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HomeMy WebLinkAboutFinance MINUTES 02-23-21 Page 2 of 7 I CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: TAD J PILECKI CENTRAL CONTRA COSTA President SANITARY DISTRICT DAVID R. WILLIAMS President Pro Tens FINANCE COMMITTEE BARBARA D.HOCKETT MARIAHN LAURITZEN MICHAEL R.MCGILL MINUTES PHONE: (925)228-9500 Tuesday, February 23, 2021 FAX: (925)372-0192 2:00 p.m. www.centralsan.org (All attendees participated via videoconference) Committee: Chair Tad Pilecki Member Mike McGill Staff. Roger S. Bailey, General Manager Kenton L. Alm, District Counsel (left after Item 5.c.) Katie Young, Secretary of the District Philip Leiber, Director of Finance and Administration Steve McDonald, Director of Operations (left after Item 6.b.) Jean-Marc Petit, Director of Engineering and Technical Services (left after Item 6.b.) Danea Gemmell, Planning and Development Services Division Manager Stephanie King, Purchasing and Materials Manager Edgar Lopez, Capital Projects Divisions Manager Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer (left after Item 5.c.) Shari Deutsch, Risk Management Administrator (left after Item 6.a.) Bryan McGloin, Management Analyste ((joined during Item 5.a.; left after Item 5.c.) Donna Anderson, Assistant to the Secretary of the District Amelia Berumen, Senior Administration Tech ((left after Item 5.a.) 1. Notice This meeting was held in accordance with the Brown Act as in effect under the State Emergency Services Act, the Governor's Emergency Declaration related to COVID-19, and the Governor's Executive Order N-29-20 issued on March 17, 2020 that allowed attendance by Board Members, District staff, and the public to participate and conduct the meeting by teleconference, videoconference, or both. The agenda included instructions for options in which the public could participate in the meeting. March 4, 2021 Regular Board Meeting Agenda Packet- Page 126 of 131 Page 3 of 7 Finance Committee Minutes February 23, 2021 Page 2 2. Call Meeting to Order Chair Pilecki called the meeting to order at 2:00 p.m. 3. Public Comments — None. 4. Old Business a. Follow-up to questions asked at the January 26, 2021 Finance Committee meeting regarding a specific expenditure Mr. Mizuno reviewed the information in the memorandum included with the agenda materials. Member McGill recalled that several years ago staff presented to the Real Estate, Environmental & Planning Committee a list of all the District's regulatory permits. He asked if the report could be updated and presented to a Committee, including information as to outside consulting costs, if any, associated with assuring that Central San is in full compliance with its permits. COMMITTEE ACTION: Received the information and requested an update on the District's regulatory permits. 5. Items for Committee Recommendation to the Board a. Review and recommend approval of obligations paid January 15, 2021 through February 9, 2021 Staff responded to a list of questions posed in advance of the meeting by Chair Pilecki and during the meeting by Member McGill regarding the expenditures listing. Ultimately, the Committee expressed satisfaction with staff's responses and recommended Board approval, however, several items arose during the discussion as follows: Procurement-Card (P-card) Expenditures: Chair Pilecki indicated that the descriptions for the P-card charges in the detail and summary reports were inadequate, especially for items over$2,000. Mr. Mizuno acknowledged the issue, stating that staff is still getting accustomed to the new Oracle Enterprise Resource Planning (ERP) system and is currently working with Oracle to enable expanded descriptions for P-Card charges. Member McGill sought clarification as to why the total P-card expenditures in Attachments 2 and 3 were slightly lower than the total amount paid to US Bank for P-card purchases on the check register. Mr. Leiber said there are incentives for the District to pay the entire US Bank bill upon receipt, including receiving higher levels of cash back rebates, and avoiding late March 4, 2021 Regular Board Meeting Agenda Packet- Page 127 of 131 Page 4 of 7 Finance Committee Minutes February 23, 2021 Page 3 fees. The discrepancy between the payment register and the attachments stems from some employee P-card statements not being processed within the current expenditure cycle. Employees across multiple divisions use P- cards, and quite a few are still adjusting to the new methods for processing purchases within the Oracle system. Mr. Mizuno added that while accounting staff makes default entries from the electronic US Bank statement as to what account should be charged, each cardholder must manually adjust the account number, if necessary, and attach any needed documentation within the Oracle system. Supervisors have been emphasizing the importance of more timely processing of P-card statements and it is hoped that the problem will improve as staff becomes more comfortable with the new system. Member McGill strongly encouraged addressing this issue. NRC Environmental Services, Inc.: Member McGill noticed invoices spanning multiple months from NRC (pages 23 and 24 of the Payment Register) for Household Hazardous Waste disposal. He asked why the charges from separate monthly invoices were paid all at once. Mr. Mizuno said that in this instance there had been a disputed billing, but that it was also not uncommon for NRC to hold an invoice. Member McGill requested additional information in this regard. Delta Discovery Voyage: Member McGill noted the $40,000 payment to Delta Discovery Voyage, and asked if it was the normal sponsorship amount, or if it represented a partial payment, possibly due to lower use of the vessel during the pandemic. Mr. Mizuno said he would find out. City of Lafayette - Maintenance Access Hole (Manhole,) Modifications: Member McGill asked if the 2020 road resurfacing work related to District Project 8448 was to reimburse the City for work done as part of a Central San project. Chair Pilecki said it is generally more cost effective for the cities to perform the resurfacing and repair work than for Central San. Mr. Lopez agreed, noting that the amount is based on a unit price charged by the contractor hired by the City. Central San has an agreement with the cities in its service area where the Capital Projects staff accepts the low bidder's pricing, reviews the billing, and authorizes reimbursement. Tracking Costs Related to COVID-19 Pandemic: Noting the payment of $42,103.28 to Be. Workplace Design for protective screens and sneeze guards, Member McGill asked if staff has been tracking costs related to the pandemic for potential reimbursement by the Federal Emergency Management Agency (FEMA). Mr. Leiber said both operating costs and capital costs are being tracked. Through November, those costs totaled approximately$1.2 million. March 4, 2021 Regular Board Meeting Agenda Packet- Page 128 of 131 Page 5 of 7 Finance Committee Minutes February 23, 2021 Page 4 Ms. Deutsch added that she is currently working on the FEMA application, which will seek reimbursement for protective screens, and disposable items like face masks, hand sanitizer, etc. FEMA will not reimburse for the additional laptops that were purchased for remote work. In response to a question from Chair Pilecki, Ms. Deutsch said the cost of extra cleaning and sanitizing by both staff and outside services may or may not be reimbursable, but she plans to submit those costs because, unlike some other agencies, Central San has not had the option of shutting down during the pandemic. Mr. Bailey said staff will prepare an updated report for future presentation to the Board summarizing all COVID-19-related expenditures and what may or may not be recoverable through FEMA. COMMITTEE ACTION: Recommended Board approval and requested additional information as noted above. b. Receive Quarterly Financial Review for Quarter Ended December 31, 2020 The following items were discussed: Vacancy Factor: Mr. Mizuno noted that the vacancy factor was the biggest reason for year-to-date Operations and Maintenance expenses being under budget. Chair Pilecki noted that for many years a 3% vacancy factor was used for budgeting purposes, but it was lowered to 2% about five years ago. He suggested staff may want to investigate the reasons for making that change. Prior Year Roll-Over of Capital Expenditures: Chair Pilecki noted that each year all unused capital project appropriations from the prior year roll over to the next budget; however, the roll-over amount never seems to be fully utilized. Mr. Leiber said staff has been investigating alternative options, including funding the future capital budgets in the rate plan at only 90-95% of anticipated spending, rather than the 100% assumption that is currently used (with the difference applied to the final years in the 10-year financial plan). He said staff plans to raise this issue for discussion at the March 25, 2021 Financial Planning Workshop. Sewer Service Charges (page 13 of Quarterly Report): Member McGill requested information at a future meeting on the negative year-to-date actual figure of$17,030 in the "Over-the-Counter"category. Mr. Mizuno said the figure related to reimbursements and he would provide detail at the next meeting. Capital Spendinq Trend Report (page 30 of Quarterly Report): Upon discussion, it was agreed that the linear dotted line (90% Target) should be March 4, 2021 Regular Board Meeting Agenda Packet- Page 129 of 131 Page 6 of 7 Finance Committee Minutes February 23, 2021 Page 5 deleted on future Capital Spending Trend reports because it can be confusing when compared to the green line on the chart, representing 90% of targeted spending. It was also noted that the difference between actual year-to-date capital spending (red line) and the green line was primarily attributable to a backlog in processing construction invoices within the new ERP system. Mr. Lopez said staff is doing everything possible to catch up but it has been a struggle and may take a few more months to be fully caught up. Mr. Mizuno said all construction projects are now tracked as purchase orders in the new Oracle system so encumbrances/contractual commitments can be monitored, per prior Board request. But the system is less forgiving and processing the invoices has taken longer. It is hoped that this will improve going forward. COMMITTEE ACTION: Recommended Board receipt and requested additional information as noted above. C. Review draft Position Paper to conduct a public hearing to consider amendments to Exhibit A of Ordinance No. 309, "An uncodified ordinance of the Central Contra Costa Sanitary District adopting an updated schedule of capacity fees, rates and charges" and to consider the interest rate charged for the non-residential capacity fee installment payment program Ms. Gemmell reminded the Committee that at the last meeting they had reviewed various proposed changes to the District Code, including changes to the District's Capacity Use Charge program. The hearing on those changes has been set for March 18, 2021. As a result of those changes and the Board's desire to revise the methodology for calculating the interest rate on fee installment payments, it will be necessary to amend Exhibit A of Ordinance No. 309, which is the current Schedule of Capacity Fees, Rates and Charges. The public hearing on that amendment will be held on March 18 as well. Mr. Brightbill explained the proposed changes to the interest rate, noting that it would be updated each year, and that the basis for setting the annual interest rate was specified in the Position Paper. Staff was asked to make clear in the Position Paper the Board's options with respect to policy decisions about whether to extend the new interest rates to existing capacity fee installment agreements, whether the rate will be fixed for the duration of any new agreements, etc. Ms. Gemmell said the purpose behind the proposed Code changes was to have a consistent methodology for calculating capacity fee installment payments. In response to the suggestion for an end date on the proposed interest rate, Mr. Brightbill asked what would happen if the Board does not act prior to the expiration of the rate. Mr. Alm said some of the other fee ordinances state the current rate will remain in place until modified by the Board. Chair Pilecki was comfortable with adding such a clause. March 4, 2021 Regular Board Meeting Agenda Packet- Page 130 of 131 Page 7 of 7 Finance Committee Minutes February 23, 2021 Page 6 Member McGill said it was important for the new program to be easily administered by staff. Chair Pilecki agreed, which was the reason he favored leaving existing capacity fee agreements as is. COMMITTEE ACTION: Reviewed the item and agreed it was appropriate to move it forward to the public hearing currently scheduled for March 18, 2021. 6. Other Items a. Review Risk Management Loss Control Report as of February 8, 2021 COMMITTEE ACTION: Received the report. b. Review Highmark Other Post-Employment Benefits (OPEB) and Pension Prefunding Sub-trust Reports for the Fourth Quarter of calendar year 2020 Mr. Mizuno said the quarterly report was all good news and the Committee Members agreed. Chair Pilecki asked why the District's rate stabilization account was not managed by Highmark. Mr. Mizuno said the account would have to be an irrevocable trust fund to enjoy the same investment discretion as do the OPEB and Pension trusts. Because of this, the investment of funds in the rate stabilization account are limited to more conservative investment options offered by the County through the Local Agency Investment Fund (LAIF). COMMITTEE ACTION: Received the information. 7. Announcements — None. 8. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items COMMITTEE ACTION: Received the list. 9. Future Scheduled Meetings Tuesday, March 23, 2021 at 2:00 p.m. Tuesday, April 27, 2021 at 2:00 p.m. Tuesday, May 25, 2021 at 2:00 p.m. 10. Adjournment— at 4:03 p.m. March 4, 2021 Regular Board Meeting Agenda Packet- Page 131 of 131