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HomeMy WebLinkAbout2016-06-06 - Board of Directors Meeting Minutes 2016-089 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Monday, June 6, 2016, 8:30 a.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The June 6, 2016 Yorba Linda Water District Board of Directors Special Meeting was called to order by President Collett at 8:30 a.m. The meeting was held in the Board Room at the District's Administration Building located at 1717 East Miraloma Avenue in Placentia, California 92870. 2. PLEDGE OF ALLEGIANCE President Collett led the pledge. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Ric Collett, President Marc Marcantonio, General Manager Michael J. Beverage, Vice President John DeCriscio, Operations Manager Phil Hawkins Gina Knight, Human Resources/Risk Manager Robert R. Kiley Delia Lugo, Finance Manager Gary T. Melton Damon Micalizzi, Public Information Manager Art Vega, Information Technology Manager Annie Alexander, Executive Secretary Cindy Botts, Water Cons Supvr/Mgmt Analyst Alex Thomas, Water Quality Engineer OTHER ATTENDEES Andrew Gagen, Partner, Kidman Law LLP Jeff Decker, Resident Kent Ebinger, Resident Jon Hansen, Resident Wayne Miller, Resident John Milton, Resident Minutes of the YLWD Board of Directors special Meeting Held June 6,2016 at 8:30 a.m. 1 2016-090 4. PUBLIC COMMENTS Mr. Wayne Miller, resident, shared his opinion of a recent article published in the LA Times and statements contained therein indicating that the District's situation could lead to similar consequences experienced in Flint, Michigan. He also commented on the District's most recent water quality report, provided a brief summary of the water contamination issue in Michigan, and stated that he didn't believe the same situation would occur in Yorba Linda. 5. ACTION CALENDAR 5.1. Transmittal of Information to the Orange County Registrar of Voters for the November 8, 2016 General Election Mr. Marc Marcantonio explained that staff had received a form from the Orange County Registrar of Voters requesting information relative to the November 8, 2016 General Election. In addition to providing a map of YLWD's boundaries, the District needed to identify if it intended to limit a Candidate's Statement of Qualifications to 200 or 400 words and if it would pay for the associated cost of publication. The Board then briefly discussed prior actions taken as related to preceding elections. Director Hawkins commented on the option to pay for candidate's statements and stated that he was not in favor of doing so. Director Beverage indicated that he was in favor of limiting the candidate statements to 200 words. Director Kiley agreed. Director Melton made a motion, seconded by Director Kiley, to authorize the General Manager to submit the Transmittal of Election Information to the Orange County Registrar of Voters, indicating that a Candidate's Statement of Qualifications is to contain no more than 200 words and will not be paid for by the District. Motion carried 5-0. 6. DISCUSSION ITEMS 6.1. Draft FY 2016/17 Operating Budget Mrs. Delia Lugo explained that staff was previously directed to present the Board with different financial scenarios associated with increased water consumption during the next fiscal year. This is due to the recent change in the State's emergency conservation regulations and the opportunity for the District to submit an application to self-certify its own conservation percentage which could be lower than the mandated 28% (after applying the 8% credit). As such, staff has prepared different "bounce back" scenarios for the Board to consider. Mrs. Cindy Botts explained that the term "bounce back" was being used to describe water consumption Minutes of the YLWD Board of Directors Special Meeting Held June 6,2016 at 8:30 a.m. 2 2016-091 projections for the end of the current fiscal year as compared to the end of the next fiscal year should usage increase. She then provided an overview of staff's demand comparisons and responded to questions from the Board. She clarified that any decrease in the base fee (on a per connection basis) would result in a reduction of projected annual service charge revenue. Mrs. Lugo noted that the scenarios being presented at this meeting were based on staffs in-house calculations and that Raftelis would be assisting the District with performing a formal financial analysis of any proposed changes to the base fee. Mrs. Botts then provided an overview of the following three bounce back scenarios through FY 2020 and their associated financial impacts as projected by staff: ■ 8% static increase in demand ■ 8% to 22% incremental increase in demand ■ 22% static increase in demand Vice President Beverage commented on the District's original 5-year financial plan and the recent change in the State's emergency conservation regulations. He also suggested that a fourth bounce back scenario be developed using the second year financial projections included in the original 5-year plan. Staff then responded to questions from the Board related to the difficulty of projecting customer consumption/conservation behavior and the impact on financial planning efforts. Mrs. Lugo stated that staff had been in contact with the District's financial advisors regarding the situation. She noted that Fitch was scheduled to review YLWD's bond rating next year. The review process will primarily focus on the District's financial status including its water/sewer rates, rate studies, debt service coverage ratio, reserves, and overall business model. Any modifications to the District's rate structure will need to be substantiated. Mrs. Lugo then responded to questions from the Board regarding the process for modifying the water rate following which President Collett asked if any members of the public wished to comment. Mr. Jeff Decker, resident, commented on the information contained in the presentation as compared to the District's year to date financial reports, Raftelis' services related to the previous water rate increase, projected and actual net income for the current fiscal year, and administrative penalty revenue. He also commented on a previous meeting he attended with District representatives, the bidding process for construction of the Fairmont Booster Pump Station (BPS) Upgrade Project, and financial contributions from developers for capital improvement projects. Minutes of the YLWD Board of Directors Special Meeting Held June 6,2016 at 8:30 a.m. 3 2016-092 Director Melton suggested that members of the public share their opinion on what percentage they thought customer consumption might increase (or bounce back). Mr. Decker suggested the District perform a survey of its customers in order to obtain this information. Mr. Jon Hansen, resident, commented on the topics discussed during the same meeting mentioned by Mr. Decker, projected and actual year to date net income for the current fiscal year, the current budget, salary of a District employee, and the services provided by Raftelis. He also commented on the Fairmont BPS Upgrade Project, the lack of financial contributions from developers, and the opinion of a professional acquaintance regarding this project. He further stated that he felt customers would gradually increase their water consumption from 8-12% in the first year up to 20% in the third year. Mr. Wayne Miller, resident, commented on the difficulty of making projections and suggested that the District choose "design values" to focus on during the budget process. He also commented on a sensitivity analysis being performed in relation to water costs/rates, the amount of groundwater being utilized, and providing rebates to District customers. At the request of Mrs. Lugo, Mr. Miller clarified his comments regarding the provision of rebates. Mr. Kent Ebinger, resident, commented on the proposed Esperanza Hills and Cielo Vista housing developments, a process for identifying developer contributions for the Fairmont BPS Upgrade Project, and utilizing the City of Yorba Linda's expected increase in consumption when calculating projected bounce-back percentages. Mr. John Milton, resident, commented on the District's financial statements, financial information contained in the presentation, his personal conservation efforts, and misinformation in the media. He also suggested that additional clarification regarding the Districts' reserves, Capital Improvement Plan (CIP), and Fairmont BPS Upgrade Project be provided. Mrs. Lugo then responded to questions from the Board regarding reserve funds expected to be transferred to CIP at the end of the fiscal year and restrictions associated with the expenditure of administrative penalties. Minutes of the YLWD Board of Directors Special Meeting Held June 6,2016 at 8:30 a.m. 4 2016-093 President Collett explained that the Fairmont BPS was originally built in 1972 and is due for rehabilitation. This project has been included in the District's CIP for some period of time and will help facilitate the distribution of lower-cost groundwater to the eastern service area in addition to system resiliency. The Board and staff then discussed the different bounce back options after which staff was instructed to bring back another scenario based on a 12% increase in demand as compared to year end projections for the current fiscal year. Mr. Jeff Decker, resident, stated that he had a lot of related questions and volunteered to work with staff on the draft budget in lieu of hiring Raftelis. Director Hawkins noted that the Board would be considering moving back to Stage 1 water conservation measures at the next regular meeting. Mr. Jon Hansen, resident, suggested that staff contact the City of Yorba Linda and Placentia-Yorba Linda Unified School District in regards to their expected increases in water consumption. Mr. Wayne Miller, resident, commented on his personal work experience in relation to projecting expenses, demands, and setting rates. Mr. John Milton, resident, commented on financial information contained in the presentation. 7. ADJOURNMENT 7.1. The meeting was adjourned at 9:57 a.m. The next Regular Board of Directors Meeting will be held Thursday, June 9, 2016 at 8:30 a.m. Annie Alexander Assistant Board Secretary Minutes of the YLWD Board of Directors Special Meeting Held June 6,2016 at 8:30 a.m. 5