for at least next year under the old contract prices. . Landfill gas is a second gas supply for the District. . Natural gas or landfill gas is needed to burn sludge. . Acme Landfill Corporation and Central Contra Costa Sanitary District have a symbiotic relationship. . The District has received no bills and made no payments for landfill gas from Acme Landfill Corporation or NEO Corporation since August 1, 2000. Mr. Kelly stated that the District could continue operating under the contractual 90-day extensions or give 90 days notice to terminate the contract. Mr. Kenton L. Aim, Counsel for the District, stated that a closed session has been scheduled if there is an interest on the Board's part whether to discuss initiation of litigation or exposure to litigation. The issue is what to do. One of the immediate reactions is to send 90-day notice to terminate the old contract to try to get them to 02 01 01 35 negotiate with us. Mr. Aim stated that he is not recommending that at this time because there are two pieces of information the District does not have. Will we be dealing with NEO or Acme in the future? NEO is a large corporation and this contract is not critical to them. The new owner of Acme may find this to be more critical. Mr. Aim stated that he understands there was an assignment but the District has not seen any signed document. Mr. Aim stated that he would want to understand that before the District cancels the contract with Acme. Secondly, the District has been informed there is a March 31, 2001 date which is a drop dead date regarding some requirements of NEO relating to their assignment agreement. The operating agreement and lease of the landfill could terminate at that time depending on what NEO does or does not do. That has not been given to the District in writing. The District needs to know who it will be dealing with after March 31, 2001. Mr. Aim stated that NEO has said they would get back to the District with a proposal this week. The District has not heard from them. The District has not been billed or paid any bills and would not until we know who we will be dealing with so we do not pay the wrong party. Discussion followed with regard to reading and calibration of the meter. Mr. Jim Belcher, Senior Engineer, stated that District staff watches when the meter is calibrated once a month. The District measures the landfill gas used on our end and the numbers are within the accuracy you would expect them to be. Mr. Kelly stated that part and parcel of the contract is that if we do get a bill what rate do we pay and who do we pay? The District could assert that they are paid at the new price. Mr. Aim stated that staff intends to report to the Board on a regular basis until this is resolved. Mr. Kelly stated that at this point barring further direction from the Board, staff will pursue the course of action laid out by Mr. Aim. Member Lucey stated that he agrees in terms of the recommendation that once the District receives a bill, we have a three-party sign off. Member Lucey stated that if the Board does not take action today, staff should not pay any bill without coming back to the Board first. Member Lucey stated that the District should pay the agreed upon lower price. Mr. Kelly agreed. Following discussion, it was moved by Member Lucey and seconded by Member Boneysteele, that the existing landfill gas contract not be canceled at this time; that this matter be brought back to the Board at such time bills are received and there is sign off with regard to the company that should be paid; and that this matter be placed on the agenda at every Board meeting so the Board can make a decision if necessary. There being no objection, the motion was approved with Member Nejedly being absent. Member Lucey thanked staff for the update, stating that this is a difficult situation. 8. APPROVAL OF EXPENDITURES a. EXPENDITURE LIST DATED FEBRUARY 1. 2001 Member Boneysteele, member of the Budget and Finance Committee, stated that he and Member Menesini reviewed the expenditures and found them to be satisfactory. It was moved by Member Boneysteele and seconded by Member Menesini, that the Expenditure List dated February 1, 2001, including Self Insurance Check Nos. 101689- 101692, Running Expense Check Nos. 129969-130089, and Sewer Construction Check Nos. 22988-22996, be approved as recommended. There being no objection, the motion was approved with Member Nejedly being absent. 02 01 01 36 9. BUDGET AND FINANCE a. ADJOURN REGULAR BOARD MEETING AND CONVENE AS THE BOARD OF DIRECTORS OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT FACILITIES FINANCING AUTHORITY TO CONDUCT ITS ANNUAL MEETING At 4:32 p.m., President Hockett adjourned the Regular Board Meeting and Member Lucey, President of the Central Contra Costa Sanitary District (CCCSD) Facilities Financing Authority, convened the annual meeting of the CCCSD Facilities Financing Authority. President Lucey requested that the Secretary call roll. PRESENT: Directors: Menesini, Hockett, Boneysteele, Lucey ABSENT: Directors: Nejedly President Lucey requested public comments, and noted that there were none. President Lucey stated that in accordance with the Bylaws of the Authority, it would be appropriate to elect officers at this time. It was moved by Director Menesini and seconded by Director Hockett, that pursuant to Article III, Section 2 of the Bylaws, the following slate of officers shall be elected for 2001 : 1) President of the Authority shall be Director Gerald R. Lucey, Chair of the Budget and Finance Committee of the District Board of Directors; 2) Vice President of the Authority shall be Director James A. Nejedly, the remaining member of the Budget and Finance Committee of the District Board of Directors; 3) Executive Director of the Authority shall be Mr. Charles W. Batts, General Manager of the District; 4) Treasurer of the Authority shall be Ms. Deborah Ratcliff, Controller of the District; and 5) Secretary of the Authority shall be Ms. Joyce E. Murphy, Secretary of the District. There being no objection, the motion was approved with Director Nejedly being absent. It was moved by Director Menesini and seconded by President Lucey, that the minutes of the CCCSD Facilities Financing Authority annual meeting of February 3, 2000, be approved as presented. There being no objection, the motion was approved with Director Nejedly being absent. Ms. Deborah Ratcliff, Treasurer of the Authority, reported that in December 1994, the Authority issued 1994 Revenue Installment Certificates (Certificates of Participation) in the amount of $25 million for a term of 20 years with interest rates ranging from 4.7 percent to 6.25 percent. In October 1998, the outstanding debt was refinanced because interest rates had dropped significantly. Revenue bonds were issued to refund all outstanding debt at 3.5 percent to 4.7 percent interest. Based on the lower interest rates, Central Contra Costa Sanitary District will save over $ 750,000 in interest expense over the first two years. After the refunding, advice of Bond Counsel was sought as to whether the CCCSD Facilities Financial Authority should be dissolved. Counsel advised that the Authority must continue to exist and meet on an annual basis until the earliest call date of the old Certificates of Participation, September 2004. At that time, the Authority can decide whether it wishes to continue to exist or dissolve. President Lucey thanked Ms. Ratcliff for her report. 02 01 01 37 There being no further business to come before the Board, President Lucey adjourned the annual meeting of the CCCSD Facilities Financing Authority at the hour of 4:35 p.m. and turned the meeting back to President Hockett. 10. EMERGENCY SITUATIONS REQUIRING BOARD ACTION None 11. ANNOUNCEMENTS/SUGGESTIONS FOR FUTURE AGENDA ITEMS Member Menesini noted receipt of the letter from Mr. Ivan Pouschine, Jr. of Orinda, and suggested that Maintenance Supervisor Paul Louis and Safety and Risk Management Specialist Kim Greer be commended for their efforts. Mr. Batts, General Manager, stated that he would see to that. BREAK At 4:40 p.m., President Hockett declared a recess, reconvening at the hour of 4:40 p.m. with all parties present as previously designated. 12. CLOSED SESSION a. 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 Central Contra Costa Sanitary District v. Joanne Lindroth and related cross actions, Contra Costa County Superior Court Case No. C99-04092. The matter entitled Central Contra Costa Sanitary District v. City of San Ramon, Contra Costa County Superior Court Case No. COO-02560, was not discussed. b. SIGNIFICANT EXPOSURE TO LITIGATION Pursuant to Government Code Section 54956.9(b), a point has been reached where in the opinion of the Board of Directors of the Central Contra Costa Sanitary District, on the advice of its Counsel, based on existing facts and circumstances, there is a significant exposure to litigation against the District. One potential matter was discussed. The other potential matter calendared for discussion on the Board Meeting agenda was not discussed. At 4:50 p.m., President Hockett adjourned the meeting into closed session to discuss litigation pursuant to Government Code Sections 54956.9(a) and (b) as noted above. At 4:55 p.m., Member Nejedly entered the closed session. At 5:20 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. 02 01 01 38 14. ADJOURNMENT There being no further business to come before the Board, President Hockett adjourned the meeting at the hour of 5:20 p.m. &/fø~jJ,~ President of the Board of Directors, Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: Sec e ary f the Central ont Costa Sani ry District, County of Contra Costa, State of California 02 01 01