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HomeMy WebLinkAboutBOARD MINUTES 05-20-04 231 MINUTES OF THE REGULAR BOARD MEETING OF THE DISTRICT BOARD OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT HELD ON MAY 20,2004 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 May 20, 2004. President Lucey called the meeting to order and requested that the Secretary call roll. 1. ROLL CALL PRESENT: Members: Menesini, Boneysteele, Nejedly, Hockett, Lucey ABSENT: Members: None a. PLEDGE OF ALLEGIANCE TO THE FLAG Board and staff joined in the Pledge of Allegiance to the Flag. b. INTRODUCTIONS . RECOGNIZE TODD SMITHEY ON HIS PROMOTION TO PAYROLL TECHNICIAN . RECOGNIZE CANDACE NEWMAN ON HER PROMOTION TO SECRETARY III President Lucey and the Board of Directors congratulated Payroll Technician Todd Smithey and Secretary III Candace Newman on their recent promotions. 2. PUBLIC COMMENTS None 3. HEARINGS a. CONDUCT A PUBLIC HEARING ON THE DRAFT CAPITAL IMPROVEMENT BUDGET CIB FOR 2004-2005 AND THE DRAFT 2004 TEN-YEAR CAPITAL IMPROVEMENT PLAN CIP APPROVE THE 2004 CIP AND APPROVE THE CIB FOR INCLUSION IN THE 2004-2005 DISTRICT BUDGET Mr. Charles W. Batts, General Manager, stated that Board workshops were held in October, January, and April to outline the Capital Improvement Budget (CIB) and the Ten-Year Capital Improvement Plan (CIP). The most recent workshop was on April 22, and included a detailed presentation of both the CIB and CIP. Mr. Batts introduced Ms. Ann E. Farrell, Director of Engineering, who provided an overview of the Capital Program. Ms. Farrell reviewed historical Capital Program activity, noting that in 2000- 2001 there was a Capital Program deficit of $9.4 million and in 2001-2002 there was a deficit of $3.5 million. However, in 2002-2003 bond proceeds of $15 million were added to the Sewer Construction Fund. In 2002-2003 and 2003-2004, $1.1 million and approximately $4 million will be put back into the Sewer Construction Fund, bringing the balance at June 30, 2004 to approximately $53 million. This has been the result of a conscientious effort on the part of staff to defer projects because the loss of ad valorem tax revenue was anticipated. Because the Sewer Construction Fund balance has grown, in 2004-2005, staff proposes to go forward with a full Capital Improvement Budget in spite of there still being some uncertainty regarding ad valorem tax revenue. The 2004-2005 CIB expenditure recommendations are $19,166,000 for the Collection System Program, $6,010,000 for the Treatment Plant Program, $2,255,000 for the General Improvements Program, and $665,000 for the Recycled Water Program, for 05 20 04 232 total expenditures of $28,096,000. Ms. Farrell stated that at a 90 percent accomplishment rate plus 5 percent for contingencies, expenditures should approximately equal the October 2003 workshop recommended expenditures of $26,600,000. Fiscal year 2004-2005 revenues are estimated to be $22,354,000 assuming an increase to $76 going to the Capital Program from the Sewer Service Charge and a reduction in property tax revenue to $328,000. Total expenditures are projected to be $28,096,000 for a deficit of $5,742,000, reducing the Sewer Construction Fund balance at June 30,2005 to $47 million. If the historical accomplishment rates apply, expenditures will be less than projected by 5 to 10 percent, and should approximate the $26,600,000 from the October 2003 CIB planning workshop resulting in a smaller deficit and smaller reduction in the Sewer Construction Fund balance. Ms. Farrell provided a summary of debt service for fiscal year 2004-2005, stating that total debt service for the year will be $3,902,000 accrued to finance the Capital Improvement Program. This total is made up of principal and interest on the Recycled Water loan, the 1998 Revenue Bond principal and interest, and the 2002 Revenue Bond principal and interest. In 2004-2005 debt service will transition to a separate Debt Service Fund. Property tax will be allocated to pay debt service preferentially. Any balance in debt service will then be paid by Sewer Service Charge first. Sewer Service Charge will then been allocated to operations and maintenance, and finally to capital. Ms. Farrell presented the Capital Improvement Budget (CIB) summary for fiscal year 2004-2005. Program expenditures for 2004-2005 are estimated to be $28,096,000, carryover from the previous fiscal year is estimated to be $21,222,000, and the estimated additional allocation needed for 2004-2005 is $20,754,000, for a total proposed authorization of $41 ,976,000. Again, Ms. Farrell noted that this is more than is actually planned to be spent, because projects usually take more than one year to complete and the funds carry over into the next fiscal year. Assuming a 90 percent accomplishment rate plus 5 percent contingency, expenditures should approximate the $26,600,000 target from the October 2003 Capital planning workshop. Ms. Farrell stated that there have been questions with regard to the specific Board approvals required at various stages of capital projects. While the 2004-2005 CIB total proposed authorization is $41,976,000, the Board has a continued approval role. Staff will come back to the Board for authorization of the following: . For consultant agreements over $50,000; . For award of construction contracts over $15,000; . For project overruns in excess of 15 percent of the final project budget at the time of construction contract award; and . For construction change orders over $50,000. In summary, Ms. Farrell reviewed future revenue structure for capital projects, stating that the District had the benefit of $15 million in bond proceeds added to the Sewer Construction Fund in 2002-2003. Anticipating the loss of ad valorem tax revenue in 2003-2004, capital spending was deferred. Retention of ad valorem tax revenue is expected to result in a $4 million positive variance for fiscal year 2003-2004. Through a concerted effort, the Sewer Construction Fund balance at July 1, 2004 is projected to be $53 million. Staff recommends moving forward with some of the larger deferred capital projects and spending down some of the reserves. Increases in the Sewer Service Charge capital component will continue to be needed to soften the impact of ad valorem tax revenue loss and spending down reserves. The Ten-Year Plan indicates more than doubling the Sewer Service Charge capital component by 2012-2013 from $76 in fiscal year 2004-2005 down to $33 in fiscal year 2006-2007 and back up to $129 in fiscal year 2012-2013. Ms. Farrell noted however, that the Board is not actually approving that today. Today the Board is being asked to approve the Capital Improvement Budget authorization for fiscal year 2004-2005 only. 05 20 04 At 2:12 p.m., President Lucey opened the public hearing to receive comments on the Draft Capital Improvement Budget for 2004-2005 and the Draft 2004 Ten-Year Capital Improvement Plan. There being no comments, the public hearing was closed. President Lucey stated that he has no objection to the 2004-2005 Capital Improvement Budget; but if the District may lose 40 to 50 percent of its ad valorem tax revenue, he has concern about approving the Ten-Year Capital Improvement Plan. President Lucey stated that he would feel more comfortable if the General Manager would add a note that approval of the Ten-Year Capital Improvement Plan is contingent on future funding. Mr. Batts stated that such a note can be added to the Ten-Year Capital Improvement Plan. It was moved by President Lucey and seconded by Member Hockett, that the 2004 T en- Year Capital Improvement Plan be approved with the addition of a note indicating that the Plan is contingent on future funding; and that the 2004-2005 Capital Improvement Budget be approved for inclusion in the 2004-2005 District Budget. There being no objection, the motion was unanimously approved. 4. CALL FOR REQUESTS TO CONSIDER ITEMS OUT OF ORDER President Lucey proceeded to Item 8.a., Engineering, to accommodate interested persons in the audience. 8. ENGINEERING a. ADOPT A RESOLUTION APPROVING A JOINT COMMUNITY FACILITIES AGREEMENT FOR FINANCING OF PUBLIC MAIN SEWERS IN THE WINDEMERE BLC'S DOUGHERTY VALLEY DEVELOPMENT AND AUTHORIZE THE PRESIDENT OF THE BOARD OF DIRECTORS AND THE SECRETARY OF THE DISTRICT TO EXECUTE THE AGREEMENT Mr. Batts, General Manager, stated that Windemere BLC has requested that the Association of Bay Area Governments (ABAG) form a Community Facilities District to provide Mello-Roos tax-exempt bond financing for some of the public infrastructure needed to serve Phases 2, 3, and 4 of their development. The cost of sewers that will be publicly owned, and operated by the District after acceptance, may be financed by these bonds if the ABAG Financing Authority and the District enter into a Joint Community Facilities Agreement. Mr. Batts introduced Mr. Jarred Miyamoto-Mills, Principal Engineer, who introduced representatives of Windemere BLC who were present, Project Coordinator Brian Olin, Finance Director Don Larsen, and Finance Department Staff Member Uno Companile. Mr. Miyamoto-Mills provided a brief status update of the Windemere BLC portion of the Dougherty Valley development, stating that 876 homes have been sold to date. Installation of sewers for Phase 4 is now beginning. Windemere BLC has used private and public bond financing for the project. Association of Bay Area Governments (ABAG) Financing Authority issued bonds on behalf of the developer. Approximately $125 million of infrastructure has been financed by those assessment bonds. Windemere BLC has now asked the ABAG Financing Authority to issue Mello-Roos bonds in the amount of $45 million in two series. Of the $45 million, approximately $1,065,000 would be for main sewer extensions in the area. State law requires that the District enter into an agreement with the ABAG Financing Authority if these bonds are to be issued. The proposed agreement provides that bonds will be issued; that the District's customary procedures and requirements for design and construction of public sewers be followed; that the District will have no liability with respect to any work performed in connection with the improvements until they are accepted and will not be obligated to accept the constructed facilities unless they meet all District standards, specifications, and regulations; and that the District Board of Directors finds that the Community Facilities District would be of benefit to the residents in Phases 2,3, and 4 that would derive services from the facilities to be constructed. 05 20 233 04 234 Discussion followed with regard to bond financing, the use of Mello-Roos bonds, and the role of the Association of Bay Area Governments. Following discussion, it was moved by Member Hockett and seconded by President Lucey, that Resolution No. 2004-035 be adopted, approving the Joint Community Facilities Agreement with the Association of Bay Area Governments (ABAG) Financing Authority for Financing of Public Main Sewers in Windemere BLC's Dougherty Valley Development, and authorizing the President of the Board of Directors and the Secretary of the District to execute the agreement. Motion unanimously approved on the following vote: AYES: Members: Hockett, Lucey, Menesini, Boneysteele, Nejedly NOES: Members: None ABSENT: Members: None At this time, President Lucey reverted to the order of the agenda. 5. BIDS AND AWARDS a. AUTHORIZE AWARD OF CONSTRUCTION CONTRACT TO MOUNTAIN CASCADE. INC. FOR THE PLEASANT HILL ROAD EAST IMPROVEMENTS. DP 5553 Mr. Batts, General Manager, stated that the Pleasant Hill Road East Improvements Project is a joint construction project with the City of Martinez. As the majority of the construction activity will involve the District's sewer lines, the District will be the lead agency for the project in accordance with a previously authorized Joint Powers Agreement (JPA). Mr. Batts introduced Mr. Alex Rozul, Associate Engineer, who stated that the sewer lines in the project area are deteriorating and do not have adequate capacity. During the interagency plan review, the City of Martinez informed the District that a waterline replacement project was planned within Pleasant Hill Road East. Both agencies agreed that combining the work into a joint project would be cost efficient and least disruptive to the residents. A JPA was authorized by the District Board and entered into with the City of Martinez for the joint project. Nine sealed bids were received for this project. Mountain Cascade, Inc. was the lowest bidder at $1,567,081. The scope of work includes installing approximately 6,300 feet of sewer in various sizes, installing 2,800 feet of 6-inch PVC waterline, and repairing the streets and overlaying the project area. The construction period is 140 calendar days with a contract completion date of November 6, 2004. Mr. Rozul noted however, that the Fish and Game Permit limits work within Alhambra Creek to June 1 through October 31,2004. Using photographs, Mr. Rozul described some of the challenges involved in this project including the Highway 4/Alhambra Avenue on ramp, traffic control, the Alhambra Creek crossing, the narrowness of the roads, and the depth of the line. Following discussion of the need for maintaining a clean job site and inspection on the project, it was moved by Member Menesini and seconded by Member Hockett, that award of a construction contract in the amount of $1 ,567,081 for the Pleasant Hill Road East Improvements, DP 5553, be authorized to Mountain Cascade, Inc., the lowest responsive and responsible bidder. There being no objection, the motion was unanimously approved. b. AUTHORIZE AWARD OF CONSTRUCTION CONTRACT TO D'ARCY AND HARTY CONSTRUCTION. INC. FOR THE WALNUT CREEK SEWER RENOVATION PROJECT. PHASE 2. DP 5709 Mr. Batts, General Manager, stated that the Walnut Creek Sewer Renovation Project, Phase 2, is part of an ongoing program to replace or renovate deteriorated sections of the oldest portions of the collection system. Four sealed bids were received for this project. The engineer's construction cost estimate was $1.1 million. The lowest responsive and responsible bidder was D'Arcy and Harty Construction of San Francisco 05 20 04 235 at $1,015,332. This project consists of renovation and replacement of approximately 5,500 feet of sewers located throughout the City of Walnut Creek and unincorporated areas. Construction is scheduled to be completed by the end of December 2004. It was moved by Member Menesini and seconded by Member Hockett, that award of a construction contract in the amount of $1 ,015,332 for construction of the Walnut Creek Sewer Renovation Project, Phase 2, DP 5709, be authorized to D'Arcy and Harty Construction, Inc., the lowest responsive and responsible bidder. There being no objection, the motion was unanimously approved. a. 2) 3) 6. REPORTS GENERAL MANAGER 1) Mr. Batts, General Manager, reported that on May 13, 2004, Governor Schwarzenegger released the details of his $103 billion budget in the May Revision entitled "Economic Recovery - A Workout Plan That's Working." The budget is based on long-term economic recovery that will improve the revenue side of the budget, which has already improved with the tax amnesty project (over $1 billion) and 4.5 percent growth in personal income resulting in increases in sales tax and improved economic activity. The budget is an attempt to address the current $15 billion operating deficit and projected $7 billion deficit in the next budget year. The proposal seeks to bring the budget into balance through cuts, borrowing, program overhauls and redesigns of such areas as general and higher education, local government, Medi-Cal redesign, and renegotiations of collective bargaining agreements. The budget is designed to resolve the deficit issues, but there is a belief that even with the improved economic outlook and budget cuts, the deficit will be back in two years. Mr. Batts stated that with regard to the issue of ad valorem tax revenue, the Governor also announced his budget agreement with local government as previously outlined, a $1.3 billion shift in property taxes in each of the next two years from cities, counties, redevelopment agencies, and special districts. Cities will give up $350 million, counties will give up $350 million, redevelopment agencies will give up $250 million, and special districts will give up $350 million in property taxes with enterprise districts being $200 million of the $350 million total, approximately 40 percent. The proposal includes multi-county districts, and there are no debt exclusions. The parties supporting the compromise are trying to hold the coalition together. The carrot in the proposal is that at the end of two years, the Governor promises to conclude the agreement and actively campaign to protect local government revenue. Mr. Batts, General Manager, stated that the Board raised the issue at the last Board Meeting about the location of future Board workshops in areas other than the Board Room. The intent of staff is to provide an atmosphere where the Board is comfortable. Staff believes that any meeting room where the Board is at ease with extended presentations would suit the purpose for the workshops. Mr. Batts proposed announcing to the Board if a change in meeting location is being considered and requesting Board input. Mr. Batts, General Manager, stated that there are a few locations in the District where topography, distance from the existing sewer system, and technical constraints have combined to prevent the District from providing service when requested. These are generally areas where extension of the gravity system would require construction of long, very deep sewers that would be economically or technically infeasible. In many cases the District has required developers to install pumping stations. In the EI Toyonal area, staff has developed a conceptual solution to serving some 05 20 04 236 05 20 of these areas using small diameter, low-pressure public forcemains receiving discharge from low-volume private lot pumping stations. Mr. Batts introduced Mr. Jarred Miyamoto-Mills, Principal Engineer, who used a map and described the EI Toyonal area. The City of Orinda Planning Department has approved a home on one of the parcels in this area contingent on public sewer service being extended, and another owner has approached the District and asked for sewer service. Both of the properties are annexed to the District. Mr. Miyamoto-Mills stated that staff has developed a concept to allow low-pressure, low-volume from private pumping equipment on lots to pump to the public low-pressure forcemain. Mr. Miyamoto-Mills stated that in addition to the two properties that have requested service, there are four or five other properties along the route, some on existing septic tanks. President Lucey expressed concern about the District taking over private lines and assuming liability for any problems that may exist. Mr. Miyamoto-Mills stated that there are few locations such as this in the District. Another one is the area just adjacent to this area. The proposal is to do a demonstration project to show this might work on small areas. If it is feasible, then there would be a solution the District could offer when property owners in other such areas come to the District. President Lucey stated that staff has come up with a great, innovative solution to provide service to these areas, but he does not know if he will vote for it as he does not want the District to have to pay for everything and to assume the liability. 4) Mr. Batts, General Manager, reported that the Environmental Protection Agency (EPA) conducted an audit of the City of Oakland in 2003, and in April of this year issued a Finding of Violation and Order for violations of the Clean Water Act due to sanitary sewer overflows (SSOs). The EPA's compliance order outlines four major components of compliance: immediate reduction of collection system spills; spill response plans, control of non-capacity related spills, and collection system capacity assurance. There were also additional reporting requirements, an obligation for adequate capital planning, and the condition of adequate resources. These plans and information, including the City's budget for wastewater collection, must be submitted to the EPA for approval. While Central San already has most of the necessary elements in place, the District is still concerned about EPA enforcement. This is just another indication of the enforcement emphasis that regulators are putting on sanitary sewer overflows. 5) Mr. Batts, General Manager, stated that on Saturday, June 12, 2004, the District and the Central Contra Costa Solid Waste Authority will conduct a joint household hazardous waste/electronic waste collection event. Because of space constraints, the number of appointments for the collection event has been limited to 500 appointments. The location of the event was selected to be able to serve the Rossmoor neighborhood. 6) Mr. Batts, General Manager, announced that the District will be advertising Phase 1 of the Vessing Road Sewer Renovation Project the week of May 31,2004. A public meeting will be held on June 14,2004 at 7:00 p.m. in the Pleasant Hill City Hall. This is a difficult project due to the number of private easements, mature trees in the construction area, and a nearby creek. District staff has been meeting with individual property owners where sewers will be constructed within their property. The project consists of installing approximately 3,600 feet of sewer to correct capacity deficiencies and replace high maintenance sewers. The project runs from 04 7) 8) b. c. d. a. 237 the intersection of Oak Park Boulevard and Oak Park Lane through private roads, easements, and public streets to Barnett Circle in Pleasant Hill. Mr. Batts, General Manager, reported that SFPP has begun locating (potholing) existing utilities on the plant site. Project construction is scheduled to start the week of May 24, 2004. A pre-construction meeting was held here at the plant on May 7. SFPP has entered into a tenant agreement with Mr. and Mrs. Quigley, the Lagiss property tenants, and SFPP is proposing to use temporary fencing to protect the Quigley's livestock. SFPP is in discussions with the other affected tenants, Contra Costa Topsoil and Contra Costa Water District, and intends to have signed tenant agreements with them by Friday, May 21, 2004. Mr. Batts, General Manager, announced that Senate Bill 1272 (Ortiz) on Special District Governance, continues to move through the legislative hurdles. The bill was suspended due to cost of implementation, and is back before the Senate Appropriations Committee today. While there are some proposed amendments to the bill, none involved Board compensation or travel reimbursement. Lobbyists for various special districts have been meeting with legislators in hopes of amending the bill into one that would be more acceptable to special districts. Staff has just learned that the Ortiz Bill was just defeated in the Senate Appropriations Committee on a 4 to 5 vote. The bill was granted "reconsideration" which is a normal cou rtesy. 9) Mr. Batts, General Manager, stated that because the Board Personnel Committee meeting was canceled, endorsement is requested from the Board to begin recruitment to fill a vacant Accounting Technician 1/11 position. The Board endorsed the request. COUNSEL FOR THE DISTRICT None SECRETARY OF THE DISTRICT None BOARD MEMBERS 1) Member Boneysteele, Chair of the Budget and Finance Committee, reported 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 May 20, 2004, including Self Insurance Check Nos. 102101-102103, Running Expense Check Nos. 150016-150244, Sewer Construction Check Nos. 26681-26728, Payroll Manual Check Nos. 48975-48977, and Payroll Regular Check Nos. 54989-55017, be approved as recommended. There being no objection, the motion was unanimously approved. 2) Member Menesini announced that Regional Water Quality Control Board Executive Director Bruce Wolfe will speak at the June 21, 2004 Environmental Alliance Discussion Series. All those interested are invited to attend. 7. ADMINISTRATIVE ADOPT A RESOLUTION REQUESTING CONSOLIDATION OF THE ELECTION OF DISTRICT BOARD MEMBERS WITH THE STATEWIDE GENERAL 05 20 04 238 ELECTION ON NOVEMBER 2. 2004 AND SETTING FORTH DISTRICT REGULATIONS FOR CANDIDATE STATEMENTS Mr. Batts, General Manager, stated that the California Elections Code requires adoption of a resolution consolidating special district elections with the Statewide General Election when they are held on a statewide election date. The Elections Code also provides for the Board of Directors to determine District regulations for candidate statements. Mr. Batts introduced Ms. Joyce E. Murphy, Secretary of the District, who stated that in 1996 because of the prohibitive cost of candidate statements for this District compared to other agencies, the Board of Directors determined that the benefits of informing citizens of the qualifications of candidates, minimizing the issue of campaign contributions for special interests, and removing financial obstacles for interested candidates to run for election warranted that the District share in the cost of the candidate statements. In 2002 Contra Costa County changed type font size of candidate statements to 10 point, causing candidate statements of more than 300 words to require two pages and doubling the cost. The California Elections Code states that the candidate statement be no more than 200 words; however, the governing body of the local agency may authorize an increase in the limitation on words from 200 to 400 words. Ms. Murphy reviewed the current District regulations for candidate statements which require that a candidate seeking election to the District Board of Directors is responsible for paying $500 towards the cost of publication of his/her respective candidate statement at the time of filing nomination papers, that the balance be paid by the District after the election costs have been determined, and that the candidate statement be limited to 400 words. It is recommended that the Board adopt a resolution requesting consolidation of the election of District Board Members with the Statewide General Election to be held on November 2, 2004, and reaffirming or modifying the District regulations for candidate statements. Following discussion, it was moved by President Lucey and seconded b Member Hockett, that Resolution No. 2004-034 be adopted, requesting consolidation of election of District Board Members with the Statewide General Election to be held on November 2, 2004; and setting forth District regulations for candidate statements requiring that candidates be responsible for paying $500 towards the cost of their candidate statements with the District paying the balance, and limiting the candidate statement to 300 words or less. Motion unanimously approved on the following vote: AYES: Members: NOES: Members: ABSENT: Members: Lucey, Hockett, Menesini, Boneysteele, Nejedly None None a. 8. ENGINEERING ADOPT A RESOLUTION APPROVING A JOINT COMMUNITY FACILITIES AGREEMENT FOR FINANCING OF PUBLIC MAIN SEWERS IN THE WINDEMERE BLC'S DOUGHERTY VALLEY DEVELOPMENT AND AUTHORIZE THE PRESIDENT OF THE' BOARD OF DIRECTORS AND THE SECRETARY OF THE DISTRICT TO EXECUTE THE AGREEMENT This item was taken out of order earlier in the agenda. 9. APPROVAL OF MINUTES a. MINUTES OF APRIL 22. 2004 It was moved by Member Menesini and seconded by President Lucey, that the minutes of April 22, 2004 be approved as presented. There being no objection, the motion was unanimously approved. 05 2() 04 239 10. BUDGET AND FINANCE RECEIVE THE 2004-2005 OPERATIONS AND MAINTENANCE (O&M) BUDGET; RECEIVE THE 2004-2005 DEBT SERVICE FUND BUDGET a. Mr. Batts, General Manager, stated that staff met with the Board in January to review the District's Ten Year Financial Plan. At that time staff recommended a three-year increase in the Sewer Service Charge. The recommended increase was for $8 in the first year, $8 in the second year, and $9 in the third year. At that time, the Ten Year Plan included 100 percent of the District's ad valorem tax revenue. Staff presented an additional scenario in March, which assumed the same Sewer Service Charge increases, but with a 50 percent loss of the ad valorem tax revenue. The Operations and Maintenance (O&M) Budget that will be presented for Board consideration and approval was developed with both of these later assumptions in mind. Mr. Batts introduced Ms. Deborah Ratcliff, Controller, who stated that the position paper included discussion about the projections for the full year 2003-2004 compared to projected budget for 2004-2005. If there were any significant variances, they were also included in the position paper. Ms. Ratcliff stated that her comments today focus on the budget to budget comparisons. Ms. Ratcliff reviewed the assumptions imbedded in the proposed 2004-2005 Operations and Maintenance (O&M) Budget. With regard to revenue, an $8 increase in the Sewer Service Charge from $272 to $280 was assumed. Of that, $204 would be allocated to O&M and $76 would be allocated to the Sewer Construction Fund. It was assumed that only half of the property tax revenue would be received and $4.2 million was budgeted. Of that $4.2 million in property tax revenue, $3.9 million was shifted to the Debt Service Fund. With regard to expenses, the bond debt service expense was shifted to the Debt Service Fund. Ms. Ratcliff summarized the 2002-2003 actual, 2003-2004 current projected, and 2004- 2005 budgeted O&M revenues, expenses, and reserves. Revenues for 2003-2004 are projected to be $44,670,000 at fiscal year end compared to 2004-2005 budgeted revenues of $41 ,140,000. Ms. Ratcliff noted that revenues are down in 2004-2005 because ad valorem tax revenue was allocated to the Debt Service Fund. Expenses for 2003-2004 are projected to be $42,923,000 compared to 2004-2005 budgeted expenses of $43,891 ,000. The O&M fund balance at fiscal year end will increase from $9,000,000 to $10,747,000. In 2004-2005, deficit spending in the amount of $1 ,751 ,000 is budgeted to bring the fund balance at June 30, 2005 to $8,996,000. Ms. Ratcliff provided a 2003-2004 budget to 2004-2005 budget comparison, noting that revenues are budgeted to decrease 2.0 percent from $42,986,000 to $42,140,000; expenses are budgeted to decrease 0.3 percent from $44,033,000 to $43,891,000; and reserves at fiscal year end are budgeted to decrease by $1,751,000 bringing the O&M fund balance to $8,997,000. Ms. Ratcliff noted that this is somewhat deceptive as expenses are budgeted to increase 2.3 percent before the funds are shifted to the Debt Service Fund. Ms. Ratcliff reviewed the key labor costs and the other key costs imbedded in the 2004- 2005 O&M Budget as set forth in the handouts provided to the Board. Ms. Ratcliff stated that a new Debt Service Fund is being created in the 2004-2005 budget process. Showing a separate fund for debt service will help clarify and simplify future budget presentations. In 2004-2005 Debt Service Fund revenue is budgeted at $3,095,000. This revenue is made up entirely of ad valorem tax revenue in 2004-2005. In the future if there is not enough ad valorem tax revenue to cover debt service, Sewer Service Charge revenue will be allocated to this fund. Debt Service Fund expenses are budgeted at $3,901,000. A net of $4,000 is budgeted to be returned to the Sewer Construction Fund at fiscal year end. There being no questions, it was noted that the 2004-2005 O&M and Debt Service Fund Budgets were duly received and will be presented for Board approval at the June 3, 2004 Board Meeting. 05 20 04 240 11. EMERGENCY SITUATIONS REQUIRING BOARD ACTION None 12. ANNOUNCEMENTS/SUGGESTIONS FOR FUTURE AGENDA ITEMS Member Hockett requested an update on District real estate activities and the traffic study. President Lucey requested that a Real Estate Committee meeting be scheduled, and stated that the Real Estate Committee will then report back to the full Board at a future Board Meeting. BREAK At 3:17 p.m., President Lucey declared a recess, reconvening at the hour of 4:00 p.m. with all parties present as previously designated. 13. CLOSED SESSION a. 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 is to be discussed. At 4:00 p.m., President Lucey declared the closed session to discuss significant exposure to litigation pursuant to Government Code Section 54956.9(b) as noted above. At 4:14 p.m., Member Nejedly excused himself and left the meeting. At 4:16 p.m., President Lucey concluded the closed session and reconvened the meeting into open session. 14. REPORT OF DISCUSSIONS IN CLOSED SESSION No decisions were made or votes taken in closed session which require reporting at this time. 15. ADJOURNMENT There being no further business to come before the Board, President Lucey adjourned the meeting at the hour of 4:17 p.m. esident of the Board of i recto rs , Central Contra Costa Sa 'tary District County of Contra Costa, State of California COUNTERSIGNED: 05 20 04