HomeMy WebLinkAbout04.a.1) Approve minutes of Board Workshop held 11-17-14MINUTES OF THE SPECIAL MEETING •Q /
OF THE DISTRICT BOARD OF THE
CENTRAL CONTRA COSTA SANITARY DISTRICT
HELD ON NOVEMBER 17, 2014
The Board of Directors of the Central Contra Costa Sanitary District convened in a
special meeting in the Diablo Vista Room at the Contra Costa Country Club, 801 Golf
Club Road, Pleasant Hill, County of Contra Costa, State of California, at 2:00 p.m. on
Monday, November 17, 2014.
President Williams called the meeting to order and requested that the Secretary call roll.
PRESENT: Members:
ABSENT: Members:
None.
1. ROLL CALL
Causey, Nejedly, McGill, Pilecki, Williams
None
2. PUBLIC COMMENTS
3. BOARD COST OF SERVICE STUDY WORKSHOP
a. OPENING REMARKS
General Manager Roger Bailey made opening remarks.
b. UNFUNDED ACTUARIAL ACCRUED LIABILITY (UAAL) ASSUMPTIONS
Finance Manager Thea Vassallo gave a presentation on UAAL assumptions and
the most recent valuation provided by Contra Costa County Employees
Retirement Association ( CCCERA), which indicated the UAAL has declined from
$142.5 million last year to $120.8 million.
Mr. Bailey asked the Board to consider the best approach to pay down the UAAL,
following the same process as the prior year or something different.
The Board Members noted that the timing of any prepayments should also be
considered because of the impact on cash flow and interest earned. The Board
suggested that we continue to monitor the CCCERA UAAL on an annual basis
and continue to make additional payments until the Districts portion is funded at
the same level as the aggregate CCCERA pool.
C.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
Board Minutes of November 17, 2014
DEVELOPMENT OF RESERVE POLICY AND TARGET
Board Members discussed possible approaches to a reserve policy, including
typical reserves for operating and capital expenses, rate stabilization, special
reserves, and catastrophic emergency reserves.
It was the recommendation of consultant Sudhir Pardiwala of Raftelis Financial
Consultants, Inc. that the District maintain a six -month reserve.
Mr. Bailey outlined the five key questions for the Board with regard to reserves:
1. Does the Board wish to adopt a formal reserve policy?
2. If so, at what level?
3. Over what period of time should the reserves be funded?
4. Under what conditions may the reserves be utilized?
5. Who has the authority to utilize the reserves, and how should the funds be
replenished?
With regard to the first question, all Board Members agreed that a formal reserve
policy should be developed.
With regard to the second question, the Board Members unanimously indicated
support for the following estimated reserve levels:
$36.0 million Operating Reserves (representing five months)
$25.0 million Capital Reserves (could be expressed as a percentage of
50 percent or capped at a predetermined amount)
-0- Rate Stabilization Reserves
$ 1.5 million Self- Insurance Reserves (3 events at $500,000 each)
5.0 million Catastrophic /Emergency Reserves
$67.5 million
CAPITAL IMPROVEMENT PLAN (CIP) SCENARIOS: 20 -YEAR PLAN
ASSUMPTIONS
Director of Engineering Jean -Marc Petit presented CIP scenarios and 20 -year
plan assumptions. He described the four main drivers that impact the CIP:
1) capacity expansion, 2) replacement and rehabilitation (aging assets), 3)
regulatory issues, and 4) sustainability /optimization. He noted that both new
regulations and aging infrastructure will constitute the majority of the investments
for which the District will have to budget in the future. For example, 70 percent of
the District's sewer pipes are now more than 50 -60 years old and efforts to
replace them will be a major issue in the coming years.
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CENTRAL CONTRA COSTA SANITARY DISTRICT
Board Minutes of November 17, 2014
e. DEVELOPMENT OF POLICY ON DEBT FINANCING VS. PAY -AS- YOU -GO
Mr. Pardiwala presented information on debt financing versus the pay -as- you -go
approach, noting that ideally, debt financing would be used to help smooth out
rate increases.
President Williams said he was comfortable using the pay -as- you -go approach for
replacement and refurbishment of sewer pipes (except perhaps interceptors),
preferring to save bond funding for longer -term, larger regulatory issues. Member
Nejedly agreed with this approach.
The remaining Board Members discussed the pros and cons of each approach
and offered opinions relating to rate increases, bond funding, and pipe capacity.
REVENUE NEEDS
Member Pilecki requested different revenue assumptions be presented at a future
date, including those related to connection fees. The other Board Members
agreed.
Board Members agreed to hold a second workshop in the near future.
There were no announcements.
4. ANNOUNCEMENTS
5. ADJOURNMENT
There being no further business to come before the Board, President Williams adjourned
the meeting at 2:00 p.m.
David R. Williams
President of the Board of Directors
Central Contra Costa Sanitary District
County of Contra Costa, State of California
COUNTERSIGNED:
Elaine R. Boehme, CMC
Secretary of the District
Central Contra Costa Sanitary District
County of Contra Costa, State of California
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