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HomeMy WebLinkAbout04.a.1) Approve minutes of February 16, 2012 Board MeetingMINUTES OF THE REGULAR MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON FEBRUARY 16, 2012 The Board of Directors of the Central Contra Costa Sanitary District convened in a regular meeting in the Board Room, 5019 Imhoff Place, Martinez, County of Contra Costa, State of California, at 2:00 p.m. on Thursday, February 16, 2012. President Nejedly called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Members: Hockett, McGill, Menesini, Williams, Nejedly ABSENT: Members: None a. PLEDGE OF ALLEGIANCE TO THE FLAG The Board and staff joined in the Pledge of Allegiance. 2. PUBLIC COMMENTS There were no public comments. 3. CONSENT CALENDAR It was moved by Member McGill and seconded by Member Hockett to adopt the Consent Calendar as recommended. Motion passed by unanimous vote of the Board. a. Approve expenditures dated February 16, 2012. Reviewed by Budget and Finance Committee. b. Adopt Resolution 2012 -012 accepting an amendment to a grant of easement from Contra Costa County for Iron Horse Corridor parcels located within the City of Walnut Creek, the Town of Danville, and the City of San Ramon, District Projects 930, 934, 1541, 1580, 1618, 4224, 4257, 4717 and 5623, and authorize staff to record documents with the Contra Costa County Recorder. C. Adopt revised job classification description for Laboratory Superintendent. d. Approve a request for emergency withdrawal of funds from the Deferred Compensation Plan. CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER None. 5. REPORTS a. GENERAL MANAGER 1) Pollution Prevention Report for 2011 and Pollution Prevention Plan for 2012 General Manager James Kelly stated that each February, as required by the National Pollutant Discharge Elimination System (NPDES) permit, staff submits an annual report of the District's pollution prevention activities for the previous calendar year. He called upon Assistant Engineer Melody LaBella who provided an update on the District's successful Pollution Prevention Program, including highlights from the 2011 Pollution Prevention Annual Report. She also reviewed the 2012 Pollution Prevention Plan, which includes (1) tracking fats, oils and grease along with other priority pollutants, including flushable products and ammonia, (2) efforts to survey and investigate potential significant sources of ammonia (other than human waste), (3) distribution of an outreach piece to medical facilities, and (4) developing an article for inclusion in the District's Pipeline encouraging the use of alternatives to plastic water bottles. 2) Update re National Pollutant Discharge Elimination System (NPDES) Permit renewal General Manager James Kelly was pleased to report that the District's NPDES permit has been approved and no appeal is expected. He noted that a copy of the permit supplement was included in the agenda packet. The Board Members congratulated staff on their diligent efforts in obtaining the permit. 3) Announcements The following written announcements were included with the agenda packet: a) General Manager Jim Kelly will retire on March 30, 2012 b) Director of Administration Randy Musgraves will retire on March 30, 2012 c) Capital Projects Division Manager Tad Pilecki will retire on March 30, 2012 d) Suspension of campaign for two pension reform initiatives VA CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 e) Contra Costa County Employees' Retirement Association cost -of- living adjustment effective April 1, 2012 f) Human Resources Manager Christopher Ko and Safety and Risk Management Administrator Shari Deutsch taught half day workshop on American with Disabilities Act, Family and Medical Leave Act, Return to Work, and Workers' Compensation g) Assistant Engineer Wesley Adams' presentation /attendance at North American Society of Trenchless Technology 2012 Conference in Nashville, Tennessee on March 11, 2012 h) Announcement for public bidding of San Ramon Pumping Station Upgrades, District Project 6003 No additional announcements were made. b. COUNSEL FOR THE DISTRICT No reports. C. SECRETARY OF THE DISTRICT No reports. d. BOARD MEMBERS 1) Board Member reports on recent meetings for which they received the stipend; and meetings or conferences for which the District paid their expenses; future meetings or conferences for which they will receive the stipend or for which the District will pay their expenses Member McGill At the request of President Nejedly, Member McGill reported on the February 14, 2012 Budget and Finance Committee meeting which he attended as an Alternate. The Board received the report without comment. Member McGill also reported on the February 2, 2012 Contra Costa Mayors' Conference hosted by the City of Pinole. Speakers included Supervisor Mary Nejedly Piepho and Karen Engel on the topic of the East Bay Economic Development Alliance's request that the Mayors Conference become the appointing authority for Contra Costa city appointments to the Alliance's Executive Committee. 3 a CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 President Nejedly President Nejedly announced changes to the Budget and Finance Committee and Outreach Committee assignments. Effective immediately, at Member Williams' request, Member McGill will serve as Chair of the Budget and Finance Committee in place of Member Williams, and Member Williams will serve as Member of the Outreach Committee in place of Member McGill. 2) Announcements Member McGill provided a written report covering Announcements and other meetings. 6. COLLECTION SYSTEM ACCEPT THE 2011 COLLECTION SYSTEM SANITARY SEWER OVERFLOW ANNUAL REPORT Director of Collection System Operations (CSO) Curt Swanson stated that the District's 2011 Collection System Sanitary Sewer Overflow Annual Report is due to the Regional Water Quality Control Board on March 15, 2011. He presented a summary of the report stating that 2011 was another very good year for CSO, with only 37 overflows reported during the year, the lowest in District history. This represents a 14 percent reduction from 2010 and 41 percent reduction from 2009, and equates to 2.5 overflows per 100 miles of pipe. This is an excellent result, particularly when compared to an average of 5.3 overflows per 100 miles statewide and 9.0 overflows per 100 miles in the Bay Area (Region 2). In terms of overflow volume, the District had 10,264 gallons of untreated wastewater uncontained during 2011, an annual average of 227 gallons per overflow. This compares to annual overflow averages of 5,600 gallons statewide and 11,000 gallons in the Bay Area. Mr. Swanson noted that the bulk of the District's sewer overflows are caused by root invasion, followed to a lesser degree by debris, primarily disposable wipes. Overflows caused by grease have abated thanks to work by the District Source Control Program staff and the District's community outreach efforts. He thanked the Board for its support and sustained effort on the war on overflows in terms of pipe renovation and outreach. It was moved by Member Hockett and seconded by Member McGill to accept the District's 2011 Collection System Sanitary Sewer Overflow Annual Report. Motion passed by the following vote of the Board: AYES: Members: Hockett, McGill, Menesini, Williams, Nejedly NOES: Members: None ABSENT: Members: None 4 CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 7. HUMAN RESOURCES a. ADOPT RESOLUTION 2012 -013 APPOINTING JARRED MIYAMOTO -MILLS AS ENVIRONMENTAL SERVICES DIVISION MANAGER, PAY RANGE M -24 ($11,087.39 - $13,476.82), EFFECTIVE FEBRUARY 17, 2012 It was the consensus of the Board to postpone action on this matter until after the Human Resources Committee meeting scheduled for March 8, 2012. 8. BUDGET AND FINANCE a. RECEIVE THE 2011 -12 OPERATIONS AND MAINTENANCE BUDGET REVIEW FOR THE SIX MONTHS ENDED DECEMBER 31 2011 AND PROJECTIONS FOR THE FULL FISCAL YEAR Controller Debbie Ratcliff presented the financial status for the Operations and Maintenance Budget for the first six months of the current fiscal year and full -year projections. Actual revenues for the six months ending December 31, 2011 were $27.8 million, compared with projected revenues of $27.7 million, a favorable mid- year variance of $0.1 million. Total actual expenses were $33.5 million versus $35.6 million projected, for a mid -year savings of $2.1 million. The resultant favorable net variance of $2.2 million at December 31, 2011 is primarily attributable to labor and benefit cost savings due to vacancies from retirements and unfilled positions, lower repairs and maintenance expenses due to the move -in delay at CSO, favorable natural gas rates, lower electrical expense in the treatment plant, reduced expenses for chemicals, and postponement of certain expenditures to the second half of the year. Professional and legal expenses were $60,400 over budget owing to labor negotiations, actuarial work performed by John Bartel, and legal and technical support for the NPDES permit. Total revenues for the full fiscal year are projected to be roughly the same as budgeted, at $62.2 million. Total projected expenses for the full fiscal year are $64.7 million versus $66.5 million budgeted, a projected savings of $1.8 million. The resultant net favorable variance at fiscal year end is generally attributable to reasons similar to those stated above. The original estimate for drawdown from the Operations and Maintenance reserves at fiscal year end was $4.3 million, but more recent projections place that figure at a more favorable $2.5 million. b. HOLD FINANCIAL PLANNING AND POLICY BRIEFING, INCLUDING REVIEW OF TEN -YEAR FINANCIAL PROJECTIONS AND THE 2011 -12 CAPITAL IMPROVEMENT BUDGET MID -YEAR STATUS REPORT Deputy General Manager /Director of Engineering Ann Farrell provided an overview of the District's Ten -Year Financial Projections, noting that her presentation would be reduced in length because the Board has already adopted a $30 sewer service charge rate increase for Fiscal Year 2012 -13. After highlighting some of the major 9 CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 District accomplishments this past year, she noted that the Board's Strategic Plan calls for continued focus on funding pensions, recycled water, reasonable rates, and meeting current and future regulations. A new focus area added this year is to achieve efficiency through technology. The sewer service charge for Fiscal Year 2011 -12 is $341; effective July 1, 2012 it will increase to $371 with no further action required by the Board because a two - year rate increase was adopted last year. As previously reported by Ms. Ratcliff, Ms. Farrell said the Operations and Maintenance drawdown from the Sewer Construction Fund at fiscal year end is projected to be $2.5 million. The Capital Program drawdown is expected to be $5.5 million, leaving $54 million in the Sewer Construction Fund at the end of this fiscal year. That figure is adequate given that $35 million is needed to pay the District's ongoing bills. Ms. Farrell stated that one issue of concern is the growing amount of unfunded liabilities, which have increased significantly since June 2011. Sewer service charge projections prepared just a year ago are now inadequate and rates will need to be increased more than previously anticipated to accommodate the unfunded liabilities. In terms of the Fiscal Year 2011 -12 Capital Program, Ms. Farrell reported that total expenditures of $25.9 were budgeted, but year -end projections are now $27.7 million, a difference of $1.8 million. Total revenues were budgeted at $22.2 million, and year -end projections are the same, resulting in an anticipated shortfall of $5.5 million to be drawn down from the Sewer Construction Fund. The $1.8 million expenditure variance is due primarily to accelerating the Primary Demolition Project and adding the Concord Recycled Water Project. Ms. Farrell presented a history of the District's sewer service charge rates since Fiscal Year 1990 -91, illustrating how the capital component of the rate has eroded in recent years as the operations and maintenance component has grown ever larger. This has led to deficit spending on the capital program. As a remedy, $30 million in bonds were sold in 2009 and two $30 rate increases were recently adopted, a portion of which was to increase the capital component of the sewer service charge. Unfortunately, due to the increased cost of unfunded liabilities, the capital component, which had increased from $11 to $39 per household from Fiscal Year 2010 -12 to Fiscal Year 2011 -12, is expected to fall to $27 per household in the next fiscal year. Capital funding is still running behind the level needed to fully fund the capital program. She presented a chart of current sewer service charge rankings for Bay Area agencies which indicated the District is in the lower one -third compared to its peers, even including the upcoming $30 rate increase. In response to a question from President Nejedly, Ms. Farrell said several agencies with rates lower than this District may have their income augmented through other sources. She offered to incorporate that information into the chart if it is available. By Fiscal Year 2013 -14, Ms. Farrell said unfunded liabilities are expected to grow to $240.1 million, of which roughly half is attributable to Contra Costa Employees' Retirement Association (CCCERA) Unfunded Actuarial Accrued Liability (UAAL). 0 None. None. CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 Since the Ten -Year Plan was prepared approximately one year ago, Ms. Farrell said employee benefit costs have increased $31.4 million over the ten -year period primarily due to CCCERA and Governmental Accounting Standards Board (GASB)- 45 increases, thus exerting pressure on rates. The $358 million Ten -Year Capital Improvement Plan includes $70 million for nitrification and $20 million for soil remediation in the area where the facilities would be built. There is no assurance that that number is sufficient. Full ammonia, phosphorus and nitrogen removal would cost roughly $160 million, as compared to the $90 million in the Plan. While staff feels the Ten -Year Plan assumptions are reasonable, the findings of the ongoing nutrient studies could reveal that insufficient funds have been included in the Ten -Year Plan. In response to a question from Member Williams as to what technological changes are being studied for the treatment plant in the coming years, Ms. Farrell said staff is trying to make sure it does the right thing by looking at what pilot work is being done in the area of nutrient removal. However, the reality is that the timeline on the nutrient studies is rather short given that the NPDES permit can be reopened in three rather than five years and there may not be sufficient time to fully explore innovative technologies. The Ten -Year Plan provides for alternatives to fund a robust capital program and significantly pay down unfunded liabilities. Two revenue scenarios were examined as were two CCCERA UAAL payment scenarios and two sewer service charge increase scenarios. Ms. Farrell presented handouts to illustrate how each scenario would impact sewer service charge rates over the ten -year period. In conclusion, Ms. Farrell said that while no rate decision is needed during this budget cycle, it is important to realize that increases in unfunded liabilities continue to drive future rate increases. A more detailed evaluation of alternatives to pay down the CCCERA UAAL, including selling bonds, will be presented to the Board next month. 9. EMERGENCY SITUATIONS REQUIRING BOARD ACTION 10. SUGGESTIONS FOR FUTURE AGENDA ITEMS 11. CLOSED SESSION District Counsel Kent Alm announced that no closed session would be needed for Item 11.a.; however, closed sessions would take place with regard to Items 11.b. and 11.c. 7 CENTRAL CONTRA COSTA SANITARY DISTRICT Board Minutes of February 16, 2012 The Board recessed at 3:12 p.m. to reconvene in the Caucus Room in closed session to confer with Legal Counsel regarding Items 11.b. and 11.c.: a. Closed Session pursuant to Government Code Section 54957.10 — Request for early withdrawal of funds from Deferred Compensation Plan. b. Conference with Legal Counsel regarding existing litigation pursuant to Government Code Section 54956.9(a): • Gregory Village Partners, L.P. v. Chevron U.S.A., Inc., M.B. Enterprises, and Central Contra Costa Sanitary District, U.S. District Court, Northern District of California, Case No. CV 11 1597 JCS C. Conference with labor negotiators pursuant to Government Code Section 54957.6: None. District Negotiator: • Secretary of the District Elaine Boehme Unrepresented Position /Employee: • General Manager /Ann E. Farrell 12. REPORT OUT OF CLOSED SESSION 13. ADJOURNMENT There being no further business to come before the Board, President Nejedly adjourned the meeting at 4:30 p.m. James A. Nejedly President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Elaine R. Boehme, CIVIC Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California