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HomeMy WebLinkAbout20.a. Committee MinutesFinance 04-19-2022 Page 1 of 9 Item 20.a. CENTRALSAN jdf A- hom CENTRAL CONTRA COSTA SANITARY DISTRICT May 5, 2022 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: APRIL 19, 2022 - FINANCE COMMITTEE - CHAIR MCGILLAND PRESIDENT WILLIAMS Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Minutes of 04-19-22 meeting 2. (Handout) Excess General Liability Premium History Charts May 5, 2022 Regular Board Meeting Agenda Packet- Page 246 of 261 Page 2 of 9 r CENTRAL SAN CONTRACENTRAL •STA SANITARY DISTRICT 5019 IMHOFF REGULAR MEETING OF THE BOARD OF DIRECTORS: DAVID R. WILLIAMS CENTRAL CONTRA COSTA President SANITARY DISTRICT BARBARA D.HOCKETT President Pro Tena FINANCE COMMITTEE MARIAHNLAURITZEN MICHAEL R.MCGILL TAD J PILECKI MINUTES PHONE: (925)228-9500 Tuesday, April 19, 2022 FAX.- (925)372-0192 2:00 p.m. www.eentralsan.org (All attendees participated via videoconference) Committee: Chair Mike McGill Member David Williams Guest: Seth Cole, Alliant Insurance Services, Inc. (left after Item 4.a.) Staff: Roger S. Bailey, General Manager (left during Item 5.a.) Katie Young, Secretary of the District Philip Leiber, Director of Finance and Administration Steve McDonald, Director of Operations Jean-Marc Petit, Director of Engineering and Technical Services Dennis Chebotarev, Provisional Information Technology Manager (joined during Item 4.a., left during Item 7) Danea Gemmell, Planning and Development Services Division Manager Edgar Lopez, Capital Projects Division Manager Kevin Mizuno, Finance Manager Thomas Brightbill, Senior Engineer (left after Item 5.c.) Olivia Ruiz, Accounting Supervisor Shari Deutsch, Risk Management Administrator Bryan McGloin, Management Analyst (left after Item 5.c.) Amelia Berumen, Assistant to the Secretary of the District 1. Notice This meeting was conducted virtually in accordance with the provisions stipulated in Assembly Bill 361 and adopted by the Central San Board of Directors on April 7, 2022. The agenda included instructions for options in which the public could participate in the meeting. May 5, 2022 Regular Board Meeting Agenda Packet- Page 247 of 261 Page 3 of 9 Finance Committee Minutes April 19, 2022 Page 2 2. Call Meeting to Order Chair McGill called the meeting to order at 2:03 p.m. 3. Public Comments None. 4. Old Business a.* Receive additional information about the California Sanitation Risk Management Authority (CSRMA) Pooled Liability Program Ms. Deutsch stated today's presentation was to provide further information for consideration of the CSRMA Pooled Liability Program and address any further Committee questions. She then introduced Mr. Seth Cole of Alliant Insurance, representing CSRMA. Mr. Leiber added that the District could find itself in a similar position as last June when faced with the challenges of finding affordable and proper excess general liability insurance within a short time period prior to the program's June 30 expiration date. He added part of the challenge is the timing of rate quotes and the small time window to decide on a renewal or move to another insurance carrier; therefore, he suggested the Board may want to consider delegating the purchase of the best option of insurance coverage to the General Manager when quotes are received in late June (to begin July 1). Mr. Cole presented the information provided in the agenda materials and responded to various questions posed. Mr. Cole state the insurance market has seen significant increases in insurance costs for various reasons. Last year, the commercial liability arena in particular experienced a sizeable increase. He noted rate increases are hard to predict; however, he anticipates further increases this year, but on a smaller scale than last year. Mr. Cole also noted CSRMA is not immune to having to charge rate increases, however, it does provide a more stable renewal cost base as lower value claims are not covered by reinsurance, but rather by the pool's members. In reply to a question posed by Mr. Bailey later in the meeting, Mr. Cole stated CSRMA saw an increase of about 25% compared to the 46.64% Central San experienced last June. A discussion was held regarding the policy and procedure section of the presentation (slide 8). Ms. Deutsch and Mr. Cole provided an overview of Central San's current claims handling process compared to the CSRMA process. In short, the initial contact on claims would still be made by staff, including onsite visits, cleanup coordination, and such routine claims May 5, 2022 Regular Board Meeting Agenda Packet- Page 248 of 261 Page 4 of 9 Finance Committee Minutes April 19, 2022 Page 3 handling response. The most significant difference is that staff would not be adjusting the claim beyond the initial contact. Ms. Deutsch described these differences in more detail, but commented that, in her opinion, initial contact with a claimant is the most critical part of the process, and staff would retain that role. Mr. Cole added that, as a pool member, Central San would have to select outside counsel for litigated cases from amongst CSRMA's approved firms. Since the outside firms currently providing litigation services to Central San are on the CSRMA panel, this would not be an immediate concern. As it pertained to claim payment and deductibles, Mr. Cole explained that CSRMA would pay Central San's claims and then invoice the District to recover settlements with Central San's deductible. Ms. Deutsch provided a historical comparison of rates, as attached. She noted in the Excess Liability Premium chart, the 46.64% increase in FY 2021-22 reflects a need to review options and consider possible change for the future. As it pertained to timing, discussion centered about the initial suggestion of Mr. Leiber to grant authority to the General Manager to purchase the best option for the District at the time of coverage renewal in late June. The Committee concurred for the Board to receive the presentation and information for their consideration and authorization of the best manner to move forward. COMMITTEE ACTION: Received the update and recommended Board receipt of the information for consideration. b. Receive clarification on funding for the Enterprise Resource Planning (ERP) Support contract with Emtec Consulting Services LLC approved at March 17, 2022 Board meeting The Committee had no questions. COMMITTEE ACTION: Received the update. May 5, 2022 Regular Board Meeting Agenda Packet- Page 249 of 261 Page 5 of 9 Finance Committee Minutes April 19, 2022 Page 4 C. Receive update on software expenditures related to DocuSign licenses requested at a prior Finance Committee meeting Mr. Leiber spoke of the complexities of the software pricing approach. Staff determined, after an in-depth review, the number of software licenses procured is at an optimum level and to maintain the same level of software licenses based on usage. Chair McGill commented the matter is well under control and appreciated the update. COMMITTEE ACTION: Received the update. 5. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred March 11, 2022 through April 7, 2022. The Committee was satisfied with the responses provided by staff on the inquiries to certain expenditures. Items of particular note or requiring staff attention include: Check 305430, NRC Environmental Services, Inc., $6,457 (p. 23 of 59) Chair McGill inquired about the described annual soil cap maintenance expense. Mr. Petit stated the cost was associated with an annual inspection to ensure compliance with permit requirements. Mr. Mizuno added the expense was for a one-day inspection, including equipment rental and disposal fee. Chair McGill requested staff provide an informational update at a future meeting. Check 305437, Pittsburg Winnelson, $7,176.50 (p. 24 of 59) A question was posed as to why the division description (Org Unit) of this expense and a handful of other items were listed as "none."Mr. Mizuno explained such items pertain to supplies and material procurements that are typically purchased by the Purchasing and Materials division (warehouse) once inventories reach specified minimum levels. Such purchases are "inventoried"and sit on the balance sheet without an Org Unit until consumed. Once the supplies and materials are consumed in operations, the amount used is expensed to the appropriate Org Unit. Expenses arising from the consumption of supplies and materials would not appear on the monthly check register, as those costs are allocated differently through the inventory subledger. May 5, 2022 Regular Board Meeting Agenda Packet- Page 250 of 261 Page 6 of 9 Finance Committee Minutes April 19, 2022 Page 5 Filter Plant Improvements, District Project 7361 Expenses; (Check 201249, C. Overaa and Company (p. 54); Check 201277, C. Overaa and Company/F&S Bank (p. 57) Chair McGill inquired about two capital project expenses for C. Overaa and Company. Mr. Lopez explained the first payment was to the contractor for work performed; the second was a bank escrow payment, as provided by the contractor at contract award. Chair McGill then inquired about capital expense oversight. Mr. Lopez stated staff provides a quarterly report to the Engineering and Operations Committee, which depicts construction and consultant contract status, as well as project change orders. COMMITTEE ACTION: Recommended Board approval. b. Receive Financial Overview through the month of March 2022 Mr. Mizuno provided a summary of the informational graphs included with the agenda materials. The Committee and staff spoke of the adjusted projection (blue) target line of the Sewer Construction Fund. As discussed at other Finance Committee meetings, the blue line reflects a reduced target based on the significantly revised scope of the large Solids Handling Facility Improvements project. Mr. Mizuno added that the adjustment, in addition to a substantial rollover of unspent project appropriations from the prior fiscal year, as well as other project challenges faced during the pandemic, have created challenges in meeting spending targets in the current and prior fiscal years. Mr. Lopez stated that in addition to the one large project that was pulled, many other projects have also been impacted that were not adjusted. Moreover, Capital Projects will also realize many savings this year as projects close. The sewer renovations projects have received great bids,- therefore, ids;therefore, as projects close the numbers will also drop downward. He plans to close many projects that will return savings to the Capital program, which is typically presented to the Engineering and Operations Committee at fiscal year-end. COMMITTEE ACTION: Recommended Board receipt. C. Review draft Position Paper to conduct a public hearing to receive public comment and consider adopting the following ordinance to become effective July 1 , 2022: • Uncodified Ordinance No. amending the schedule of Environmental and Development-Related Fees and Charges, replacing Ordinance No. 317 in accordance with District Code chapter 6.30 May 5, 2022 Regular Board Meeting Agenda Packet- Page 251 of 261 Page 7 of 9 Finance Committee Minutes April 19, 2022 Page 6 Mr. Brightbill provided an explanatory overview of the draft Position Paper in preparation of a pending public hearing to consider the listed fees under review. These fees are reviewed annually and most of the fees are based on actual labor and direct costs; some minor adjustments reflect changes in staff and work associated with the fees. Staff responded to limited questions by the Committee. Chair McGill complimented staff for presenting the material in an understandable manner. COMMITTEE ACTION: Recommended the Board conduct the public hearing. 6. Other Items a. Review Risk Management Loss Control Report as of April 4, 2022 Ms. Deutsch reviewed the report included with the agenda materials. Chair McGill inquired whether the force main break listed under the property loss section was indeed a break or whether it was damage. Ms. Deutsch replied the main break was a damage claim that had since moved under the liability claims category. COMMITTEE ACTION: Received the report. 7. Announcements Mr. Leiber provided the Committee with two announcements: a. State offered Low Income Household Water Assistance Program (LIHWAP) Mr. Leiber provided details of a new state program that evolved with public challenges experienced by some in paying their sewer and water bills during the pandemic. This program requires qualified low income participants to apply directly with the state though a partnering organization that would in turn issue payment to the water/wastewater provider accordingly. In the case of Central San, whose Sewer Service Charge bill is on the property tax roll, it may be preferrable for the state payment to go directly to the County so that customer arrearages can be reconciled. However, coordination discussions with the County would need to be held to determine the most workable approach. Staff has reviewed the program and determined that it does appear to make sense for Central San to participate on behalf of its customers. Central San will need to submit an expression of interest in the program by the end of the month. Mr. Leiber indicated that staff will report back to the Board as the program progresses. May 5, 2022 Regular Board Meeting Agenda Packet- Page 252 of 261 Page 8 of 9 Finance Committee Minutes April 19, 2022 Page 7 b. CCCERA' Investment Return Rate Update Earlier this month, CCCERA adopted an investment return rate change from 7% down to 6.75%, in line with other agencies and Ca1PERS. Mr. Leiber noted a reduction in the rate means an increase to future liabilities. At this time, an assessment of how it will affect the UAAL2 was not available. He added the change will impact contribution rates for FY 2023-24, two years out; and, any increase in the URAL would be recovered over a period of 18 years. Staff will return with more information at a future meeting, and it will be included in the September financial report. Chair McGill introduced a note of congratulations to Mr. Leiber for recently being reappointed to serve a four-year term on the County's Treasury Oversight Committee, which is relevant to Central San and its participation in the County pool. 8. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items Member Williams requested a future agenda item to receive more information on the State's LIHWAP as announced by Mr. Leiber above. Including what happens if the program were to run out of funds. COMMITTEE ACTION: Received the list and provided input to staff. 9. Future Scheduled Meetings Monday, May 9, 2022 at 2:30 p.m. Tuesday, May 24, 2022 at 2:00 p.m. Tuesday, June 21, 2022 at 2:00 p.m. 10. Adjournment— at 3:46 p.m. * Attachment CCCERA defined as Contra Costa County Employees' Retirement Association 2 UAAL defined as unfunded actuarial accrued liability May 5, 2022 Regular Board Meeting Agenda Packet- Page 253 of 261 Rem 4..CA 9 (Handout) Excess Liability Paid and Projected Insurance Premiums $900,000 CSRMA Quote for FY 21-22 was$50k $813,966 higher than regular renewal, but incl. $800,000 add'I$10 million in coverage. $700,000 Lower pool deductible eliminates the need for gap EPL coverage,saving us an $626,128 $600,000 add'I$20k-net$30k dif. $500,000 $426,992 $400,000 $300,000 $200,000 $100,000 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 CSRMA 2022-23 Excess Liability Premium - % Increase Year to Year 50.00% 46.64% 45.00% 40.00% 35.00% 30.00% 30.00% 25.00% 20.00% 15.00% 14.09% 10.00% 5.000% , — ' ■ 0.00% 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 Proj2022- 23 May 5, 2022 Regular Board Meeting Agenda Packet- Page 254 of 261