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HomeMy WebLinkAboutFinance MINUTES 08-24-21 Page 2 of 9 I CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF SPECIAL 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, August 24, 2021 FAX.- (925)372-0192 12:00 p.m. www.centralsan.org (All attendees participated via videoconference) Committee: Chair Tad Pilecki Member Mike McGill Staff.- Roger S. Bailey, General Manager Katie Young, Secretary of the District Philip Leiber, Director of Finance and Administration Benjamin Johnson, Internal Auditor Danea Gemmell, Planning and Development Services Division Manager (left during Item 5.a.) Stephanie King, Purchasing and Materials Manager (left after Item 4.a.) Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer (left after Item 4.b.) Shari Deutsch, Risk Management Administrator Amelia Berumen, Assistant to the Secretary of the District 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 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. 2. Call Meeting to Order Chair Pilecki called the meeting to order at 12:00 p.m. September 2, 2021 Regular Board Meeting Agenda Packet- Page 192 of 199 Page 3 of 9 Finance Committee Minutes August 24, 2021 Page 2 3. Public Comments No comments. 4. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred July 9, 2021 through August 12, 2021 Staff responded to questions from the Committee provided in advance and during the meeting. Notable discussions, some with future staff action, are summarized below. Contra Costa Health Services, Check 303061, $53,159 (P. 5 of 78) Question was posed why Collection System Operations (CSO) services were not included in the listing of invoice payments. It was explained that there are two separate type of permit transactions with the County Health Services. Invoices for fuel tank items are charged to CSO; the other for hazardous materials (hazmat) get charge to the Safety and Pump Station divisions. This particular batch of invoices had none associated to CSO charges. Mr. Mizuno stated the largest invoice shown was due to a significant increase in the hazmat permit bill that was associated with lead contamination at a treatment plant construction location and a large spill earlier in the year. He advised that the Safety division expects a large bill related to CSO charges. It appeared only a few invoices were paid the prior month and a trend indicates the invoices hit at the start of the fiscal year. Member McGill indicated he would like more information on the hazmat billings, noting the various invoice price differences and lead contamination concerns. Chair Pilecki would like the update to include information on the spoils pile CSO generates, whether it is considered hazardous materials and how it is treated categorically. Staff will delve deeper into this matter and provide a summary update at the next meeting. Keller Canyon Landfill, Check 303072, $28,716.18 (P. 9 of 78) Question was whether this payment was for environmental or disposal fees and if associated to the CSO spoils pile. Mr. Mizuno confirmed the expense was a disposal fee for removing CSO spoils. The fee is charged by the landfill for the annual task, and a separate hazmat fee is charged by the County (mentioned above to be reported back). Chair Pilecki noted the description listed environmental fee rather than disposal fee and recommended the description mannerism be looked into for future listings. September 2, 2021 Regular Board Meeting Agenda Packet- Page 193 of 199 Page 4 of 9 Finance Committee Minutes August 24, 2021 Page 3 Meyers Nave (Legal Services), Check 303216, $6,989.70 (p. 40 of 78) Member McGill inquired about receiving an update on legal matter expenses by issue that has not occurred in some time since he is curious about the amount of money the District is spending. There was some discussion and due to the sensitivity of some matters, the amount of detail to be provided will be limited. Staff will compile a summary of costs over an annual basis for the Committee to review and discuss. It was concurred that it would be good to understand the annual legal costs and its components. Banksia Landscape, Inc., Check 303243, $3,059.32 (p. 46 of 78) Mr. Leiber confirmed this payment is for a new landscape services provider that was selected by a Request for Proposal process, which considered price and other evaluated items. He stated this contract will provide a 6% savings compared to the last contracted vendor. P-Card Expenses and cross-check review challenqes Chair Pilecki inquired about a $4,994 p-card charge for COVID Test Kits and asked for an explanation of using this type of testing since it is not considered the most reliable mechanism for actual infection detection. In short, a large group at CSO had an exposure, this was a preliminary test as a `quick-check'for the potential large crew. Mr. Bailey indicated the District does require a more efficient test to confirm a clear result. As in prior Committee meetings, the challenges associated to reviewing and reconciling p-card expenses was discussed at some length. Suggestions were brought up to potentially repurpose columns in the Expense Report (Attachment 3) that are not considered to be of particular value. For the sake of time to hear the other agenda items, Mr. Bailey asked staff to investigate further and report back any update at a future meeting. COMMITTEE ACTION: Recommended Board approval. b. Review draft Position Paper to conduct a public hearing to receive public comment on adopting proposed uncodified Ordinance No. to establish a reimbursement fee applicable to parcels which could connect to Job 6712 on La Sonoma Way in Alamo Mr. Brightbill provided a background and discussed the terms of the program for two other potential future connections. In response to a question by Chair Pilecki, Mr. Brightbill stated there is a sunset clause of 20 years for reimbursement fees in the District Code. Should either of the other two properties elect to connect to the public sewer within that timeframe, the District would collect the reimbursement fee and disburse it to the job installer. September 2, 2021 Regular Board Meeting Agenda Packet- Page 194 of 199 Page 5 of 9 Finance Committee Minutes August 24, 2021 Page 4 Member McGill inquired about the stated 1.5-inch diameter pipe and whether it was for a high point that dropped down. Mr. Brightbill explained this area has a flat slope and shallow grades in the area and will therefore use a multiple-user low pressure pumping system (MULPPS) with a double-walled pressure main in the street. The homeowner will have a pump with a check valve so the site can pump waste to the pressure main and then to a gravity manhole. Although gravity systems are preferred, this type of system allows Central San to provide a service to residents that are not easy to serve. A MULPPS usually allows mains in the street to be extended rather than using mains in back yards. Ms. Gemmell added this type of design is used as a last resort option. Mr. Brightbill pointed out that MULPPS systems are not out of the ordinary and are listed in Central San's Standard Specifications. Chair Pilecki offered this type of connection has been used for a while and noted the homeowner is responsible for the service to the main in the street, including the pumps. After some discussion, it was noted that the location map included needed to be updated prior to the public hearing. COMMITTEE ACTION: Recommended Board approval. C. Review draft Position Paper to consider adopting an amendment to the: 1) Fiscal Year (FY) 2021-22 Central San budget for the following funds: Operations and Maintenance(O&M), and Debt Service related to changes in expenditures and funding sources; and 2) FY 2021-22 funding source change to the Sewer Construction fund Mr. Leiber provided a brief recap of the recent unfunded actuarial accrued liability (UAAL) payoff in June and the budget amendments that must occur as a result of the borrowing and UAAL reduction transaction. This is the second budget amendment request resulting from the UAAL transaction, with the FY 2020-21 O&M Budget amended to allow for the pay-off to CCCERAI, and now the FY 2021-22 budgets also amended to show the effects of that payoff. The effect is positive and will result in a reduction in overall spending by $1.074 million. This will provide for less pressure on rates. With this paydown, two sub-funds require changes in expenditures and funding sources; and the Sewer Construction Fund requires a change in funding sources, but not expenditures. Contra Costa County Employees' Retirement Association September 2, 2021 Regular Board Meeting Agenda Packet- Page 195 of 199 Page 6 of 9 Finance Committee Minutes August 24, 2021 Page 5 Mr. Leiber stated he and staff debated on the best way to properly show these changes and chose to do an appendix that shows changes to a number of the tables in the Budget book. Table 1 (p. 1 of the appendix) shows the $10.4 million increase to expenditures for the Debt Service Fund for payback of the Certificates of Participation (COPs), as well as the reduction in O&M expenditures of $11.5 million. Table 7 (p. 4 of the appendix) shows three changes to O&M expenditures. Two were housekeeping items, including a correction of life insurance expenditures, and an increase to Board travel to bring back to where it had been for a number of years. The main change is the reduced UAAL contribution of$11.5 million. Table 13 (p. 9 of the appendix) shows changes to the funding sources for the Sewer Construction Fund, including reduction of ad valorem tax and Sewer Service Charge (SSC), which was backfilled with the COP proceeds totaling $34.5 million. Mr. Leiber acknowledged the many moving pieces related to funding sources and expenditures, but the bottom line is expenditures will be down by$1.1 million. Mr. Bailey highlighted the importance that the net impact is a reduction. The main need for the budget amendment is the large debt service payment not previously reflected in the FY 2021-22 Budget, and the need to be transparent for not only the Board's approval but also for the public. Otherwise, he noted, moving money around would not need this level of attention for a net decrease. Mr. Leiber concurred and said Board authority is required to spend more in the Debt Service Fund. Chair Pilecki also noted that the process of moving money around could impact compliance with the reserve policies; however, these tables clearly show that these amendments demonstrate that the District continues to follow those policies. Mr. Leiber confirmed by sharing that Table 13 (p. 5) shows the compliance with the reserve policy. He noted at the bottom of the table, it all comes together and the results expected are seen. The reserves will be $1.3 million higher, which are driven by the net reduction in spending, updating FY 2020- 21 SSC collections, and an updated City of Concord revenue estimate for FY 202-22. The City of Concord will also share in the savings from the UAAL payoff, and the resulting reduction in their revenue to Central San is reflected. September 2, 2021 Regular Board Meeting Agenda Packet- Page 196 of 199 Page 7 of 9 Finance Committee Minutes August 24, 2021 Page 6 The Committee commended Mr. Leiber for his write-up and presentation that simplified a very complicated matter that was put into a logical order. With regard to the COPs, the Committee requested an annual report be provided with respect to the UAAL related savings. Mr. Leiber indicated that such reports would be provided in the future. COMMITTEE ACTION: Recommended Board approval. 5. Other Items a. Receive Highmark Other Post-Employment Benefits (OPEB) and Pension Prefunding Sub-trust Reports for the Second Quarter of calendar year 2021 Mr. Mizuno reviewed the information summarized in the agenda's memorandum. He noted the $47,000 balance remaining in the Pension Prefunding Trust fund is due to an estimate used for the trust balance garnered from the May month-end report. It was recommended the small balance remain in an open trust fund until a policy direction from the Board is made otherwise. Although a calculated low-risk, UAAL could gradually return. With an open trust account, deposits could be easily made to account for some UAAL should it appear in the future. COMMITTEE ACTION: Received the information. b. Review Risk Management Loss Control Report as of August 17, 2021 Ms. Deutsch reviewed the report and highlighted a recent overflow event that affected three units in a condominium complex. The overflow occurred due to a blockage in the sewer main. Additionally, all three units tested positive for asbestos; therefore, specialty contractor services will be needed. A separate issue of this situation is that the complex did not have a code required overflow protection device (OPD) found anywhere on its grounds. The District's general position is that it will handle an overflow caused by a problem in the line. However, had the complex had the OPD installed it would have minimized the damages. The complex will be put on notice. Should an event occur in the future, a different approach will be taken to remedy the situation. Ms. Deutsch mentioned the OPD topic has been brought before the Board before to discuss how to handle such situations where no OPD is installed. She asked whether the Committee would like this discussion to be revisited. The Committee concurred a future discussion item would be worthwhile. COMMITTEE ACTION: Received the report. September 2, 2021 Regular Board Meeting Agenda Packet- Page 197 of 199 Page 8 of 9 Finance Committee Minutes August 24, 2021 Page 7 C. Receive annual report on status of loans under Board Policy No. BP 001 - Employee Computer Purchase Assistance Program Mr. Mizuno provided the annual program report and noted six loans were outstanding at the end of the fiscal year. The program has retained a consistent popularity over its 25 year tenure. However, at the policy's next biennial review, Mr. Mizuno advised that staff may consider revising its language to include a better explanation of its potential use and consider an increase to the threshold, although the threshold has not been reached and may not be necessary. The Committee concurred the program is working well and should continue. COMMITTEE ACTION: Received the report. 6. Announcements Mr. Leiber shared that this will be the first year under the new Oracle Enterprise Resource Planning software that staff will complete a fiscal year-end closure. Although not unanticipated, this change has proven to be quite challenging and new situations are being faced by staff to be able to close the books. Staff is working with the vendor to work through these issues. As such, he advised there may be a delay in producing the initial monthly financial statements for the new year, since those cannot be released until June is closed. There is no alarm to these trials but staff wanted the Committee to be apprised of potential delays. The Finance Division's top priority is to successfully and accurately wrap-up the fiscal year as soon as possible. 7. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items The Committee concurred on the following future agenda item topics: • Receive an update of legal services expenses and components over an annual timeframe for review and discussion. • Receive an annual update of COP activities and UAAL savings. • Future discussion on OPD requirements and event responsibilities, including any impact to Central San coming out of the City of Oroville lawsuit. • Update at next Committee meeting of fiscal year end progress and complications status, including any impacts to the Comprehensive Annual Financing Report and year-end audit. COMMITTEE ACTION: Received the list and provided input to staff. September 2, 2021 Regular Board Meeting Agenda Packet- Page 198 of 199 Page 9 of 9 Finance Committee Minutes August 24, 2021 Page 8 8. Future Scheduled Meetings Tuesday, September 28, 2021 at 2:00 p.m. Tuesday, October 26, 2021 at 2:00 p.m. Monday, November 22, 2021 at 2:00 p.m. 9. Adjournment— at 1:17 p.m. September 2, 2021 Regular Board Meeting Agenda Packet- Page 199 of 199