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Home My WebLink About09.a. Committee Minutes - Finance 07-18-2023Page 1 of 7 Item 9.a. LICENTRAL SAN August 3, 2023 FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: JULY 18, 2023 - FINANCE COMMITTEE - PRESIDENT HOCKETTAND MEMBER LAURITZEN Attached are minutes of the above Committee meeting. ATTACHMENTS: 1. Finance Committee Minutes 07-18-23 2. Finance Committee 07-18-23 (Handout) August 3, 2023 Regular Board Meeting Agenda Packet - Page 51 of 64 Page 2 of 7 Attachment 1 110ENTRAL SAN REGULAR MEETING OF THE BOARD OF DIRECTORS. BARBARA D. HOCKETT CENTRAL CONTRA COSTA President SANITARY DISTRICT MARIAH N. LAURITZEN President Pro Tent FINANCE COMMITTEE MICHAEL R.MCGILL TAD J PILECKI FLORENCE T WEDINGTON MINUTES Tuesday,Jul 18, 2023 PHONE: (925) 228-9500 y FAX.- (925) 372-0192 9:30 a.m. www.centralsan.org Committee: Chair Barbara Hockett Member Mariah Lauritzen Guests: James Ramsey, Eide Bailly Nick Rosas, Eide Bailly Lesley Murphy, PFM Asset Management Staff. Roger S. Bailey, General Manager Katie Young, Secretary of the District Greg Norby, Deputy General Manager — Operations Philip Leiber, Deputy General Manager — Administration Charles Mallory, Information Technology Manager 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 3.c.) Dan Frost, Senior Engineer (left after Item 3.b.) Christoper Thomas, Accounting Supervisor Olivia Ruiz, Accounting Supervisor Shari Deutsch, Risk Management Administrator (arrived during Item 3.b. Geoffrey Michaelcyzk, Management Analyst Russ Leavitt, Engineering Assistant III Stacey Durocher, Administrative Services Assistant Call Meetina to Order Chair Hockett called the meeting to order at 9:30 a.m. 2. Public Comments None. August 3, 2023 Regular Board Meeting Agenda Packet - Page 52 of 64 Page 3 of 7 Finance Committee Minutes July 18, 2023 Page 2 3. Items for Committee Recommendation to the Board a. Review and recommend approval of expenditures incurred June 9, 2023, through July 06, 2023 COMMITTEE ACTION: Recommended Board approval. b. Review draft Position Paper to extend the existing Septic to Sewer (S2S) financing program for three years and create a new three-year pilot Lateral Replacement Financing Program Ms. Gemmell provided an overview of the presentation included in the agenda materials and also provided a brief history regarding the S2S pilot program noting that it was approved two years ago to encourage more conversions for residential properties and through this pilot program staff has converted 16 parcels to sewer from June 2021 to June 2023. Member Lauritzen asked if the pilot program was approved for another three years, and if it was still successful would it remain a pilot or become permanent. Mr. Bailey responded saying Board Policies are set and removed at the discretion of the Board. Ms. Gemmell discussed sewer lateral statistics stating that breaks and leaks in private sewer laterals are assumed to account for up to 50 percent of inflow and infiltration (I&I) in a collection system. Mr. Bailey clarified that laterals universally throughout the State and beyond are owned and maintained by the property owner not the agency. In discussing the different options for the financing program and the CCWD insurance program, Member Lauritzen asked if the third -party insurance offered through Contra Costa Water District's (CCWD) covers both the potable and the sanitation side and Ms. Gemmell said it does. Mr. Bailey clarified that this is not a CCWD insurance program but is with a private insurance company and the agreement is between the property owner and the insurance company. Mr. Lopez provided an overview of the Downtown Walnut Creek Sewer Renovations project on Locust Street and the possible opportunity of being able to offer financing on other Capital projects. Mr. Bailey asked Mr. Lopez whether staff plans to propose to the Board and the property owners to pay for entire lateral replacement or segments with the portion of the lateral connected to our pipeline up to the property line as Central San's cost, and the remaining portion up to the building being the responsibility of the property owner. Mr. Lopez stated staff is only looking for the option of financing at this time rather than the agency taking ownership of August 3, 2023 Regular Board Meeting Agenda Packet - Page 53 of 64 Page 4 of 7 Finance Committee Minutes July 18, 2023 Page 3 the lateral from the pipeline to the property line connection. He mentioned staff will discuss funding of the lower laterals for the Locust Street project at a future Engineering & Operations meeting. Mr. Bailey stated that there is a matter of public policy to be taken into consideration, and recommended the Committee consider allowing Engineering to replace the lower portion of the laterals stubbing them out to the property lines, especially if they are in disrepair. Further discussion ensued. Mr. Norby addressed the Committee discussing the other potential benefits to the public in considering the broad data available in looking at the basic costs of lower laterals and taking into consideration the clear improvement in the reduction of 1&1 that is received when both mains and laterals are addressed versus mains only. He also mentioned Central San is fortunate in that there are a number of peer agencies that have been working on some of the same topics, so Central San can draw from those experiences without reinventing the wheel and make the process smoother. Mr. Leiber said he is in support of this program saying he understands the complications of taking on more than a public agency should and that it is important to achieve the right balance. The District prides itself as being a customer -friendly utility, and to have a local utility there to provide assistance to customers when they encounter a large unforeseen cost like a failing lateral would be consistent with Central San's reputation as being customer - oriented utility, and this program as proposed is a good balance of those objectives. COMMITTEE ACTION: Recommended Board receipt. C. Review draft Position Paper to assess risk, draft policies and procedures and a project implementation plan related to the proposed transition to an In- house Treasury Structure Mr. Leiber provided an outline of the presentation included in the agenda materials. He briefly discussed the District's current financial processes and various inefficiencies noted by staff as well as an internal audit that came out last year finding the current structure is not as efficient as it should be. In addition, the District has implemented a new ERP system that is not fully optimized due to our current non-standard financial processes and policies. Certified Public Accounting firm Eide Bailly was retained to provide a risk assessment for the transition to an in-house treasury process. As part of that, they observed and discussed current processes with staff to better understand the inefficiencies that existed. Eide Bailly identified the four August 3, 2023 Regular Board Meeting Agenda Packet - Page 54 of 64 Page 5 of 7 Finance Committee Minutes July 18, 2023 Page 4 overall areas on the Risk Assessment for Central San in banking and cash management and highlighted steps required to reduce those risks associated with each area. Mr. Bailey asked if a change to the District's reserve policy would be necessary. Mr. Nick Rosas, Senior Manager from Eide Bailly stated the recommended changes are more related to investment management and not so much in operations. Mr. Leiber agreed that a change in the reserves policy would not be expected, and stated the District would be retaining an investment management firm to gain the best advice for the type of investments that have the best balance of security, liquidity, and yield. Member Lauritzen commented on the presentation by Eide Bailly stating that she would not have understood or been able to follow the discussion if she had not read the risk assessment and stated that additional slides are needed with greater detail and examples on each quadrant for the public. In response to Chair Hockett's question about the criteria that the bank will need to meet in order to do business with Central San's finance system, Mr. Mizuno stated that the bank will need to have the ability to integrate with the District's current Enterprise Resource Planning System (ERP) which is Oracle Cloud Fusion. In response to Member Lauritzen's questions regarding the admin policies, Mr. Leiber replied that it has been past practice for all policies to be routed through the Admin Committee and this would be expected to continue going forward. He also stated in response to the question of which policies are new versus policies that are existing, there are some that are new to cover topics that staff has never dealt with before and some existing policies that may require some minor adjustments that will be shown as red lined changes when revised. However, the Banking & Cash Management board policy and administrative procedure discussed today are new. In regard to the Implementation Timeline, Member Lauritzen requested more detail on the timing of each phase and asked for clarification on Phase 4 Banking Services RFP and if Central San would have a consultant to assist with that process. Mr. Mizuno responded saying this is included in Eide Bailly's contract as part of their services. The only other consultant that would be needed is the District's ERP implementation and support consultant, Emtec to assist with ERP system changes and activating the cash management module. He emphasized a contract is already in place with Emtec for that work. August 3, 2023 Regular Board Meeting Agenda Packet - Page 55 of 64 Page 6 of 7 Finance Committee Minutes July 18, 2023 Page 5 Member Lauritzen requested additional detail specifically on the Risk Assessment presentation and dates on the timeline. COMMITTEE ACTION: Recommended Board acceptance. 4. Other Items a. Review Risk Management Loss Control Report as of July 10, 2023 Ms. Deustch updated the Committee stating there were no new incidents. COMMITTEE ACTION: Received the report. 5. Announcements None. 6. Suggestions for Future Agenda Items a. Receive list of upcoming agenda items and provide suggestions for any other future agenda items COMMITTEE ACTION: Received the list and provided input to staff. 7. Future Scheduled Meetings Tuesday, August 22, 2023 at 9:30 a.m. Tuesday, September 19, 2023 at 9:30 a.m. Tuesday, October 24, 2023 at 9:30 a.m. 8. Closed Session a. Closed Session pursuant to Government Code Section 54957(a) — Threat to public services or facilities. This Item was not heard. 9. Adjournment — at 11:17 a.m. August 3, 2023 Regular Board Meeting Agenda Packet - Page 56 of 64 CCCSD 2023-24 Loss Control Report Attachment 2 New Incident F_____1 Ongoing Incident Prior FY 0 Litigated Item 4.a.(Handout) OVERFLOWS Status # ID# Loss DOL Other Party Address City Reserve Expenses Claim Incident Total Paid to I Ck # Type PaidPaid ** Total - SSO $ $ $ $ OTHER LIABILITY CLAIMS Status # ID# Loss Type DOL Other Party Address City PLUMBING REIMBURSEMENTS Reserve Expenses Paid Claim Paid Incident Total Paid to I Ck # Open A 2019014 GL 7/26/2018 Jane Kappel 25 Arlene Lane Walnut Creek $ 10,000.00 $ 6,000.00 $ $ $ $ 16,000.00 25,000.00 MSJ Mar 2023/100110 PI: In Discovery Open B 2021015 GL 12/14/20 A R Johnson (GAL) M73, 205 Alamo View Walnut Creek $ 25,000.00 $ - Open C 2021024 GL 2/1/17 EBMUD 17-29 Chapel Drive Lafayette $ 25,000.00 $ $ $ 25,000.00 2017+ slide, served 5/25 Open D 2022015 GL 5/8/21 Robin Hayden (Rep) Mariposa & Sheri Ln Danville $ 25,000.00 $ $ $ 25,000.00 PI: Fall/Hip Fracture Open E 2023002 GL 2/1/22 Weldon's Xcompl 644 Vallecito Ln Walnut Creek $ 10,000.00 $ Paid ** $ $ 10,000.00 Tendered to Contractor Open 2 2023007 GL 1/19/23 Bypass - Landslide Cedar Lane Orinda $ - $ 1,079.60 $ $ 1,079.60 Hotel Rooms -don't meet FE Open 3 2023010 GL 9/30/22 Frederick Hagen Sycamore Vly Rd. Danville $ 25,000.00 $ - $ $ 25,000.00 Bike Injury - Denied 5/4 August 3, 2023 Regular Board Meeting Agenda Packet - Page 57 of 64 Total - Liab I $ 120,000.00 I $ 7,079.60 I $ $ 127,079.60 PLUMBING REIMBURSEMENTS Loss Expenses Claim Status # ID# DOL Other Party Address City Reserve Incident Total Paid to I Ck # Type Paid * Paid ** Total - PL $ $ $ $ AUTO INCIDENTS Status # ID# Loss DOL Other Party Location Veh# Reserve Expenses Loss Incident Total Paid to I Ck # Type Paid * Paid ** Open 1 2024001 AL 7/5/23 Kemal Gunel 1273 Locust Street, W, 288 $ $ $ $ Denied Total -Auto $ $ $ $ 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 * Total -Prop $ $ $ $ Notes: Prior year closed claims have been removed from report. Prior year active claims show a letter in the # column to distinguish them from current year claims. 7/10/23 August 3, 2023 Regular Board Meeting Agenda Packet - Page 57 of 64