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HomeMy WebLinkAboutBOARD MINUTES 04-27-01 107 MINUTES OF THE ADJOURNED REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON APRIL 27,2001 The District Board of the Central Contra Costa Sanitary District convened in an adjourned regular session in the Second Floor Conference Room, 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 10:00 a.m. on April 27, 2001. President Hockett called the meeting to order. The attendance of the following Board Members was noted. 1. ATTENDANCE PRESENT: Members: Boneysteele, Menesini, Hockett ABSENT: Members: Nejedly, Lucey 2. PUBLIC COMMENTS There were no comments from the public. Mr. Charles W. Batts, General Manager, introduced Mr. Gerald R. Davis, who will act as Interim Director of Administration during the recruitment for that position. 3. CAPITAL PROJECTS COMMITTEE MEETING/BOARD WORKSHOP a. REVIEW DRAFT FISCAL YEAR 2001-2002 AND 2002-2003 CAPITAL IMPROVEMENT BUDGET AND 2001 TEN-YEAR CAPITAL IMPROVEMENT PLAN Mr. Batts, General Manager, stated that the goals of the District's Capital Improvement Program are to: . Protect public health and the environment; . Maintain existing assets; . Respond to community concerns; and . Accommodate planned future growth. These feed directly into the District strategic goals of: . Excellent customer service; . Full regulatory compliance; . Responsible rates; and . . High performance organization. Mr. Batts stated that there are three major sources of revenue for the Capital Improvement Program: 1) ad valorem taxes, which in the future may be in question; 2) connection fees; and 3) Sewer Service Charges. Last year, $16 of the capital component of the Sewer Service Charge was taken to balance the Operations and Maintenance (O&M) Budget. It will be necessary to build the capital component of the Sewer Service Charge back up in the next three years to support the Capital Improvement Program. Mr. Batts introduced Ms. Ann Farrell, Director of Engineering, to provide an overview of the 2001-2002 and 2002-2003 Capital Improvement Budget (CIB) and 2001 Ten-Year Capital Improvement Plan (CIP). 04 211 01 108 Member Menesini stated that the Capital Improvement Budget/Plan is a large document and difficult to fully absorb. Member Menesini suggested that a walking tour be organized to help Board Members better visualize where this money is proposed to be spent. Ms. Farrell agreed that is a good suggestion. Staff struggled with how best to present the large volume of information and a tour could be helpful. Ms. Farrell defined Capital Improvement Plan jargon, including authorization, allocation, and expenditures. Ms. Farrell noted that authorizations will always exceed expenditures due to multi-year projects. Staff is attempting to keep the authorization level to the lowest practical amount through realistic performance estimates. Mr. Farrell showed a bar chart depicting historical CIP authorizations, General Manager allocations, and actual expenditures for the period 1990 through the present. In recent years, focus was lost with the change in Engineering management staff and with old projects and wish list projects that were not removed from the CIP. That has now been done to bring this document down to a reasonable level. The figures included in the 2001-2002 and 2002- 2003 CIB do not include the Dougherty Tunnel and Trunk Sewer Project because it skews the numbers since the District will be reimbursed for this project. In addition, the figures do not include any of the San Ramon projects. The District will be challenged if it is necessary to move them forward. (Note: On May 1, 2001, a settlement was reached. Staff will prepare an addendum to the C/S to include the San Ramon projects and request additional authorizations as needed for those San Ramon projects whose schedules have changed. ) Ms. Farrell stated that because the Dougherty Tunnel and Trunk Sewer Project has been subtracted out, it is proposed that $1,665,339 be returned to the Sewer Construction Fund this year. (It should be noted that this may change when the CIS addendum incorporating the San Ramon projects is issued.) Ms. Farrell stated that the total proposed authorization for projects that are active in the 2001-2002 fiscal year is $39 million, $1.6 million will be returned to the Sewer Construction Fund, and 2001-2002 expenditures are estimated to be $25.1 million. Ms. Farrell reviewed the major project emphasis for 2001-2002 and briefly described the following projects which make up about 50 percent of the total planned expenditures of $25.1 million. . Pleasant Hill Relief Interceptor, Phase 4 ($5,745,000) . Orinda Crossroads Pumping Station - Long Term ($1,963,000) . Moraga Pumping Station - Long Term ($1,932,000) . Collection System Renovation Program - Near Term ($1,210,000) . Pumping Station SCADA and Power Management ($822,000) . Recycled Water - Pleasant Hill Relief Interceptor, Phase 4 ($800,000) Ms. Farrell stated that in the 2002-2003 Fiscal Year, planned expenditures total $20,976,000, and the following major projects are planned. 04 27 . Collection System Renovation Program ($2,040,000) . Lower Orinda Pumping Station Renovation ($2,000,000) . Concord Industrial Forcemain ($1,377,000) . M4-A Forcemain Relocation ($1,235,000) . Collection System TV Inspection Program ($1,000,000) . Pumping Station SCADA and Power Management ($817,000) 01 109 . Solids Conditioning Building Ventilation Improvements ($817,000) . Collection System Urgent Projects ($750,000) In summary, Ms. Farrell stated that the Fiscal Year (FY) 2001-2002 and 2002-2003 Capital Improvement Budget meets spending targets of $25 million for FY 2001-2002 and $21 million for FY 2002-2003; includes large investment in pumping stations of $5.5 million in FY 2001-2002 and $8.0 million in FY 2002-2003; includes large investment in collection system renovation of $2.8 million in FY 2001-2002 and $3.7 million in FY 2002-2003; makes a commitment to collection system television program of $0.5 million in FY 2001-2002 and $1.5 million in FY 2002-2003; makes a commitment to development of a plant equipment replacement strategy with the goal of developing the same type of information for the plant as we now have for the collection system; and provides for a new approach for the District's information technology. b. REVIEW INFORMATION TECHNOLOGY FIVE-YEAR MASTER PLAN Ms. Farrell introduced Mr. Mark Greenawalt, Management Information System (MIS) Administrator, who stated that the District's Information Technology Five-Year Master Plan has been developed to centralize efforts in the development of computer and telecommunications technology within the District. This centralization effort will: . Improve communication, support, and reliability; . Provide for standardization of software; . Provide for integration of systems and data; and . Develop District-wide solutions to computer and telecommunications needs. Mr. Greenawalt stated that input for the Master Plan was gathered and developed through the results of an MIS survey, management project lists, and the MIS staff project list encompassing the entire District. These items were reviewed and a determination made as to whether the items were actually needed to get the work of the District done or whether they were just wish list items. Items were prioritized, and the costs and benefits were evaluated. Input was obtained using management and staff focus groups. An information technology capital project and budget were established. The Information Technology Five-Year Master Plan will be reviewed annually by District staff to address the changes in technology and staff needs. The plan provides direction and flexibility to meet the District's future information technology needs. Mr. Greenawalt reviewed the proposed budget for the five-year period estimated at $587,000 for FY 2001-2002; $776,000 for FY 2002-2003; and $2,370,000 for FY 2003 through 2006 for a total of $2,733,000 for the five-year period. Mr. Greenawalt noted that this is less than three percent of the total five-year Capital Improvement Budget. The master plan contains projects and policies reviewed and acknowledged by District management and staff. Existing capital projects that were centralized under the information technology capital project and budget include: . Geographical Data Integration . Document Imaging/Management . Replacement of Sewer Maintenance Management System (SMMS) . Replacement of Mainsaver Computerized Maintenance Management System During FY 2001-2002, the Information Technology Capital Project and budget will include: . PC Replacement Program. PC's are now on an 8-year life cycle. Consideration is being given to reducing that to a 5-year life cycle. 04 27 01 110 . Replacement of Network Infrastructure. This is one of the top priority projects. The District is now running a "token ring" network which is obsolete, and staff is having difficulty finding vendors to maintain it. Staff is developing an "Ethernet" network infrastructure that will improve performance and reliability and allow future upgrades. . Continued Development of Intranet to allow sharing of information between functions and individuals, and making more information available to the desktop. In FY 2002-2003, the information technology project focus will be: . PC Replacement Program. . Mainsaver Computerized Maintenance Management System Replacement to upgrade and integrate this system into the network. . HTE Upgrade. Upgrade rather than replacement of the HTE software system is planned, since it is estimated that it could cost up to $2 million to replace the HTE system. . Sewer Network Application. This is the modeling software that is used to predict capacity constraints within the District's system. At this time, Mr. Greenawalt turned the meeting back to Ms. Farrell. Ms. Farrell stated that the Ten-Year Capital Improvement Plan (CIP) is based on the following assumptions: . . . Expenditure of approximately $21 million per year; . 3 percent inflation per year; . Increase of the Sewer Service Charge as needed to fund the capital program; Fund studies in the early years of the Ten-Year CIP to better define specific programs; and Dougherty Valley and San Ramon projects are authorized and funded separately. Ms. Farrell stated that a separate addendum will be prepared and added to this document once it is determined what and how these projects will be funded. Ms. Farrell reviewed the program expansion for upgrade/replacement for the ten-year period from 2001-2002 to 2010-2011 which totals $211.6 million. Of that amount $60.0 million is planned to be expended on Treatment Plant Improvements, $131.7 million is planned to be expended on Collection System Improvements, $10.3 million is planned to be expended on General Improvements, and $9.6 million is planned to be expended on Recycled Water Improvements. Ms. Farrell noted that in future years it may be necessary to move funds from one program to another. When the Board authorizes funds, it is done by program as well as total funds authorized. If it is determined that more must be spent in one program, staff must come back to the Board for an additional authorization of funds. Ms. Farrell reviewed the income and expenditure ten-year cash flow projection, Table A-3 from the CIB/CIP. Ms. Farrell stated that the only amount that is projected to increase more than inflation is the Sewer Service Charges. The additional funds needed to fund the CIP must come from the Sewer Service Charge. If the District loses the remaining ad valorem taxes, that is an additional $5.5 million to $6.5 million per year that must come from Sewer Service Charges. As the Board is aware, the Facilities Capacity Fees are being recalculated this year and are proposed to increase to approximately $3,360 per connection. District staff met with the City of Concord staff last week and they have pointed out that Concord paid a 04 27 01 111 percentage of the cost of facilities. The City of Concord maintains that when those facilities are re-rated as part of the Facilities Capacity Fee recalculation and allocated to the Dougherty Valley connections, the City of Concord should receive some credit back for that. The City of Concord has budgeted to receive $311 rebate from each connection fee based on initial staff discussions to recognize their reduced percentage of the total flow/facilities needs. To be conservative with respect to revenue, the initial cash flow projection assumes in the draft CIB/CIP document a credit to the City of Concord. District staff will be meeting with Concord representatives and will be coming back to the Board. Discussion followed with regard to the contract between the District and the City of Concord, new Concord connections, and capacity. (Note that in the final CIB/CIP document the Concord connection fee rebate is QQ1 included. Any adjustment that is made in the future to return revenue to Concord will reduce the revenues shown in the final C/B/CIP document.) Ms. Farrell reviewed a bar chart showing the projection of capital revenue and expenditures assuming inflation of 3 percent per year and rate increases to cover spending, and graphs showing District level funds required for both capital and O&M compared to funds available. In recent years, expenditures have exceeded revenues and the difference has been made up by taking money from reserves. At some point, the District must stop that practice and begin rebuilding reserves. In summary, Ms. Farrell stated that in the 2001 Capital Improvement Plan: . Capacity expenditures are replaced by renovation/replacement expenditures. . An expenditures goal of $21 million per year has been established and budgeted. This will be reassessed each year with the TV Program and Treatment Plant Study to confirm whether that is still a good target. . Current projection of priorities are: ~ Treatment Plant Collection System General Improvements Recycled Water 30 percent 60 percent 5 percent 5 percent ~ ~ ~ These priorities will be reassessed each year. With putting the Information Technology Project into the General Improvements Program, there may be a need to reassess the 5 percent for General Improvements priority projections. . The capital component of the Sewer Service Charge will need to be raised consistently to fund the capital program. . Loss of ad valorem taxes would create additional revenue needs. Ms. Farrell reviewed the San Ramon facilities which will be authorized separately. The tunnel and trunk sewer are estimated to cost $18 million including staff time and construction. All of this expense is being paid by the developer. The San Ramon (Larwin) Pumping Station Project is estimated to cost $10 million and is scheduled for 2006, and the Forcemain Project is estimated to cost $5 million and is scheduled for 2003. Staff will be looking at the financial impacts of moving these projects forward. Bond financing may be needed if these projects are accelerated. The developers have agreed to work with the District on the issue of this additional expense and may defray some of the interest costs. Mr. Batts stated that the District has an excellent Capital Improvement Program. Staff has done a good job of looking at the future needs of the District. Regulations are pushing the District towards more of an asset management approach for all facilities. The issue that is always at the hub of these discussions is how to raise the revenue for such programs. Unfortunately the Sewer Service Charge is what the District must look to for financing both O&M and capital. To have a strong program it is necessary to look at the rate structure. Staff is taking very positive action in controlling costs. Unfortunately, 04 27 01 112 some things are out of our hands. If a pipe fails, if equipment needs replacing, the replacement project must be done. The challenge to all of us, Board and staff working together, is to control costs and ensure reasonable rates. President Hockett stated that an increase of up to $24 per year for three years has been proposed. President Hockett asked if that is still viable. Mr. Batts stated that it is. In 2000-2001, $16 of the $31 Sewer Service Charge capital component was transferred from capital to O&M to balance the Operations and Maintenance Budget. In years two and three, a larger portion of the $24 per year increase would go back into the capital program. The Board commended staff of the work that went into preparation of the Capital Improvement Budget and Plan and the Information Technology Five-Year Master Plan, and thanked staff for the excellent presentations. 4. REPORTS/ANNOUNCEMENTS None 5. ADJOURNMENT There being no further business to come before the Board, President Hockett adjourned the meeting at the hour of 11 :58 a.m. President of the Board of Direct Central Contra Costa Sanitary District, County of Contra Costa, State of California COUNTERSIGNED: Secr t ry f the Central Contr Costa Sani y District, County of Contra Costa, State of California 04 27 01