HomeMy WebLinkAbout2016-06-14 - Board of Directors Meeting Agenda Packet Yorba Linda
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AGENDA
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS SPECIAL MEETING
Tuesday, June 14, 2016, 3:00 PM
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
Ric Collett, President
Michael J. Beverage, Vice President
Phil Hawkins
Robert R. Kiley
Gary T. Melton
4. PUBLIC COMMENTS
Any individual wishing to address the Board is requested to identify themselves and state the matter on which
they wish to comment. If the matter is on the agenda, the Board will recognize the individual for their comment
when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited
to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to three
minutes.
5. ACTION CALENDAR
This portion of the agenda is for items where staff presentations and Board discussions are needed prior to
formal Board action.
5.1. Metropolitan Water District of Southern California Coalition Letter Opposing SB554
(Wolk)
Recommendation: That the Board of Directors authorize the General Manager to
sign the Metropolitan Coalition letter on behalf of the District.
6. DISCUSSION ITEMS
This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the
Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for
which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the
District's interest to discuss these more complex matters at one meeting and consider formal action at another
meeting. This portion of the agenda may also include items for information only.
6.1. Draft Reserve Policy for FY 2016/17
6.2. Draft Operating Budget for FY 2016/17
7. ADJOURNMENT
7.1. The next Regular Board of Directors Meeting will be held Thursday, June 23, 2016 at
8:30 a.m.
Items Distributed to the Board Less Than 72 Hours Prior to the Meeting
Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items
and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for
public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870,
during regular business hours. When practical, these public records will also be made available on the District's internet
website accessible at http://www.ylwd.com/.
Accommodations for the Disabled
Any person may make a request for a disability-related modification or accommodation needed for that person to be
able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba
Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and
the type of accommodation requested. A telephone number or other contact information should be included so the
District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should
make the request with adequate time before the meeting for the District to provide the requested accommodation.
ITEM NO. 5.1
AGENDA REPORT
Meeting Date: June 14, 2016
To: Board of Directors
From: Marc Marcantonio, General
Manager
Presented By: Damon Micalizzi, Public
Information Manager
Prepared By: Damon Micalizzi, Public
Information Manager
Subject: Metropolitan Water District of Southern California Coalition Letter Opposing
SB554 (Wolk)
SUMMARY:
SB 554 Delta Levee Maintenance: This bill would declare legislative intent and authorize Central
Valley Flood Protection Board to reimburse up to 75% of those costs incurred in any year for
maintenance or improvement of levees in excess of$1,000 per mile of levee.
Metropolitan is seeking signatures for a coalition letter taking an Oppose Unless Amend position.
SB 554 is contrary to the "beneficiaries pay" principle as it seeks to permanently encumber state
General Fund for levee maintenance responsibilities on private lands in Sacramento-San Joaquin
Delta absent financial justification for such level of state investment. Amendments are necessary to
direct Dept. of Water Resources to enlist outside entity to conduct affordability/beneficiaries
assessment for Delta levee subventions program.
STAFF RECOMMENDATION:
That the Board of Directors authorize the General Manager to sign the Metropolitan Coalition letter
on behalf of the District.
DISCUSSION:
Current law establishes a Delta levee maintenance program for reimbursement of costs incurred in
connection with maintenance or improvement of projects or non-project levees in the Sacramento-
San Joaquin Delta.
ATTACHMENTS:
Name: Description: Type:
SB554-AWPW Draft Coalition Letter (3).0 Draft Letter Backup Material
June XX, 2016
Assembly Member Marc Levine
California State Assembly
State Capitol, Room 2141
Sacramento, CA 95814
Re: SB 554 (Wolk): Delta Levee Subventions—OPPOSE UNLESS AMENDED
Assembly Water, Parks and Wildlife Committee—June 14, 2016
Dear Assembly Member Levine:
On behalf of the water agencies and organizations noted below, we wish to inform you of our
opposition to SB 554 by Senator Lois Wolk. SB 554 is as an inappropriate attempt to permanently
encumber the state general fund for levee maintenance responsibilities on private lands in the
Sacramento-San Joaquin Delta absent financial justification for a long-term commitment for the level of
state support as required under the bill.
"Beneficiaries Pay" is a concept that has long-standing support among the signatories noted below.
SB 554 does not meet this standard and merits some significant revisions should the bill proceed in the
legislative process.
As you know,the Delta Levees Maintenance Subventions Program dates back to the 1990s.The
Legislature's clear intent was to reduce the state's financial exposure on this program from 75 percent
to 50 percent within 10 years. Various reasons have been advanced in since the enactment of the
program, including SB 554,to temporarily extend the subsidy level to 75 percent. In 2006, it was the
Delta Risk Management Study that was not yet completed which called for an extension of the subsidy.
In 2012, it was the Delta Plan that was not yet completed (the Delta Stewardship Council's levee
prioritization study still is unfinished) which was the justification for transitioning to the 50 percent
subsidy in 2018. Now SB 554 seeks to extend the higher level of subsidy in perpetuity, in contradiction
to the enacting legislation and rationales of previous temporary extensions.
We cannot find evidence that that the California Department of Water Resources (DWR) has conducted
an assessment of the local agency's ability to pay for levee maintenance since 2007. Commodity prices
have enjoyed above-inflation increases in the past decade.The Delta has undergone a degree of a
transition to higher-value crops such as wine. In 2012,the Delta Protection Commission's Economic
Sustainability Plan found and determined that there was a "strong agricultural economy" in the Delta
Primary Zone.
We recommend that prior to any further legislative action, SB 554 be amended to direct DWR to enlist
an outside entity of sufficient independence and financial expertise to conduct an affordability and
Letter re SB 554 (Wolk)
Page 2
June XX, 2016
benefits assessment for the Delta Levee Subventions Program. It is simply unclear which Delta islands, if
any, have insufficient economic vitality to underwrite their own levee maintenance, and whether
statewide interests merit a 75 percent public subsidy. If there is any rationale to temporarily extend the
current subsidy beyond what the author sought from her 2012 legislation,we look forward to analyzing
that assessment, and based upon our review, would revisit our policy position on SB 554 at that time.
SB 554 provides an opportunity to advance the beneficiaries-pay principle in the Delta with due analysis
and deliberation. For these reasons, we believe SB 554 is premature and urge you and members of the
Assembly Water, Parks and Wildlife Committee to vote "no" on the bill.
Sincerely,
cc: Senator Lois Wolk
Members of the Assembly Water, Parks and Wildlife Committee
Ryan Ojakian, Senior Policy Consultant, Assembly Water, Parks and Wildlife Committee
Robert Spiegel, Policy Consultant, Assembly Republican Caucus
ITEM NO. 6.1
AGENDA REPORT
Meeting Date: June 14, 2016
To: Board of Directors
From: Marc Marcantonio, General
Manager
Presented By: Delia Lugo, Finance Manager Dept: Finance
Prepared By: Delia Lugo, Finance Manager
Subject: Draft Reserve Policy for FY 2016/17
SUMMARY:
Attached is a copy of the Draft Reserve Policy for FY 2016/17 for the Board's review and
comment. The difference from the previous version is the addition of a Conservation Reserve,
which shall be funded by the net result of administrative penalties assessed less allowed
expenditures of each fiscal year. This reserve will be used to fund district-wide conservation efforts
in relation to, but not limited to, salary and related, maintenance, and material expenses for leak
detection, conservation efforts, and other allowable expenses outside the normal cost of service for
each fiscal year.
ATTACHMENTS:
Description: Type:
Financial Reserves Policy - FY 16-17 4 23 16.docx Draft Reserve Policy FY 2016/17 Backup Material
RESERVE POLICY
A. GENERAL POLICY:
Maintaining adequate reserves is an essential part of sound financial management. The Yorba
Linda Water District Board of Directors realizes the importance of reserves in providing reliable
service to its customers, financing of long-term capital projects and funding availability for
emergencies should the need arise. Interest derived from reserve balances shall be credited to the
reserve account from which it was earned.
B. CATEGORIES:
YLWD shall accumulate, maintain and segregate its reserve funds into the following categories:
Restricted and Designated Reserves
1. Board Designated Reserves; and
2. Contractually Restricted Reserves.
C. SCOPE:
This policy will assist the Board of Directors in establishing:
1. Target levels for reserve funds;
2. Requirements for the use of reserve funds; and
3. Periodic review requirements for each reserve.
D. PERIODIC REVIEW:
Staff and the YLWD Board shall review the reserve balances and targets annually as a part of the
annual budget process. The Finance Staff will continue to review all reserve and investment
balances monthly, with a quarterly report going to the full Board.
E. RESTRICTED AND DESIGNATED RESERVES:
1. Board Designated Reserves:
These are reserve funds earmarked for the purpose of funding such items as new capital
facilities, repair or replacement of existing facilities and general operating reserves designated
for a specific purpose and use by the Board of Directors.
1.0 Operating Reserve
A. Definition and Purpose — Established to cover temporary cash flow deficiencies that
occur as a result of timing differences between the receipt of operating revenue and
expenditure requirements and unexpected expenditures occurring as a result of doing
business.
June 23,2016 Page 1 of 4
B. Target Level — The Government Finance Officers Association (GFOA) recommends
that funding should be no less than one to two months (or 8% - 17%) of the District's
annual operating budget. The District's current target will be a minimum of 8% and a
maximum of 17% of the annual operating budget for both the water and sewer funds.
C. Events or Conditions Prompting the Use of the Operating Reserve—This reserve may
be utilized as needed to pay outstanding operating expenditures prior to the receipt of
anticipated operating revenues.
1.1 Emergency Reserve
A. Definition and Purpose — Established to provide protection recovery to the District
and its customers for losses arising from an unplanned event or circumstance. The
reserve level combined with YLWD's existing insurance policies should adequately
protect YLWD and its customers in the event of a loss.
B. Target Level—Established at a minimum level equal to $1,000,000 for the water fund
and shall accumulate interest and annual contributions as determined by the District's
annual operation to a maximum level of$4,000,000. The target for sewer will be a
minimum of$250,000 and a maximum of$1,000,000.
C. Events or Conditions Prompting the Use of the Emergency Reserve — This reserve
shall be utilized to cover unexpected losses experienced by the District as a result of a
disaster or other unexpected loss. Any reimbursement received by the District from
insurance companies as a result of a submitted claim shall be deposited back into the
reserve as replenishment for the loss.
1.2 Capital Replacement Reserve
A. Definition and Purpose — Established to provide capital repair and replacement
funding as the District's infrastructure deteriorates over its expected useful life.
B. Target Level— The Board-approved 2010 Asset Management Plan recommended that
the annual contribution to this reserve be at a minimum level of $1,820,000 for the
water fund and $345,000 for the sewer fund, less money set aside for the Maintenance
Reserve. Funding with available funds based on the District's operations shall be
allocated quarterly.
C. Events or Conditions Prompting the Use of the Capital Replacement Reserve —
Through the annual budget process, staff shall recommend anticipated asset
replacement projects. The Board of Directors shall take action to approve
recommended project appropriations from the capital replacement reserve. Should
unplanned replacement be necessary during any fiscal year, the Board of Directors
may take action to amend the budget and appropriate needed funds as required.
June 23,2016 Page 2 of 4
1.3 Maintenance Reserve
A. Definition and Purpose — Established to provide funding for non-scheduled capital
asset repair and replacement.
B. Target Level—$200,000 subject to an annual review.
C. Events or Conditions Prompting the Use of the Maintenance Replacement Reserve —
Unplanned failure of assets including but not limited to pumps, motors and major
facility repairs.
1.4 Debt Service Reserve
A. Definition and Purpose—Established to provide funding for semi-annually scheduled
debt service payments.
B. Target Level — The District's highest annual debt service payment — currently
$2,723,509.
C. Events or Conditions Prompting the Use of the Debt Service Reserve — Semi-annual
debt service payments will be made out of this fund, with funding on the water rate
replenishing the fund annually.
1.5 Employee Liabilities Reserve
A. Definition and Purpose — The purpose is to cover employees' accrued vacation and
other compensatory time and to ensure the complete funding associated with the
liability incurred for employees whom have met the requirements necessary for
district paid health benefits at retirement.
B. Target Level — The annual contribution will be $100,000 ($93,000 for water and
$7,000 for sewer) to be evaluated and/or adjusted annually thereafter based on an
analysis of current employees' vacation and sick time accrued and actuarial
determinations of future retiree costs. As of July 1, 2015, an actuary determined that
the District's Other Post Employment Benefit (OPEB) liability was $2,136,644.
When combined with a liability on the District's books for vacation, compensatory
and sick time of $1,204,595 at June 30, 2015, the target is projected to be
approximately$3,341,239 for the combined water and sewer enterprises.
C. Events or Conditions Prompting the Use of the Employee Liabilities Reserve — This
reserve may be used in the event that operating funds are not adequate to meet
vacation, compensatory and sick time paid out or retiree medical cost obligations
within the current year.
June 23,2016 Page 3 of 4
1.6 Conservation Reserve
A. Definition and Purpose — Established to provide funding for district-wide
conservation efforts.
B. Target Level — Funding shall be established as the net result of administrative
penalties assessed less allowed expenditures of each fiscal year.
C. Events or Conditions Prompting the Use of the Conservation Reserve — This reserve
may be used to fund district-wide conservation efforts in relation to, but not limited
to, salary and related, maintenance, and material expenses for leak detection,
conservation efforts, and other allowable expenses outside the normal cost of service
for each fiscal year.
2. Contractually Restricted Reserves:
These are funds held to satisfy limitations set by external requirements established by creditors,
grant agencies or law. Examples include stipulated bond covenants and reserves held with a
fiscal agent.
2.0 US Bank 2008 COP Reserve
A. Definition and Purpose — Established to cover reserve requirements held with a
designated fiscal agent(US Bank) for the 2008 Certificates of Participation.
B. Target Level—Funding shall be held in an amount equal to $2,147,096.
C. Events or Conditions Prompting the Use of the Contractually Restricted Reserve —
This reserve may be utilized as needed by the fiscal agent to pay any outstanding debt
service payments not covered by the District within the specified billing and due
dates.
End of Policy Document
June 23,2016 Page 4 of 4
ITEM NO. 6.2
AGENDA REPORT
Meeting Date: June 14, 2016
Subject: Draft Operating Budget for FY 2016/17
i
ATTACHMENTS:
„ Description: Type:
Presentation.pdf Backup Material Backup Material
Yorba Linda
waver lL CA
:-A
Budget Workshop #4
FY 2016/ 17
Presented By:
Marc Marcantonio, General Manager
Delia Lugo, Finance Manager
Cindy Botts, Management Analyst
June 14, 2016
Demand Comparisons
YEAR-END BUDGET MWD 15% 2009 Drought
FY 15/16 FY 15/16 FY 15/16 FY 10/11
Proj. Year End (36%-Jun-Feb) (28% of CY13) (15% Conserv.) (Voluntary 19%)
15,800 16,534 171030 17,696 18,170 18,567 18,960 19,276
Recovery
from FY 5% 8% 12% 15% 17% 20% 22%
15/16 Proj.
Option 1 - 127o Bounce Back, Incremental
of Op Exp 39%_ , 41% 43% 45%
$ $ 10,057,527 $" 1,188,258 $2,362,193 $ -.13,528,941
ecovery% s. 11% 20% t i
Increasing Deman M
R PV-rl - 41 $ 28,788,884 $ 30,42 $ 32,015,511
Service Charges $ 10,672,546 $ 10,057,527 $ 11,188,258 $ 12,362,193 $ 13,528,941
Commodity $ 16,564,695 $ 18,731,358 $ 19,233,090 $ 19,653,318 $ 20,069,312
Other Revenues $ 3,297,856 $ 2,772,254 $ 2,883,753 $ 2,929,647 $ 2,993,868
Total Revenues $30,535,097 $31,561,138 $ 33,305,101 $ 34,945,158 $ 36,592,121
O&M Expenses $ 21,843,141 $ 25,595,530 $ 27,094,639 $ 28,624,777 $ 29,939,069
Power Costs $ 1,117,959 $ 1,128,422 $ 1,193,403 $ 1,256,062 $ 1,293,744
Water Supply Costs $ 9,679,591 $ 12,051,056 $ 12,950,935 $ 13,860,049 $ 14,553,051
Salary Related Expenses $ 7,284,591 $ 8,088,361 $ 8,492,779 $ 8,917,418 $ 9,363,289
Supplies&Services $ 3,760,999 $ 4,327,691 $ 4,457,522 $ 4,591,248 $ 4,728,985
Other Expenses $ 224,862 $ 193,000 $ 193,795 $ 124,509 $ 125,244
Total Expenses $22,068,003 $ 25,788,530 $ 27,288,434 $ 28,749,286 $ 30,064,313
Net Revenue $ 8,467,094 $ 5,772,608 $ 6,016,667 $ 6,195,872 $ 6,527,807
Debt Service $ 2,721,559 $ 2,716,884 $ 2,714,309 $ 2,718,509 $ 2,710,909
Available to Transfer to CIP $ 5,745,535 $ 3,055,724 $ 3,302,358 $ 3,477,363 $ 3,816,898
Beginning CIP Resery Bal $ 16,952,425 $ 21,630,225 $ 12,630,416 $ 8,914,775 $ 8,544,038
CIP Requirements $ 1,067,735 $ 12,055,533 $ 7,018,000 $ 3,848,100 $ 1,880,000
$ 21,630,225 $ 12,630,416 $ 8,914,775 $ 8,544,038 $ 10,480,936
DebtSeQ goC— L M 311% 212% 222% 4 228% 241%
Option 1 . incremental Notes
• Increase in Demand
Sales 0--M
Increased Demand
• 1 6/ 17- 24% Reduction in Base Fee
• Incremental Increases to 450 of Total
Expenses at FYI 9/20
• All CIP Approved is Completed
• Depreciation in Part Potentially Funded
• Less Depletion of CIP Reserves
• Other Res-*erves Potentially Funded . . 4
- --,a-4d
Option 2 - 817o Bounce Back.. Incremental
% of Op Exp 39% 41% 43% 45%
$ $ 9,810,438 $ •: 11,502,580 $ 12,583,684 $ 13,771,892
ecovery% - 0 ` 1 1 �'= 22%
Increasing Demand M
1144
17-0 0
1 $ 27,975,134 $ 30,59 3 ,414,
Service Charges $ 10,672,546 $ 9,899,100 $ 10,890,079 $ 11,960,649 $ 13,771,892
Commodity $ 16,564,695 $ 18,076,034 PF$ 19,702,961 F,$ 20,453,443 $ 20,453,443
Other Revenues $ 3,297,856 $ 2,772,254 $ 2,883,753 $ 2,929,647 $ 2,993,868
Total Revenues $30,535,097 $30,747,388 $ 33,476,793 $ 35,343,739 $ 37,219,203
O&M Expenses $ 21,843,141 $ 25,154,970 $ 27,861,279 $ 29,139,872 $ 30,478,960
Power Costs $ 1,117,959 $ 1,085,951 $ 1,266,045 $ 1,304,026 $ 1,343,147
Water Supply Costs $ 9,679,591 $ 11,652,967 $ 13,644,933 $ 14,327,180 $ 15,043,538
Salary Related Expenses $ 7,284,591 $ 8,088,361 $ 8,492,779 $ 8,917,418 $ 9,363,289
Supplies&Services $ 3,760,999 $ 4,327,691 $ 4,457,522 $ 4,591,248 $ 4,728,985
Other Expenses $ 224,862 $ 193,000 $ 193,795 $ 124,509 $ 125,244
Total Expenses $22,068,003 $25,347,970 $ 28,055,074 $ 29,264,381 $ 30,604,204
Net Revenue $ 8,467,094 $ 5,399,418 $ 5,421,719 $ 6,079,359 $ 6,614,999
Debt Service $ 2,721,559 $ 2,716,884 $ 2,714,309 $ 2,718,509 $ 2,710,909
Available to Transfer to CIP $ 5,745,535 $ 2,682,534 $ 2,707,410 $ 3,360,850 $ 3,904,090
Beginning CIP Resery Bal $ 16,952,425 $ 21,630,225 $ 12,257,226 $ 7,946,636 $ 7,459,385
CIP Requirements $ 1,067,735 $ 12,055,533 $ 7,018,000 $ 3,848,100 $ 1,880,000
$ 21,630,225 $ 12,257,226 $ 7,946,636 $ 7,459,385 $ 9,483,476
��11% 199% 200% 024 .1 244% ,
AW
Option 2, Incremental Notes
• Increase in Demand o-2 P)
Q�c
1&rSale, M
Increased Demand
• 1 6/ 17- 24% Reduction in Base Fee
• Incremental Increases to 450 of Total
Expenses at FYI 9/20
• All CIP Approved is Completed
• Depreciation in Part Potentially Funded
• Less Depletion of CIP Reserves
• Other Res-*erves Potentially Funded
In - House Rate Projections
IN-HOUSE \ IN-HOUSE`
FY 14/15 FY 15/16 FY 16/17 @12% PY Reduction FY 16/17@ 8% PY Reduction
5/8 & 3/4 $ 10.06 $ 26.29 $ 19.45 $ (6.84) $ 19.19 $ (7.10)
1 $ 16.77 $ 41.57 $ 32.49 $ (9.08) $ 32.05 $ (9.52)
1.5 $ 33.54 $ 79.77 $ 64.78 $ (14.99) $ 63.91 $ (15.86)
2 $ 53.66 $ 125.61 $ 103.69 $ (21.92) $ 102.29 $ (23.32)
3 $ 117.37 $ 270.77 $ 227.04 $ (43. 73) $ 223.97 $ (46.80)
4 $ 211.26 $ 484.69 $ 408.55 $ (76.14) $ 403.03 $ (81.66)
6 $ 469.47 $ 1,225.77 $ 907.95 $ (317.82) $ 895.68 $ (330.09)
In-house projections subject to change once "2017 Water Financial Plan Update"
received from Raftelis Financial.
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