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HomeMy WebLinkAboutFinance MINUTES 07-26-22 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, July 26, 2022 FAX.- (925)372-0192 2:00 p.m. www.eentralsan.org (All attendees participated via videoconference) Committee: Chair Mike McGill Member David Williams Staff. Philip Leiber, Director of Finance and Administration Jean-Marc Petit, Director of Engineering and Technical Services Benjamin Johnson, Internal Auditor Danea Gemmell, Planning and Development Services Division Manager Stephanie King, Purchasing and Materials Manager Edgar Lopez, Capital Projects Division Manager (joined during Item 5.a.) Charles Mallory, Information Technology Manager Kevin Mizuno, Finance Manager Olivia Ruiz, Accounting Supervisor Christopher Thomas, Accounting Supervisor Shari Deutsch, Risk Management Administrator (left after Item 6.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 on July 7, 2022, by the Central San Board of Directors. The agenda included instructions for options in which the public could participate. 2. Call Meeting to Order Chair McGill called the meeting to order at 2:03 p.m. August 4, 2022 Regular Board Meeting Agenda Packet- Page 84 of 94 Page 3 of 9 Finance Committee Minutes July 26, 2022 Page 2 3. Public Comments None. Mr. Leiber requested consideration to hear Item 6.c. as the first order of business; the Committee concurred. 4. Old Business Beginning with Item 4.a., the balance of the original agenda order was heard upon conclusion of Item 6.c. a. Follow-up to question asked at the June 21, 2022 Finance Committee meeting regarding specific expenditures Mr. Leiber provided a brief overview of the contract with Mr. Faust for lobbyist representation. Chair McGill opined that the General Manager obtaining these services was a great idea and the Board is aware and supportive. COMMITTEE ACTION: Received the information. 5. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred June 10, 2022 through July 14, 2022 Staff responded to questions posed of various expenditures to the Committee's satisfaction. Items with notable attention and discussion are summarized below. Check 306281, Sustainable Contra Costa, $5,172.50 (p. 35/117) Chair McGill stated his appreciation of the educational services coordination and this great partnership with Central San. Morgan-Bonanno Development Inc. Check 306384 (p. 44/117) and Check 306515 (p. 65/117) Chair McGill inquired about the large quantity of materials captured in the invoice descriptions and asked how the tonnage is monitored. He wanted to ensure the Committee and staff have appropriate controls in place. Member Williams asked whether these costs were associated with a pipeline or other capital project. August 4, 2022 Regular Board Meeting Agenda Packet- Page 85 of 94 Page 4 of 9 Finance Committee Minutes July 26, 2022 Page 3 Mr. Lopez provided an explanation that although Capital Projects works closely with CSO on job coordination, these payments are not part of a capital project but rather various maintenance projects. This includes spot repairs, trenching, pavement settlement, and repaving tasks. He stated CSO organizes location pavement work for cost-efficiency. Some areas are completed with an urgency to meet any city requirements and standards. Ms. Gemmell added when the maintenance cover inventory was taken, staff worked with CSO to note areas of deficiencies for immediate repair coordination. Mr. Lopez also noted that with the higher threshold for applicable public works projects, CSO has been able to complete more maintenance work, which has helped with a push from cities to complete paving projects. Check 30649, Alfa Laval, Inc., $115,219.70 (p. 49/117) This payment was due to a single unit centrifuge repair and associated labor. The centrifuges are sent out of state for repair. Mr. Lopez explained staff is repairing the equipment until such time replacements can be installed under the Solids Handling Facility Improvements - Phase 1A project. He estimated the centrifuge repairs will continue to be an annual maintenance cost for another few years until that project can be completed. It was noted throughout the discussion that many of the questions posed was due to the invoice descriptions, or lack thereof. Mr. Mizuno acknowledged this correlation. COMMITTEE ACTION: Recommended Board approval. 6. Other Items a. Receive overview of Procurement Card (P-Card) Procedures and Reconciling Items Chair McGill stated he thought the overview memorandum was well done, and provided a nice background of P-Cards and the reconciliation process. He commented the memorandum should be required reading for any new Finance Committee member in the future. Mr. Mizuno extended his appreciation to Ms. Ruiz and the accounting staff with gathering the data for this update, which was a worthwhile endeavor and allowed staff to build new processes to assist the Committee with its reviews. For example, a key change was the use of the posting date rather than expense date. August 4, 2022 Regular Board Meeting Agenda Packet- Page 86 of 94 Page 5 of 9 Finance Committee Minutes July 26, 2022 Page 4 Member Williams provided his understanding of the P-Card process. A discussion ensued about the number of assigned cards, receipt management, and supervisor oversight. Ms. King stated there are 143 P-Cards currently issued to staff, and recently a report was sent to the management group to verify the list is appropriate or whether any cards may no longer be needed and could be closed. Mr. Leiber provided an example of the approval notification sent by Oracle once the cardholder submits their P-Card expense reconciliation, and the amount of detail that is provided as part of the approval process. Mr. Mizuno added that from a financial perspective as a former auditor, the supervisor approval process is a key control. The transaction cannot be posted until the approval process is complete and accurate. If a supervisor does not respond to the Oracle notification, a second and third reminder is sent; if not response after the third notification, the process is escalated up the chain of command. Additionally, Mr. Mizuno advised that of the 143 cards that are issued, not all cards are being used on a monthly basis; on average, 75 expense reports are submitted monthly. Member Williams stated he is a firm believer in the P-Card system, which helps to eliminate extra work of some purchase needs. He also stated he has the upmost confidence in the checks-and-balances and tracking mechanisms in place; the system is robust and thorough. Chair McGill asked Mr. Mizuno if he had any closing remarks. Mr. Mizuno stated the discussions with the Committee have been a useful tool. Although the Oracle implementation has had some challenges, it has also provided many benefits and more transparency. Before Oracle, the P-Card process was all done manually with one staff member in control of the oversight. Now it can all be reviewed electronically and better controls are in place. Mr. Mizuno opined an annual P-Card update may be a consideration for the future. Member Williams indicated his support of staff attempting to extract maximum efficiency from Oracle and encourage staff to keep working with them to makes things even better that will eventually save staff time. Chair McGill stated these assignments are not a matter of staff not being trusted, but to close any gap for particular accounting rules that need to be followed and assist staff in the process. COMMITTEE ACTION: Received the information. August 4, 2022 Regular Board Meeting Agenda Packet- Page 87 of 94 Page 6 of 9 Finance Committee Minutes July 26, 2022 Page 5 b.* Receive update on borrowing decision discussed at March 2022 Financial Planning Workshop Chair McGill complimented the staff memorandum provided in the agenda materials to address this topic. Overall, Mr. Leiber stated staff will continue to watch and monitor the borrowing options and rates. He noted the market has been fairly volatile, and even since this agenda packet published, rates have decreased (2.95% as of today, down about 0.4% since mid-June). The preferable alternative outlined at the March 2022 Financial Workshop was to acquire State Revolving Fund (SRF) loans for borrowing needs since the rate is one-half of the market interest rate. As to the alternative of using revenue bonds, Mr. Leiber added that should interest rates dip further, staff may return to the Committee and full Board for authorization to lock-in a rate for cost savings. Mr. Leiber shared that additional clarity on borrowing needs and timing will be available in the coming months. For example, timing of the Ultraviolet (UV) Disinfection Replacement and Hydraulic Improvements project is under discussion. In order to preserve maximum flexibility, staff is in the process of preparing an SRF loan application for that project. In response to questions posed by Chair McGill on the SRF loan program; Mr. Leiber stated the revolving fund rates also change, but not on a daily basis. The rate is not established until the loan agreement is signed with the state. Ms. Gemmell stated the $173 million SRF loan obtained for the initial Solids Handling Facility Improvements project can only be use on the Phase 1A scope. Mr. Leiber added that too is in a bit of flux, and more clarity will be realized with a study is completed on that project, expected towards the end of this calendar year. Mr. Leiber asked whether staff should continue to monitor and provide a future update or if the Committee had other input for staff: Member Williams stated he was comfortable with staff continuing to monitor the situation. He noted that the Board makes it decision based on the best information that is available at that time. On this matter, he confirmed that staff provided the Board with full disclosure with the information made available and the Board was in-step with staff. Member Williams concluded he agreed with the approach for staff to monitor and update. Chair McGill concurred and added the Board has flexibility to move projects to aim to capture opportunities for overall cost savings. August 4, 2022 Regular Board Meeting Agenda Packet- Page 88 of 94 Page 7 of 9 Finance Committee Minutes July 26, 2022 Page 6 Additionally, he commented staff is doing a great job to manage cashflow and debt service. Mr. Leiber stated staff is attempting to obtain the best deal possible for its ratepayers, which includes not only low interest rates, but also doing the right project at the right time, at the right cost; even if that may be at a slightly higher interest rate. COMMITTEE ACTION: Received the update and provided staff with direction to continue monitoring the alternatives and provide an update as applicable. After the meeting, staff provided the Committee with an updated AAA MMD Rate History chart as of July 25, 2022, which reflects a decrease in the rates since the agenda posting (attached). C. Review Risk Management Loss Control Report as of July 12, 2022 This item was heard out of order as the first item of business. Ms. Deutsch provided a brief overview of first Loss Control Report for the new fiscal year. She noted there were no new overflow, auto incident, or property loss claims. With the new fiscal year, she explained all open items from the prior fiscal year are carried forward and assigned a letter rather than numeric designation. New items will be numbered going forward for differentiation. The Committee had no questions. COMMITTEE ACTION: Received the report. 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 Mr. Mizuno mentioned that an agenda item may be brought forward to the August Committee meeting to address staff's assessment of the treasury function discussed at a prior meeting, which will include various conversation topics as well as alternatives to gain the Committee's input on any next steps. August 4, 2022 Regular Board Meeting Agenda Packet- Page 89 of 94 Page 8 of 9 Finance Committee Minutes July 26, 2022 Page 7 COMMITTEE ACTION: Received the list. 9. Future Scheduled Meetings Tuesday, August 23, 2022 at 2:00 p.m. Tuesday, September 27, 2022 at 2:00 p.m. Tuesday, October 25, 2022 at 2:00 p.m. Member Williams announced he would be absent from the August 23 Committee meeting. Chair McGill complimented staff on the various memos and follow-up discussions to answer the Committee's questions and other inquiries. 10. Adjournment— at 3:31 p.m. *Attachment August 4, 2022 Regular Board Meeting Agenda Packet- Page 90 of 94 Page 9 of 9 Item 6.b. (Handout) AAA MMD Rate History 3.5046 3•a�� 3 age 3�� 3 x5� 3.2546 ��gOfa 2$gWa S$g°k 3.0096 3 6Aa� 2• g7�2?g 2- a10 2?2� 2.50% 2 AA°y 4A°�AA 2 dank 2 Ad°Z 4A9 Z,CA92,A49�° 2 3g9rO 2 3g� 2.25% 21&� 2 t3°1O 2.00% 2 jai ? 12 65962 p96 2❑gWc L c�A9rO t zy,S°r 1.75% N N N N [V iV N N N N CV LV N N N N N N N N N N N N N N N N [V LV N N N d ie - � rn c LCVv LrVr n r f• f• N N A F N N N N F F f— F � � +AAA Gd 5 Year --Q—AAA GO 10 Year —0--AAA Go 20 Year --9—AAA GO 30 Year Starca:lhfur&t m?Markef LUfa as of JL425%2022. PIPER 5ANDLER 2 Updated AAA MMD Rate History Chart, as of July 25, 2022. August 4, 2022 Regular Board Meeting Agenda Packet- Page 91 of 94