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HomeMy WebLinkAboutFinance MINUTES 03-14-22 (Special) Page 2 of 9 I CENTRAL SAN CENTRAL CONTRA • • IMHOFF PLACE, MARTINEZ, CA 94553-A392 SPECIAL MEETING OF THE BOARD OF DIRECTORS: DAVID R. WILLIAMS CENTRAL CONTRA COSTA President SANITARY DISTRICT BARBARA D.HOCKETT President Pro Tens FINANCE COMMITTEE MARIAHNLAURITZEN MICHAEL R.MCGILL TAD J PILECKI MINUTES PHONE: (925)228-9500 Monday, March 14, 2022 FAX: (925)372-0192 2:00 p.m. www.centralsan.org (All attendees participated via videoconference) Committee: Chair Mike McGill Member David Williams Guest: Andrew Brown, HighMark Capital Management (left after Item 5.a.) Staff. Roger S. Bailey, General Manager (joined during Item 5.a. and left during Item 5.b.) Philip Leiber, Director of Finance and Administration Jean-Marc Petit, Director of Engineering and Technical Services Qoined during Item 5.a.) Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer (left during Item 4.b.) Olivia Ruiz, Accounting Supervisor Chris Thomas, Accounting Supervisor (left after Item 4.b.) Benjamin Johnson, Internal Auditor Shari Deutsch, Risk Management Administrator Laci Kolc, Risk Management Specialist Qoined during- and left after Item 5.b.) Amelia Berumen, Assistant to the Secretary of the District 1. Notice This meeting was held virtually in accordance with the provisions stipulated in Assembly Bill (AB) 361 and adopted by the Central San Board of Directors on January 13, 2022 via Resolution 2022-009. The agenda included instructions with options in which the public could participate in the meeting. 2. Call Meeting to Order Chair McGill called the meeting to order at 2.00 p.m. April 7, 2022 Regular Board Meeting Agenda Packet- Page 157 of 194 Page 3 of 9 Finance Committee Minutes March 14, 2022 Page 2 3. Public Comments No comments. Chair McGill announced Item 5.a. would be heard as the first item of business. 4. Items for Committee Recommendation to the Board Item 4.a. and the balance of the agenda was heard at the conclusion of Item 5.a. a. Receive Financial Overview through the month of January 2022 (Continued from February 22, 2022 meeting) Mr. Mizuno provided an overview of the January 2022 graphs carried over from the prior Committee meeting, and advised that the February 2022 financial overview would be presented to the Committee next week at its regularly scheduled meeting. COMMITTEE ACTION: Recommended Board receipt. b. Receive Quarterly Financial Review for quarter ended December 31, 2021 (Continued from February 22, 2022 meeting) Mr. Mizuno reviewed the second quarter report as provided in the agenda materials and responded to limited questions. Items of particular note are summarized below. Expenses. • Page 7, Operations and Maintenance (O&M) expenses were $36.3 million through the second quarter. The bulk of the variance was attributed to the "Other Purchased Services"category, a 56% variance, which includes professional, technical, and administrative services. Mr. Mizuno stated staff is monitoring these activities. As it pertained to salaries and benefits (first three listed categories), the expense variance was largely attributable to there being a 5.2% vacancy factor for this second quarter compared to the 3% assumption used in the budget. • Page 14, Capital expenditures were at $33.9 million with an expectation that expenses will increase in the second half of the fiscal year, consistent with the "s-curve"spending trend that occurs each year in the last two quarters of the fiscal year. Revenues.- Page evenues.Page 5, O&M favorable revenue variance for the quarter was $1.1 million or 2%, which is largely attributable to the non-residential component of the Sewer Service Charge (SSC) coming in higher than projected. This component was budgeted conservatively due to the pandemic; April 7, 2022 Regular Board Meeting Agenda Packet- Page 158 of 194 Page 4 of 9 Finance Committee Minutes March 14, 2022 Page 3 however, it has done better than originally projected. It was noted the SSC revenues are expected to be approximately 2.6% over budget at year-end. • Page 12, Capital revenue shows a similar trend to O&M and had a modest favorable revenue variance of only 1.1%. • There was some discussion regarding the secured property tax variance shown on page 13. Mr. Mizuno explained the County allocates payments three times per year(December, April, and June) based on their actual collections to date. Thus, when developing the budget, staff does not have those exact figures and estimates conservatively based on the current year. He noted the total percentage increase was 4% for the service area territory that may need to be adjusted to 4-5% by year-end. In response to a question posed by Chair McGill pertaining to "bridging," Mr. Mizuno stated 5/12 of the following year's O&M budget is used as a reserve for such purposes. The City of Concord is billed following the close of the fiscal year, with payment typically received in early fall. COMMITTEE ACTION: Recommended Board receipt. C. Receive Fiscal Year 2020-21 Risk Management Annual Report (Continued from February 22, 2022 meeting) Ms. Deutsch reviewed the prior fiscal year activities included in the agenda materials and responded to limited questions. As it pertained to Emergency Operations planning, Ms. Deutsch replied to Chair McGill's inquiry of operating in an emergency during the pandemic. Although no drill has been conducted due to the complexities of many staff working remotely, there are contingency plans in place in the event of an actual event. Emergency Operations could be mobilized on a smaller scale if needed, and the County has had virtual meetings to coordinate any required actions and contingency plans. Ms. Deutsch stated emergency response activities would need to rely on the actual training staff has already received in prior drills. Moreover, she noted that the District has been operating in a "state of continuity event"since the pandemic struck. In continued reference to the pandemic, Ms. Deutsch noted that the Everbridge Emergency Notification System has been fully updated with all employees. The pandemic provided an opportunity for this administrative function to be completed and the system is ready to send test messages. COMMITTEE ACTION: Recommended Board receipt. April 7, 2022 Regular Board Meeting Agenda Packet- Page 159 of 194 Page 5 of 9 Finance Committee Minutes March 14, 2022 Page 4 5. Other Items a. Receive Highmark Other Post-Employment Benefits (OPEB) and Pension Prefunding Sub-trust Reports for the Fourth Quarter of calendar year 2021 (Continued from February 22, 2022 meeting) This item was heard out of order as the first item of business. Mr. Brown provided an update of current market conditions and described an increase of uncertainty in the today's environment. Changes continue to develop and are being closely monitored. Regarding the 2022 Assumptions (p. 7 of 25) further changes have developed. The GDP growth estimate was revised downward to 3.2-3.9% last week, and it is possible to see sustained energy/gas prices that could further cut economic growth this year. The core PCE measure of inflation increased significantly which could become an issue. Since December 2021 (this report), the asset equity allocation has been lowered to the 48% level from the 53% shown on the graph provided. Mr. Brown discussed risk mitigation positioning and that 2% of that mitigation occurred earlier in the day. In reply to Chair McGill of recommendations, Mr. Brown stated there were no recommendations or actions to be considered today, but noted a change to allocation range may be considered at some point. In regard to pension funding, there was some discussion of the recent liabilities paydown and current market activity. Mr. Leiber explained the outcome is subject to returns each year and would not be known in certainty for seven years. Although there is a lot of volatility in the current market, he expects a positive return over seven years, especially since the paydown was made at a 0.38% borrowing rate. The seven year period relates to the bond payoff term of the pension debt bonds, which was designed to mirror the remaining amortization period of the District's UAAL' absent the bond transaction. Mr. Brown concurred with Mr. Leiber's statement, especially with the significance of the low borrowing rate. Staff stated the today's discussion was for informational purposes and there were no items requested of the Committee to focus upon at this time. COMMITTEE ACTION: Received the report. UAAL defined as unfunded actuarially accrued liability April 7, 2022 Regular Board Meeting Agenda Packet- Page 160 of 194 Page 6 of 9 Finance Committee Minutes March 14, 2022 Page 5 b.* Review Risk Management Loss Control Report, updated as of February 24, 2022 (Continued from February 22, 2022 meeting) Ms. Deutsch stated that although this agenda packet provided an updated report, it had been further refined since the agenda posting to include a column for payment reference (attached). Ms. Deutsch noted the additional information was recommended at the prior Committee meeting, has been reconciled to claimant/payee, and proved to be a useful exercise. COMMITTEE ACTION: Received the report. C. Receive update of COVID-19 related costs reimbursement from State and Federal programs Mr. Leiber provided an update on based on three key items. 1. Staff applied for cost reimbursement of limited funds through the state for special districts. Payment was received just shy of a million dollars based on a claim submitted of approximately$3 million. 2. A claim in underway to submit through FEMA2. The claim period has not closed; therefore, eligible expenditures are still being accumulated for consideration. 3. A new state program has been developed for customer's that may have arrearages with wastewater agencies. Originally this program was setup for drinking water agencies and was funded with a $985 million program that recently closed; with just over$300 million dispersed. With funds remaining, the program was expanded to include wastewater agencies. Staff participated in a discussion panel last fall on the set-up of the program. It was noted that a large number of wastewater agencies are not direct billers, including Central San, and are paid through property tax bills. From these panel discussions, the program was structured to allow for participation by agencies with billing agents. Further discussion ensued. Mr. Leiber also discussed reaching out to the County regarding potentially participating in the program. It was tentatively concluded that there was not a compelling reason to participate in light of several complicating factors, including the effort to obtain necessary information and the likely limited recovery given the relatively low default level seen by the County of property tax bills during the relevant event. 2 FEMA defined as Federal Emergency Management Agency April 7, 2022 Regular Board Meeting Agenda Packet- Page 161 of 194 Page 7 of 9 Finance Committee Minutes March 14, 2022 Page 6 Despite this, with the deadline to apply being April 1, staff thought it was worthy of the Committee's awareness. In response to Member Williams, Mr. Leiber stated there was no financial consequence to Central San whether applied for or not since the District receives full payment from the County given their participation in the Teeter plan. Chair McGill added he is a firm believer to protect the interests of ratepayers; however, concurs with Member Williams and staff from a policy perspective and the amount of time and effort to evaluate could be viewed as a non-worthwhile use of public funds. COMMITTEE ACTION: Received the update. 6. Announcements Chair McGill noted the prior agenda was too full, and today's special meeting took some time to get through the balance of those items. He appreciated the efforts made to have this additional meeting to hold these discussions. 7. Future Scheduled Meetings Tuesday, March 22, 2022 at 2:00 p.m. Tuesday, April 19, 2022 at 2:00 p.m. Monday, May 9, 2022 at 2:30 p.m. (Special meeting) 8. Adjournment— at 3:30 p.m. * Attachment April 7, 2022 Regular Board Meeting Agenda Packet- Page 162 of 194 CCCSD 2020-21 Loss Control Report Item 5.b. (Handout) 0 New Incident 0 Ongoing Incident Prior FY Litigated Updated report as presented OVERFLOWS Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to/Ck# Type Paid* Paid** Open A 2019014 SSO 07/26/18 Jane Kappel 25 Arlene Lane Walnut Creek $ 10,000.00 $ $ $ 10,000.00 Denied Closed 1 2022001 SSO 08/15/21 3 Homeowners 4,6,7 Ascot Ct Moraga $ - $ 17,276.33 $ ServiceMaster/100058 la Shampa Chakravarty 4 Ascot Court Moraga $ $ - $ 5,870.01 Claimant/100051 lb Yanshan Li 7 Ascot Court Moraga $ $ $ 17,342.17 Claimant/100068 1c Gabriela Garcia-Sanch 6 Ascot Court Moraga $ $ $ 14,500.00 $ 54,988.51 Claimant/100065 Closed 2 2022003 SSO 09/07/21 Mike Kelly 327 4th Ave S Pleasant Hill $ $ 2,064.11 $ - $ 2,064.11 Ext OF SvcM/100055 Closed 3 2022009 SSO 10/16/21 Lesley Ramos Lee 839 Glen Rd Danville $ $ 13,557.34 $ - ServiceMaster/100062 $ $ - $ 27,160.00 $ 40,717.34 Claimant/100049 Closed 4 2022011 SSO 10/21/21 Michael Manlapeg 2086 P H Road Pleasant Hill $ $ 13,465.25 $ - ServiceMaster/100058 $ $ 2,205.08 $ $ 15,670.33 Laf Park Hotel Open 5 2022012 SSO 10/28/21 John Ebisui 81 Bolla Ave Alamo $ 2,500.00 $ - $ Ext OF $ - $ 2,474.97 $ $ 4,974.97 ServiceMaster/100070 Closed 6 2022019 SSO 10/25-27/21 D.Goldstein/A.Nocen 3474 Tice Creek Dr.#WC $ $ - $ 537.00 $ 537.00 Claimant/100064 Closed 7 2022020 SSO 1/2-3/22 IROC Hospitality 3290 Phillips Rd Lafayette $ $ $ 9,002.80 $ 9,002.80 Claimant/100066 Closed 8 2022023 GL 12/15/21 Bruce Poster 3474 Tice Creek Dr.#Walnut Creek $ $ $ 109.92 $ 109.92 Claimant/100059 Open 9 2022024 SSO 1 2/17/22 J DeLorme 1005 Homestead WC $ 15,000.00 $ $ - $ 15,000.00 OF,Exterior Total-SSO $ 27,500.00 $ 51,043.08 $ 74,521.90 $ 153,064.98 OTHER LIABILITY CLAIMS Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to/Ck# Type Paid* Paid** Open D 2021015 GL 12/14/20 A R Johnson(GAL) M73,205 Alamo View Walnut Creek $ 25,000.00 $ $ $ 25,000.00 PI:In Discovery Open 1 2022002 GL 2/01/2017+ EBMUD 17-29 Chapel Drive Lafayette $ 25,000.00 $ $ $ 25,000.00 Landslide,Tolling Agt Closed 2 2022004 GL 2019 Joan Lindroth 11 Lost Valley Orinda $ - $ $ $ - Denied Open 3 2022005 GL Apr/May 2021 Ali Nikban 4 Lost Valley Orinda $ 5,500.00 $ $ $ 5,500.00 Prop Dam by Contractor Closed 4 2022013 GL 9/16/21 Steve Depper 31 Muth Orinda $ - $ $ 3,040.00 $ 3,040.00 Claimant/100052 Open 5 2022015 GL 5/8/21 Robin Hayden(Rep) Mariposa&Sheri Ln Danville $ 25,000.00 $ $ - $ 25,000.00 PI:Fall/Hip Fracture Open 6 2022016 GL 8/26/21 Robert Redmond Miranda Road Alamo $ 25,000.00 $ $ $ 25,000.00 PI:Teeth/Head Injury Closed 7 2022017 GL 9/16/21 Steve Depper 31 Muth Orinda $ - $ $ $ - Denied Closed 8 2022018 GL 9/24/21 Shawna Walker 7 Lost Valley Orinda $ - $ $ $ - Settled by Contractor Total-Liab $ 105,500.00 $ $ 3,040.00 $ 108,540.00 *Paid per GM Authority " Board approval required to pay claims of$50,000 or more April 7, 2022 Regular Board Meeting Agenda Packet- Page 163 of 194 CCCSD 2020-21 Loss Control Report PLUMBING REIMBURSEMENTS Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to 1 Ck# Type PaidPaid** Closed 1 2022006 PL 09/28121 Irving M.Ford 583 Monarch Ridge Walnut Creek $ 179.00 $ 179.00 Claimant 1100048 Total-PL $ - $ $ 179.00 $ 179.00 AUTO INCIDENTS Status # ID# Loss DOL Other Party Location Veh# Reserve Expenses Loss Incident Total Paid to 1 Ck# Type Paid* Paid** Closed 1 2022007 APD 7130121 N/A Concord 281 $ $ $ 5,070.91 $ 5,070.91 CarStar Russo/303864 Closed 2 2022014 APD 10/15/21 N/A Concord 318 $ $ $ 1,747.02 $ 1,747.02 Earl Scheib/304824 Closed 3 2022022 AL 11116121 Ivan Gutierrez Pleasant Hill 313 $ $ $ 670.21 $ 670.21 Claimant 1100061 Total-A to $ - $ $ 7,488.14 $ 7,488.14 CENTRAL SAN'S PROPERTY LOSSES Status # ID# Loss DOL Other Party Address City Subrogation Expenses Loss Cost Incident Total Paid to I Ck# Type Paid* Closed 1 2022008 Prop 8/27/21 Homeless North Border Martinez $ $ 13,377.97 $ $ 13,377.97 SvcM/100054 Closed 2 2022010 Prop 11/1/21 Homeless Anvil Property Martinez $ $ 17,115.26 $ $ 17,115.26 SvcM/Pending Closed 3 2022021 Prop 12/17/21 Homeless Anvil Property Martinez $ $ 1,611.12 $ $ 1,611.12 SvcM/Pending Total-Prop $ - $ 32,104.35 $ - $ 32,104.35 Notes: Prior year closed claims have been removed from report. 3/16/22 Prior year active claims show a letter in the#column to distinguish them from current year claims. *Paid per GM Authority *' Board approval required to pay claims of$50,000 or more April 7, 2022 Regular Board Meeting Agenda Packet- Page 164 of 194