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110ENTRAL SAN
REGULAR MEETING OF THE BOARD OF DIRECTORS:
MARIAHN LAURITZEN
CENTRAL CONTRA COSTA President
SANITARY DISTRICT MICHAEL R. MCGILL
President Pro Tent
FINANCE COMMITTEE BARBARA D. HOCKETT
TAD J PILECKI
FLORENCE T WEDINGTON
MINUTES
PHONE: (925) 228-9500
FAX.- (925) 372-0192
Tuesday, April 16, 2024 www.centralsan.org
2:30 p.m.
Committee:
Chair Mariah Lauritzen
Member Tad Pilecki
Guest: Nick Rosas, Eide Bailly (joined during Item 3.a.)
Staff. -
Katie Young, Secretary of the District
Philip Leiber, Deputy General Manager — Administration
Benjamin Johnson, Internal Auditor
Danea Gemmell, Planning and Development Services Division Manager
Edgar Lopez, Capital Projects Division Manager (arrived during Item 3.a.)
Kevin Mizuno, Finance Manager
Thomas Brightbill, Senior Engineer
Christopher Thomas, Accounting Supervisor (joined during Item 3.a.)
Geoff Michalczyk, Management Analyst
Laci Kolc, Risk Management Specialist
Karen DeLong, Administrative Services Assistant (joined during Item 3.a.)
Stacey Durocher, Administrative Services Assistant
1. Call Meeting to Order
Chair Lauritzen called the meeting to order at 2:30 p.m.
2. Public Comments
None.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 42 of 55
Page 3 of 9
Finance Committee Minutes
April 16, 2024
Page 2
3. Items for Committee Recommendation to the Board
a. Review and recommend approval of expenditures incurred March 14, 2024
through April 4, 2024
Staff responded to questions about expenditures posed in advance of the
meeting from Member Pilecki. Following are items of particular note:
Check #312020 California Diesel and Power (CDP), $77, 790.06; and
Check #312087 California Diesel and Power, $23,435.99.
Mr. Mizuno explained that charges for Items 1 and 2 are related to the
rental and installation of a temporary replacement generator at the
Orinda Pumping Station to replace the new generator that caught fire.
The Contractor has committed to the repair and/or replacement even
though the warranty has already expired.
• In response to Member Pilecki's question regarding whether this is a
warranty item and if the District will be receiving reimbursement for
these costs, Mr. Leiber stated that reimbursement for the temporary
equipment has not been confirmed but is being discussed.
Check #312090CHC: Creating Healthier Communities, $5, 241.09
• Member Pilecki questioned the processing fee. Mr. Mizuno explained
that in 2019 the Board authorized payment of the processing fees to
pay the District's fiduciary and third -party administrator for the Giving
Campaign donations collected in calendar year 2023.
Check #312155 California Department of Tax and Fee Administration for
$27, 507.50
Mr. Mizuno explained that this is the use tax owed for any materials or
equipment purchased subject to sales tax that did not include sales
tax on the invoice. On an annual basis, a report is prepared and any
such tax due is remitted to the California Department of Taxes and
Fee Administration (CDTFA).
Check #202852Delaney Construction, $131,260.55
Member Pilecki questioned the account description. Mr. Mizuno
explained that during the preparation of the purchase order, the
incorrect account code was inadvertently used, and staff has
corrected the error for historical year-to-date charges as well as for
prospective invoices.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 43 of 55
Page 4 of 9
Finance Committee Minutes
April 16, 2024
Page 3
Procurement Cards:
Shenae Howard, retirement gift for Paul Kelly
Member Pilecki questioned the timing of the payment for the retirement
gift, as Mr. Kelly retired over a year ago. Mr. Mizuno explained that his
retirement gift was delayed pending the new maintenance access cover
design that was not available at the time of his retirement.
The Committee had no further questions.
COMMITTEE ACTION: Recommended Board approval.
b. Receive Budget -to -Actual Expenditure overview through the month of March
2024
Operations & Maintenace Fund (O&M)
Total year-to-date expenditures for the O&M Fund were $64.1 million
through March 2024, which was lower than the year-to-date Budget of $69
million resulting in a favorable variance of $4.9 million or 7.8 percent. It is
anticipated that the variance will tighten and will be within the five percent
range (the targeted variance) by the end of the fiscal year.
Mr. Mizuno stated that the two main contributors to this variance are
underspending for salaries and wages and for contracted technical services.
Member Pilecki stated that the current variance range is acceptable and is
more concerning if the variance rate was above 10 percent.
Sewer Construction Fund (SCF)
Mr. Mizuno discussed the feedback received from the Committee at the
March meeting which was to extend the actual line (red dotted line) to show
the projected spending, which is now estimated at $92.6 million by the close
of the year. Total expenditures through March 2024 were $53.46 million
which was less than the target of $76.2 million amounting to $22.7 million or
a 28.9 percent variance. Mr. Mizuno pointed out that the gap between the
targeted spend and the actual spend decreased from March which was
$27.6 million or 37.9 percent.
COMMITTEE ACTION: Recommended Board receipt.
C. Review draft Position Paper to receive a customer's request to amend
Capacity Fee Schedule for ADUs less than 500 square feet
Mr. Brightbill provided an overview of the draft Position Paper included in the
agenda materials. He stated that staff received an application for the
construction of a new 462 square foot detached Accessory Dwelling Unit
(ADU). The capacity fee quoted to the property owner was $1,607. The
May 2, 2024 Regular Board Meeting Agenda Packet - Page 44 of 55
Page 5 of 9
Finance Committee Minutes
April 16, 2024
Page 4
property owner requested that the Board of Directors review this policy to
either reduce or eliminate fees for ADUs less than five hundred square feet.
In response to Chair Lauritzen's question regarding the three alternatives/
considerations listed in the draft Position Paper and whether all should be
considered by the full Board. Member Pilecki stated that he does not support
changing Central San's current Capacity Fee structure for ADUs. Chair
Lauritzen agreed.
Ms. Gemmell asked if the Committee would like the item to go to the full
Board even if the recommendation from the Committee is not to approve the
item. The Committee agreed that the preference would be to bring the item
to the full Board for transparency.
COMMITTEE ACTION: Reviewed and Recommended the Board deny
the request per Alternative 2 in the Position Paper.
d. Review draft Position Paper to conduct a public hearing on June 6, 2024 at
2:30 p.m. to receive public comment and consider adopting an Uncodified
Schedule of Environmental and Development -related fees and charges
replacing Ordinance No. 321 in accordance with District Code, Chapter 6.30
Mr. Michalczyk provided a brief overview of the draft Position Paper included
in the agenda materials. He stated that the Environmental and Development
related fees include permit counter fees such as application fees, plan review
fees, inspection fees and other related items. The average increase in fees
will be 1.3 percent with the highest being 4.8 percent. The interest rate to
administer Contractual Assessment Districts (CAD) and Septic Sewer
Financing programs will increase from 3.8 percent to 4.5 percent.
In response to Member Pilecki's questions about public outreach, Mr.
Brightbill stated that the permit counter fee updates, the report, and the new
fee schedule were included in the outreach to the public. Member Pilecki
recommended that staff include this in the draft Position Paper.
Member Pilecki referred to the Recommended Board Action in the draft
Position Paper and recommended adding the word "consider" in front of
adopting the proposed uncodified ordinance, so it is the same as the wording
in the subject of the draft Position Paper.
In response to Member Pilecki's question regarding the interest rates and
whether reimbursement agreements should be included, Mr. Brightbill stated
the calculation for the main line extension reimbursement fee is adjusted by
a different process. This interest rate increase would apply to CAD's,
Alhambra Valley Assessment Districts (AVAD's), lateral financing, septic to
sewer, and non-residential capacity fee payment programs.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 45 of 55
Page 6 of 9
Finance Committee Minutes
April 16, 2024
Page 5
In response to Member Pilecki's question about considering a ceiling on the
interest rate for financing CAD's and replacement of bad laterals, Mr.
Brightbill pointed out that a discussion occurred with the prior District
Counsel regarding the minimum interest rate being too high at the time.
Further discussion ensued regarding the benefits to Central San of the
projects being financed and pursuing grants to help bring these costs down
for this program. Member Pilecki stated he will mention this at the next Board
meeting for further discussion.
COMMITTEE ACTION: Recommended the Board set the public hearing
for June 6, 2024 at 2:30 p.m. to consider adopting an Uncodified
Schedule of Environmental and Development -related fees and charges
replacing Ordinance No. 321 in accordance with District Code, Chapter
6.30.
e. Review draft Position Paper to conduct a public hearing on June 6, 2024 at
2:30 p.m. to receive public comment and consider adopting Uncodified
Ordinance No. amending the Schedule of Capacity Fees, Rates and
Charges replacing Ordinance No. 329 in accordance with District Code,
Chapter, 6.12
Mr. Brightbill provided an overview of the draft Position Paper included in the
agenda materials. He said that this fee applies to new developments and the
expansion of non-residential properties. The increase will be about 4.4
percent, to $8, 539 per Residential Unit Equivalent.
Member Pilecki referred to the Recommended Board Action in the draft
Position Paper and recommended adding the word "consider" in front of
adopting the proposed uncodified ordinance, so it is the same as the wording
in the subject of the draft Position Paper.
Member Pilecki asked staff to provide the number of Residential Unit
Equivalents or RUEs in Table 1 so all components of the calculation were
shown in the table.
In response to Member Lauritzen's question regarding whether the District
allocates funds to financing programs and if there was a cap, Mr. Brightbill
said no. Ms. Gemmell pointed out that the non-residential Capacity Fee
financing program does not involve payments to third parties so the
availability of funds for that program is less of an issue. Ms. Gemmell further
explained that the non-residential Capacity Fee installment payment program
is designed to address property owners' concerns. For example, if a tenant
who participates in the program leaves or goes out of business, they can
notify the District and the payments will be postponed until there is a new
tenant so they are protected. Another advantage for property owners is that
once the agreement is paid off, it results in an entitlement which stays with
the property.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 46 of 55
Page 7 of 9
Finance Committee Minutes
April 16, 2024
Page 6
The Committee had no further questions.
COMMITTEE ACTION: Recommended the Board set the public hearing
for June 6, 2024 at 2:30 p.m. to consider adopting an Uncodified
Schedule of Capacity Fees, Rates and Charges replacing Ordinance No.
329 in accordance with District Code, Chapter 6.30.
Review draft Position Paper to adopt proposed Resolution 2024-xxx
establishing Central San's Independent Treasury function and separation
from the Contra Costa County Treasury Pool and adopt BP 051 Banking and
Cash Management
Mr. Leiber provided an overview of the draft Position Paper included in the
agenda materials. He stated that the proposed Resolution would formally
notify Contra Costa County of Central San's intent to leave the County's
Treasury Pool. He also mentioned that Board Policy (BP) 051 on Banking
and Cash Management was also being presented for the Board's approval,
which amongst other matters, appoints the Deputy General Manager of
Administration position as Central San's Treasurer. An internal
Administrative Policy (AP) over banking and cash management was also
included for informational purposes to demonstrate that internal controls
would be in place in the new treasury structure, although Board approval
was not being requested as APs are within the authority of the General
Manager.
In response to Member Pilecki's question regarding an external auditing
component in the Board Policy, Mr. Leiber stated that the normal annual
audit function does happen as required by the California Government Code.
Member Pilecki recommended adding that information to the Board Policy.
Mr. Rosas added that the annual independent audit process will take a more
detailed approach regarding the implementation of the treasury function by
testing the controls and conducting extensive interviews about the process.
Further discussion ensued regarding the annual independent audit process
and whether it was appropriate to include this in the scope of the BP as the
audit was a broader topic covering several other areas. Given the
significance of the transition to an internal treasury function, Chair Lauritzen
agreed that the language should be added and tabled the discussion to
continue with the full Board.
In response to Member Pilecki's question regarding the internal audit
function, Mr. Leiber stated that every year the District's Internal Auditor
proposes an audit plan based on a risk assessment. Member Pilecki
recommended adding language to the AP regarding the internal audit
function.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 47 of 55
Page 8 of 9
Finance Committee Minutes
April 16, 2024
Page 7
Member Pilecki referred to Item 3. Related Policies and asked whether
procurement cards (P-cards) were related to Petty Cash Reimbursement.
Mr. Mizuno stated that there is a separate AP pertaining to P-cards.
Regarding Item 7. Roles and Responsibilities, b. General Manager, Member
Pilecki asked if State Revolving Fund (SRF) loans fall under this section.
Mr. Mizuno stated that there is a separate BP for Debt Management. Mr.
Leiber stated that no changes are expected to debt management, related to
the Treasury in -housing.
Further discussion ensued regarding the requirements for Investment
Management and Advisory Services.
Member Pilecki asked what is going to happen to the Expenditure and
P-card information that is reviewed by the Committee once the in-house
Treasury function is in place. Mr. Leiber stated that further discussion will
likely be needed to address what changes the Board will want to undertake
regarding expenditure review going forward, which will become more
relevant following the successful transition out of the County Treasury Pool.
COMMITTEE ACTION: Reviewed and Recommended Board approval.
4. Other Items
a. Review Risk Management Loss Control Report as of April 2, 2024
Ms. Kolc stated there have been two new incidents since the last report. One
claim was filed. The second claim was a plumbing claim and has been
closed.
The Committee had no questions.
COMMITTEE ACTION: Reviewed the report.
5. Announcements
None.
6. Suaaestions for Future Aaenda 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.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 48 of 55
Page 9 of 9
Finance Committee Minutes
April 16, 2024
Page 8
7. Future Scheduled Meeti
Tuesday, May 14, 2024 at 2:30 p.m. (Budget Review)
Tuesday, May 21, 2024 at 2:30 p.m.
Tuesday, June 25, 2024 at 2:30 p.m.
8. Adjournment — at 3:40 p.m.
May 2, 2024 Regular Board Meeting Agenda Packet - Page 49 of 55