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HomeMy WebLinkAbout04.a.3) Approve minutes of November 3, 2011 Special Board MeetingCENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of November 3, 2011 property in Annexation Areas 182 -1 through 182 -9 (inclusive) is exempt from CEQA CENTRAL CONTRA COSTA SANITARYDISTRICT Board Minutes of November 3, 2011 6. ADJOURNMENT Central Contra Costa Sanitary District November 28, 2011 TO: Honorable Board of Directors FROM: James M. Kell General Manager Y� g Ann E. Farrell, Deputy General Man ger SUBJECT: Draft Summary of Strategic Planning Workshop The draft summary of the Strategic Planning Workshop conducted by Dr. Marilyn Manning, the Consulting Team is attached. The draft presents a summary of the questionnaire results, the individual interviews and the workshop. Please review the summary to ensure it is accurate. If you would like any changes, please let us know. JMK/tm cc: Elaine Boehme N:\ ADMINSUP \ADMIN \DIST- SEC\STRATEGIC PLAN\2011 Workshop \Strategic Plan Cover Memo Summary of Workshop.doc TO: HONORABLE BOARD OF DIRECTORS FROM: MARILYN MANNING, THE CONSULTING TEAM SUBJECT: SUMMARY OF STRATEGIC PLAN REVIEW DATE: NOVEMBER 28, 2011 INTRODUCTION This memorandum summarizes The Consulting Team's strategic planning facilitation services to the Board of Directors (Board) of the Central Contra Costa Sanitary District (District). The purpose of the effort was to review the District Strategic Plan, its mission, vision, values, and priorities for application in the next two years, align District staff's business plan activities with the Board's vision, and consider what type of strategic planning effort should be considered in the future METHODOLOGY In order to gauge the positions of the Board with respect to the existing strategic plan, The Consulting Team gathered information though a formal interview of each individual Board Member. A matrix of responses to each of the questions was developed from the information. From the responses several possible issues were derived for discussion, which are presented in Part 1 of this report. These issues were prioritized and discussed, as time allowed, in a half -day session on November 3, 2011. The outcomes from this review are presented in Part 2 of this report. PART 1: SUMMARY OF INITIAL FINDINGS The following list of issues and related questions were derived from the survey responses for discussion in the review session: 1. Meeting current and new regulations — Are our efforts to influence /guide regulations cost effective? Are we spending the right amount of resources? 2. Funding/ Reasonable rates — Should we raise rates as needed or consider additional bond funding or a combination? 3. Funding Pensions — Should we consider borrowing from the sewer construction fund to pay down UAAL and backfill the fund by selling bonds? 4. Efficiency through technology? — What can we improve? What areas should we address? Page 1 of 6 N:\ADMINSUP\ADMIN \DIST- SEC \STRATEGIC PLAN\2011 Workshop \Summary of Strategic Plan Review.doc 5. Recycled water — Should the District continue to promote recycled water projects? What is the District's role in providing recycled water? What level of resources should be dedicated to the recycled water program? 6. Outreach, education, relationships with other agencies — What more can we do /should we do? 7. Customer Satisfaction — What else should we be doing, if anything? More surveys? Can service be improved? If so, where? 8. MOU Negotiations — Any questions about the process? 9. Robust Strategic Planning Process — Board's and staff's roles? What are the benefits? What does a typical process look like? PART 2: REVIEW SESSION ON NOVEMBER 3, 2011 Due to the limited time allotment, The Consulting Team asked the Board Members to prioritize the list of issues they chose to discuss. The discussion is summarized below in priority order. Funding Pensions The amount the District owes is a moving target. CCCERA has given many different numbers for the unfunded liability. The District is now paying 7.75 % interest rate to CCCERA for the outstanding unfunded liability, which is higher than current bond rates. The District raised rates last year to reduce the unfunded amount, only to have CCCERA increase by the unfunded liability by $21 M. Governor Jerry Brown is working on comprehensive pension reform. The Board will review each point of his recommendations to understand how they will affect the District. Future possibilities for the Board in mitigating the pension funding issue: 1) Utilize the Sewer Construction Fund Balance to pay off as much as possible of they unfunded liability and sell bonds at a lower interest rate than CCCERA charges to finance the Capital Program. 2) Influence the interest rates CCCERA charges by identifying and working with like - minded Boards of other CCCERA agencies. (This could increase the liability). The Board expressed concern about this ongoing issue and asked staff to develop some different funding scenarios using those possibilities. Page 2 of 6 N:\ADMINSUP\ADMIN \DIST- SEC \STRATEGIC PLAN\2011 Workshop \Summary of Strategic Plan Review.doc Recycled Water In general, the Board supports the continued priority of Recycled Water. It has always been a focus and most members believe that it is part of the District's core mission. One member expressed the belief that the target payback for new recycled water projects of 15 years is insufficient; a similar agency only considers capital projects with 5 -year return on investment (ROI). Another felt a 15 -year recovery on investment is reasonable. The District currently processes approximately 40 million gallons of water every day that can be sold to recycled water customers. Most on the Board see this commodity as a way to save domestic water for better use. It is a resource for customers who need or want it. But currently it is very expensive to treat and distribute it and the District doesn't control the price or ability to serve many potential customers due to the rights that the water districts have to purvey water. Most felt that the Board should support efforts at policy level, with legislature, water agency, community, and media to attack waste of this resource, with information such as the current daily dumping of this resource into Suisun Bay. They want the District to be seen as a leader of recycled water policy. The majority of the Board supported the District's current focus on recycled water. Funding/ Reasonable Rates Several questions arose at the beginning of this discussion: - Using Bonds funding versus rate hikes for funding capital projects? - What is the gauge of reasonable rates? There isn't an agreed upon benchmark, Sanitary Districts compare themselves against each other. - What do we use to measure the acceptability /affordability of rate increases? - What and how do we communicate increases? - Where do we, as a Board, want to see the District on the list of comparable agencies - lower third? Are comparisons apples to apples? Some bundle other services with their rates. The Board noted that the District is a good steward of the environment, doing an outstanding job of meeting the goals and the underlying philosophy of the Clean Water Act. Even with the pension funding issue, rates are expected to remain in the bottom half of comparable agencies. Discussion centered on the philosophy of a modest raise in rates each year as compared to going a year or more without raising rates and then needed a more substantial rate increase. The members expressed differing perspectives on annual rate increases. One thought they should increase every year, unless they hit a deflationary period. Another disagreed, because the social /political climate may not support it, preferring to increase risk or keep costs down for a short period of time when conditions warrant. One member wondered if communicating cost increases instead of rate increase might be a better way of educating the public. Page 3 of 6 N:\ADMINSUP\ADMIN \DIST- SEC \STRATEGIC PLAN \2011 Workshop \Summary of Strategic Plan Review.doc The Board also reviewed the use of bonds for funding capital projects. They agreed the best scenario is to pay as you go, but there are times to use bonds, that is, when big, unexpected costs appear or for long -term projects where future rate payers will benefit. Member expressed concern that debt payments should not be allowed to grow to an unmanageable size. They agreed with a general principle of "don't kick the can down the road." Meeting Current and New Regulations The District is facing new issues on ammonia and nutrients. Staff has been addressing it by participating in Suisun Bay studies using "good science." They are not sure ammonia and nutrients are a significant contributor to the environmental issues in Suisun Bay, but it will take time and money and scientific study to resolve the issue. The needed District contribution to the studies is expected to be in the hundreds of thousands of dollars. The avoided cost for the facilities that may need to be constructed to remove ammonia and other nutrients is in the $70 to $150 million range. This discussion tied into the earlier recycled water discussion. In the future, if the District is required to nitrify, the cost of supplying recycled water to the refineries will be significantly reduced and this project may become more viable. On regulatory issue that could be raised at that time is the Districts right to take its "fresh" water out of Suisun Bay. Fortunately, the District has rights to about 20 mgd of its effluent as it has petitioned the State for the water rights in the past. The Board generally supported the District's current approach for meeting current regulations and working to influence new regulations. Efficiency through Technology This issue emerged because the Board is unsure what is the current status of technology in the District. Should and could we be funding more innovative technologies? These concerns were for both infrastructure and treatment technology and information technology. For Plant technology, one Board Member posed the question of whether the Board and District, as the current plant approaches the end of its technologies life cycle, wants to replace the same equipment or leap ahead, taking a green field approach. The Board can then review studies of both approaches, assessing which is most efficient. Another Plant technology issue was incinerators vs. anaerobic digesters for solids treatment. One member expressed an interest in reviewing assumptions, studies and analyses, and proposals. Other ways to reduce labor costs was offered through application of technology for off -shift scheduling and unattended operations. In IT matters, the Board questioned if greater efficiencies could be achieved by integrating billing, permit, and fee systems and in appropriate use of iPads for personal computing. Current systems have been bandaged many times and some are antiquated. Staff is now considering how to streamline and replace legacy systems. They think that there is now a major opportunity with newer employees having better technology backgrounds. The Board indicated Page 4 of 6 N:\ADMINSUP\ADMIN \DIST- SEC \STRATEGIC PLAN\2011 Workshop \Summary of Strategic Plan Review.doc support of this, and expressed support to have staff ensure that the District is using technology to provide up -to -date cost - effective service. During the discussion of technology efficiencies, one Board Member asked if a two -year budget cycle might be an administrative efficiency. Staff answered that annual updates are needed when rate setting decisions are being made on an annual basis. Where savings can be accrued is the two -year budget, hand in hand with a two -year rate increase process. MOU Negotiations The labor contract negotiations process is ongoing in another venue. The Board agreed there was no need for discussion as part of the strategic planning discussion. Strategic Planning Process One Board Member explained strategic planning as a defined process that includes updating every couple of years. He asked the other Board Members if they would be interested in pursuing an in -depth plan with key performance indicators. The Board could review these indicators and at a glance see an overall view of strategic initiatives and operations. It could also provide a framework to improve Board understanding of the organization. He agrees with the others that the District is well -ran district, and still believes it might be beneficial.for the Board. The other Board Members expressed the support of strategic planning concepts, but had concerns that they may not be needed for the time investment to develop. Specific measurements may focus attention on those aspects of the operation losing the holistic view. One member suggested that staff develop a plan that would address the Board's issues as outlined during this review process. (Note: the Management Team develops a Business Plan each year which incorporates the priorities expressed by the Board.) Feedback on Mission, Vision, Values: Mission: All agreed in the interviews the Mission statement is still accurate. One member felt that recycling waste water wasn't part of the mission but others believed the District's plant constructed in the early 1970's was partially funded with a grant for the purpose of recycling wastewater and this has become a part of the District culture Values: All agree that the values are still pertinent. Vision: The consensus is that the vision is what the District is still striving to do and does not need to be changed. Page 5 of 6 N:\ADMINSUP\ADMIN \DIST- SEC \STRATEGIC PLAN \2011 Workshop \Summary of Strategic Plan Review.doc Conclusions The Board expressed general satisfaction with the Strategic Plan Review. Members noted that they appreciated the BOARD MEMBER RESPONSES TO STRATEGIC PLANNING SURVEY — 2011 Matrix and agreed with the priorities derived from the results of that exercise. All commented that they enjoyed the opportunity to have a free flowing discussion of the issues, to better understand the issues and other members opinions and ideas on the issues. Their expectation is that the staff will take direction from the Board's comments and concerns in planning staff's approaches and activities. Page 6of6 N:\ADMINSUP\ADMIN \DIST- SEC \STRATEGIC PLAN\2011 Workshop \Summary of Strategic Plan Review.doc