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HomeMy WebLinkAboutBOARD MINUTES 03-24-22 (Special, Workshop) PiF .NoENTRAL SAN CENTRAL CONTRA COSTA SANITARY DISTRICT 0 . IMHOFF PLACE, MINUTES* BOARD OF DIRECTORS: DAVID R.WILLIAMS President SPECIAL BOARD MEETING BARBARA D.HOCKETT Multi-Purpose Room President Pro Tem Thursday, March 24, 2022 MARIAHN LAURI=N 2.00 m• MICHAEL R.MCGILL P TAD J.PILECKI Open Session — Multi-Purpose Room (Video recorded) NOTICE This Board of Directors participated in-person in the specified meeting room with a virtual participation option for the public pursuant to findings made by the Board on March 17, 2022, and provisions provided under Assembly Bill 361. The agenda provided options in which members of the public could participate in the meeting. ROLL CALL A special meeting of the Board of Directors was called to order by President Williams at 12:04 p.m. Secretary of the District Katie Young called roll: PRESENT: Members: Hockett, Lauritzen, McGill, Pilecki, Williams ABSENT: Members: None 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 General Manager Roger S. Bailey requested Item 2 be heard as the first item of business. These summary minutes are supplemented by a corresponding video recording available on the District's website at centralsan.org. Book 70— Page 50 CENTRAL CONTRA COSTA SANITARY DISTRICT March 24, 2022 Special Board Meeting Minutes—Book 70-Page 59 FINANCIAL PLANNING WORKSHOP 1. Conduct the Financial Workshop, during which the following will be presented: • Current Financial Condition Review • Financial Plan Update • Debt Timing • Rates • Other Issues / Next Steps This item was heard immediately following Item 2. Director of Finance and Administration Philip Leiber reviewed the recent financial accomplishments and information included in the agenda material on Central San's current financial condition and other factors to be considered in the annual rates check-in and noted that, despite the challenges of COVID-19, the agency was in good financial shape due to previous fiscal discipline policies and initiatives adopted by the Board. He advised that staff is recommending staying the course with respect to the fourth-year rate increase adopted in 2019 for FY 2022-23. Planning and Development Services Division Manager Danea Gemmell provided a financial plan update overviewing slides included in the agenda material. This included the updated Capital Improvement Program size and composition, financial plan assumptions, and recommended course of action, continuing with the previously approved rates for year four of the four-year rate plan, specifically, a $690 flat fee for single family residences, representing a 4.55% increase, which will also be applied to the other rate classes. Ms. Gemmell provided the Board with three scenarios in the 10-year Capital Improvement Plan (CIP), including (1) nutrients, (2) no nutrients, and(3) the Recycled Water Exchange project(Water Exchange) and how each would affect rate increases in the future. Discussion ensued. A lengthy discussion was held regarding the cost sharing of the potential Water Exchange project. Mr. Bailey advised that to the extent the Water Exchange project has a value, staff will negotiate a cost sharing and revenue recovery, relative to cost, and emphasized that no commitments in the near term were being made with respect to those issues. Ms. Gemmell reviewed the rate and debt assumption models included in the presentation and answered minimal questions from the Board. Mr. Leiber reviewed the debt timing considerations included in the agenda material. There was a lengthy discussion about the merits of either using State Revolving Fund(SRF) low-cost financing or issuance of revenue bonds for CIP projects. Mr. Leiber and Ms. Gemmell answered several technical questions from the Board Members. CENTRAL CONTRA COSTA SANITARY DISTRICT March 24, 2022 Special Board Meeting Minutes—Book 70-Page 52 Mr. Leiber explained the conceptual debt timing decision flow chart(slide 39). Key issues included forecasting future interest rates and the likelihood of successful SRF loan applications. Financial consultant PFM analyzed the issue of borrowing now versus later and concluded that borrowing later tentatively appears to have a lower overall cost to Central San, but the gap narrows significantly when considering the following two factors: impact of delay on project cost resulting from the SRF loan process and, secondly, higher project costs with SRF Build America/Buy America spending requirements. Mr. Leiber advised that the staff recommendation is to tentatively accept the results of the analysis, but continue to monitor the situation (i.e., inflation, interest rates, SRF funding outlook, and other project borrowing needs). Mr. Bailey requested the Board give staff broad discretion when completing the designs of all the projects and determining any use of debt timing. The Board Members indicated a general consensus in support of financing capital projects with a revenue bond, especially as staff would monitor the financial factors. District Counsel Kenton Alm advised the Board that in order to initiate a new project and bonds, staff will be required to return to the Board for approval. Ms. Gemmell reviewed the Sewer Service Charge rate portion of the presentation included in the agenda material, which included a comparison of Central San rates to peer agencies, rate trend, and a recommendation for FY 2022-23 rate consideration (year four of the four-year rate plan). In response to a question posed by Member Pilecki, Ms. Gemmell advised that the rate comparison chart does not include other entities'potential rate increases for FY 2022-23. Member Lauritzen thanked staff for adding the median to the rate comparison as she requested last year. Ms. Gemmell also reviewed recycled water rates which were also approved in April 2019 with a 3% rate increase for FY 2022-23. Board member discussion ensued. President Williams expressed concerns about moving forward without recovering full costs of recycled water. Mr. Bailey stated, at this point, the District needs to focus on cost recovery of operational and maintenance costs. Ms. Gemmell indicated that next year the recycled water cost of service will be brought back to the Board for a new multi-year rate schedule and the Board will be able to further review this matter at that time. In response to a question posed by Member Hockett, Ms. Gemmell confirmed this upcoming year was year four of the multi-year rate plan and next year staff will bring a full analysis and subsequent multi-year rate schedule for Board consideration. CENTRAL CONTRA COSTA SANITARY DISTRICT March 24, 2022 Special Board Meeting Minutes—Book 70-Page 53 Finally, Ms. Gemmell reviewed the upcoming dates regarding the rate and budget public hearings. BOARD ACTION: Conducted the workshop and provided direction to staff. Upon conclusion of this item, the agenda moved to Item 3. OTHER BOARD ACTION ITEMS 2. Adopt Resolution No. 2022-020 outlining the employment salary and benefits of the unrepresented at-will employees' group and rescind Resolution No. 2021-012 This item was heard as the first order of business as requested by Mr. Bailey. BOARD ACTION: Motion was made by Member Hockett and seconded by Member McGill to approve the terms presented and adopt the proposed resolution. Motion passed by unanimous vote. Member McGill thanked Mr. Bailey for bringing this item forward today as it is a critical element, and he was pleased to support the unrepresented group with the approval of the resolution. Upon conclusion of this item, the Board reverted back to the original agenda sequence, hearing Item 9. 3. Hold discussion to consider a new Board Policy, BP 048 - Budget Finance Manager Kevin Mizuno reviewed the Position Paper included in the agenda materials. Member Pilecki advised that the Administration Committee reviewed this Board Policy and with the eight items mentioned in the Position Paper recommended by the Committee and incorporated into the policy, he felt comfortable approving the policy. President Williams requested striking Item 8 on the policy, in regard to "development of a collaborative district wide effort" He opined this statement should not be included in the Board Policy. All Board Members concurred. BOARD ACTION: Motion was made by Member Pilecki and seconded by Member Hockett to adopt the new Board Policy No. BP 048 as amended above. Motion passed by unanimous vote. ANNOUNCEMENTS 4. General Manage — None. CENTRAL CONTRA COSTA SANITARY DISTRICT March 24, 2022 Special Board Meeting Minutes—Book 70-Page 54 5. Counsel for the District— None. 6. Secretary of the District— None. EMERGENCY SITUATIONS 7. Confirm General Manager's designation of an emergency on March 22, 2022 regarding a broken force main in Orinda Mr. Bailey provided a general overview of the emergency that occurred on March 22. Director of Engineering and Technical Services Jean-Marc Petit provided further information on the emergency. Mr. Alm advised since this item is to confirm an emergency there will need to be a two-third's majority vote to continue to spend funds on the work. At each additional Board meeting, staff will provide an update on the status until such time funds are no longer being spent on this issue. Communications and Governmental Relations Manager Emily Barnett advised that there had been no customer complaints or media inquiries at this time. She passed along kudos from East Bay Municipal Utility District regarding the response time and action taken from Central San staff and crews. BOARD ACTION: Motion was made by Member Pilecki and seconded by Member McGill to confirm designation of an emergency regarding a broken force main in Orinda. Motion passed by unanimous vote. ADJOURNMENT The meeting was adjourned at 2:56 p.m. =o xv David R. Williams President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED- Katie Young Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California