The URL can be used to link to this page

Home My WebLink AboutBOARD MINUTES 01-15-19 (Special) CENTRALSAN CENTRAL CONTRA COSTA SANITARY DISTRICT 5019 IMHOFF PLACE, MARTINEZ, CA 94553-4392 MINUTES* BOARD OF DIRECTORS: DAVID R WILLIAMS Prea'ideer SPECIAL BOARD MEETING MICHAEL h/CGILL Preside/!(Pni Tem Collection System Operations Building, Crew Room PAULH CAI'SEY 1250 Springbrook Road JAMES A.N£JEDLY Walnut Creek, CA 94596 TAD J.P/LECKI Tuesday, January 15, 2019 12:00 p.m. Open Session (Video recorded) ROLL CALL A special meeting of the Board of Directors was called to order by President Williams at 12:00 p.m. Secretary of the District Katie Young called roll. PRESENT: Members: Causey, McGill, Nejedly, Williams ABSENT.- Members: Pilecki PLEDGE OF ALLEGIANCE The Board, staff and audience joined in the Pledge of Allegiance. PUBLIC COMMENT PERIOD No comments. REQUESTS TO CONSIDER MATTERS OUT OF ORDER None. FINANCIAL PLANNING WORKSHOP NO. 2 1. Financial Planning Workshop in which the following will be presented and discussed: • Proposed Fiscal Years 2019-20 and 2020-21 Capital Improvement Budgets and corresponding updated 10-Year Capital Improvement Plan; These summary minutes are supplemented by a corresponding video recording available on the District's website at centralsan.org. Book 67— Page 7 CENTRAL CONTRA COSTA SANITARY DISTRICT January 15, 2019 Special Board Meeting Minutes—Book 67-Page 8 • Report on capital project budget issues/transfers; • Cost of Service update, including proposed changes to certain non-residential I Sewer Service Charge customer categories; l • Updated Operations and Maintenance budget assumptions; and • Sewer Service Charge and Recycled Water rate impact scenarios and proposed implementation schedules Director of Engineering and Technical Services Jean-Marc Petit presented the Capital Improvement Plan (CIP) Update presentation included with the agenda materials. There was a discussion about the deferral or movement of projects in order to extract more life from the assets. Mr. Petit stated that the District considers options in lieu of replacement, and that equipment life can be extended at times, with more funds invested in the assets through repairs, maintenance and rehabilitation. Additionally, the engineering team reviews a detailed analysis of each project's business case while considering the timing of equipment replacement. Member Causey asked about increasing the rate of pipeline replacement. General Manager Roger Bailey stated that there is a dilemma when extending the life of the assets. With best practices there is a rate of replacements from the Environmental Protection Agency(EPA). Staff analyzes the performance of the collection system on an annual basis to determine the proportionate replacements; otherwise, with an increase in the rate of replacement, the District could be replacing pipelines prematurely. Member McGill inquired about a published list of depreciation timelines and if they formally apply to government agencies. Director of Administration and Finance Phil Leiber stated that he was not aware of an industry required table;peer agencies use differing expected useful lives for similar assets. He noted that that some utilities use depreciation as a basis for setting rates, while Central San bases rates off debt service and capital spending. As Central San is not subject to income tax, IRS depreciable life requirements are also not applicable. Mr. Leiber provided the Board with Part 2 of the presentation included in the agenda materials covering budget transfers for capital projects. The presentation addressed three main concerns that have been expressed about the implications of budget transfers, and provided commentary exploring the concerns. The number of, and reason for budget transfers over the past two and half fiscal years were analyzed in arriving at several conclusions about the practice. As savings from project closeouts exceed the potential future year budget impact from transfers, staff concluded there did not appear to be building rate pressure from the transfers. The presentation also provided several follow-up steps that would be implanted to continue attention to the issue. Member Causey stated that he would like to see a clear definition of the use of the contingency fund budget. Mr. Leiber stated that an additional explanation and coding CENTRAL CONTRA COSTA SANITARY DISTRICT January 15, 2019 Special Board Meeting Minutes—Book 67-Page 9 may be possible, and that staff could provide periodic reporting about the use of the contingency, and ongoing reporting about the budget transfers. Member Causey asked how a project closeout with cost savings impacts the City of Concord and how they would benefit. Planning and Development Services Division Manager Danea Gemmell stated that the District bills the City of Concord for actual costs. Ms. Gemmell presented the proposed Fiscal Years 2019-20 and 2020-21 rate impact scenarios which had been provided with the agenda. Based on the updated Cost of Survey study, the Board agreed with staffs recommendation to decrease the number of mixed-use classification categories from 15 to 5 for non-residential users. BREAK The Board Members and staff took a 10-minute break starting at 2:16 p.m. CONTINUATION OF FINANCIAL PLANNING WORKSHOP NO. 2 Ms. Gemmell reviewed the recent updates to the Financial Plan and Revenue Requirements. She provided the Board with three rate impact scenarios. Member IMcGill stated that he would entertain Scenario 1. Member Causey stated that he preferred Scenario 2 which would reduce the amount of future bond funding. Member Nejedly stated that he has difficulty approving any scenario that increases debt, but recognized that Scenario 3, with significantly higher rate increases and no debt was also problematic Member Causey advised that since the costs associated with distributing Proposition 218 notices are expensive, he would prefer a longer rate period than two years, he suggested a five-year rate increase. Communication Services and Intergovernmental Relations Manager Emily Barnett stated that the cost of printing and mailing Proposition 218 notices is approximately$75,000 each cycle. Mr. Bailey stated that the rate period length is a policy call with the assumption that a rate validation review would be performed annually to adjust course if necessary. The Board agreed to entertain a four-year rate increase. There was a discussion about recycled water costs and rates. Ms. Gemmell reminded the Board that a ceiling was decided to charge customers that obtain over 100,000 gallons of recycled water. It was decided that a 3 percent annual rate increase for recycled water would be considered, which would continue the practice from the past few rate cycles. Ms. Gemmell reviewed the proposed rate schedule, stating that the Board will review the draft Proposition 218 notices at the January 31, 2019 Board meeting and will CENTRAL CONTRA COSTA SANITARY DISTRICT January 15, 2019 Special Board Meeting Minutes—Book 67-Page 10 consider setting the public hearing on April 18, 2019 to consider the rate increases for the next four years. Mr. Bailey confirmed that staff will bring draft Proposition 218 notices to the January 31 Board meeting with Scenario 1 figures for a four-year rate increase. The Board concurred. ANNOUNCEMENTS None. ADJOURNMENT The meeting was adjourned at 3:52 p.m. David R. Williams President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: i Katie YoutQhe%strict Secretary Central Centra Costa Sanitary District County of Contra Costa, State of California