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HomeMy WebLinkAbout2016-06-14 - Board of Directors Meeting Minutes 2016-103 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS SPECIAL MEETING Tuesday, June 14, 2016, 3:00 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The June 14, 2016 Yorba Linda Water District Board of Directors Special Meeting was called to order by President Collett at 3:00 p.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 Director Kiley led the pledge. ROLL CALL DIRECTORS PRESENT STAFF PRESENT Ric Collett, President Marc Marcantonio, General Manager Michael J. Beverage, Vice President Steve Conklin, Engineering Manager Phil Hawkins John DeCriscio, Operations Manager Robert R. Kiley Gina Knight, Human Resources/Risk Manager Gary T. Melton Delia Lugo, Finance Manager Damon Micalizzi, Public Information Manager Art Vega, Information Technology Manager Annie Alexander, Executive Secretary Cindy Botts, Water Cons Supvr/Mgmt Analyst Laurie McAllaster, Records Mgmt Administrator OTHER ATTENDEES Andrew Gagen, Partner, Kidman Law LLP Jeff Decker, Resident Kent Ebinger, Resident Ben Parker, Resident Cristy Parker, Resident Julia Shultz, Resident 4. PUBLIC COMMENTS None. Minutes of the YLWD Board of Directors Special Meeting Held June 14, 2016 at 8:30 a.m. 1 2016-104 5. ACTION CALENDAR 5.1. Metropolitan Water District of Southern California Coalition Letter Opposing SB554 (Wolk) Mr. Micalizzi explained that the Metropolitan Water District of Southern California was seeking signatures for a coalition letter taking an Oppose Unless Amend position against Senate Bill 554. The Bill contains language that is contrary to the "beneficiaries pay" principle as it is seeking to permanently encumber the State General Fund for levee maintenance responsibilities on private lands in the Sacrament-San Joaquin Delta. Mr. Micalizzi noted that Director Brett Barbre had requested the District's support regarding this matter at a previous Board meeting. He and Mr. Marcantonio then responded to questions from the Board regarding the content of the letter. Director Hawkins made a motion, seconded by Director Kiley, to authorize the General Manager to sign the Metropolitan Coalition letter on behalf of the District. Vice President Beverage asked about the number of other agencies signing on to the letter. Mr. Micalizzi explained that due to timing issues, only those agencies who were able to take action prior to the submission deadline would be participating. Motion carried 5-0. President Collett requested that staff forward a copy of the letter to the Board once it had been finalized. 6. DISCUSSION ITEMS 6.1. Draft Reserve Policy for FY 2016/17 Mrs. Lugo explained that the Board considered the District's reserve policy on an annual basis. The only change from the current policy is the addition of a Conservation Reserve which would be funded from the net result of administrative penalties assessed less allowable expenditures for each fiscal year. Mrs. Lugo then read the description of the Conservation Reserve contained in the draft policy and responded to related questions from the Board. Mr. Marcantonio noted that Rutan & Tucker had just published a white paper regarding the use of penalty revenue. Mrs. Lugo then responded to additional questions from the Board regarding the handling of the proposed reserve should the State Water Resources Control Board (SWRCB) implement permanent conservation regulations. Minutes of the YLWD Board of Directors Special Meeting Held June 14, 2016 at 8:30 a.m. 2 2016-105 Vice President Beverage suggested utilizing the proposed reserve to enhance the District's rebate program through MWDOC. Mr. Jeff Decker, resident, spoke against the use of administrative penalty revenue for any purpose and suggested that it be refunded to District customers. He then commented on fines issued to customers for violations of the District's conservation ordinance. President Collett clarified that the revenue received from fines assessed for violating the conservation ordinance was different from that received from administrative penalties and that the proposed reserve would be funded from the latter. Mr. Decker then spoke against the use of administrative penalty revenue to fund the salaries of the District's Water Conservation Representatives. Mrs. Cristy Parker, resident, noted that there wasn't a maximum level for the Capital Replacement Reserve contained in the draft reserve policy. She also commented on the recommended reserve levels referenced in the water/sewer rate study. Mrs. Lugo clarified that the proposed reserve policy did not reflect the recommended levels referenced in the water/sewer rate study due to pending litigation. Staff is planning to present a revised reserve policy for Board consideration once the litigation has been resolved. Mrs. Julia Shultz, resident, asked for confirmation that the fines assessed for violating the conservation ordinance were different from the administrative penalties assessed for exceeding mandatory water use restrictions. Vice President Beverage confirmed that there were two different ordinances associated with the fines and penalties. Mrs. Shultz, stated that the majority of District customers were not assessed penalties and spoke against refunding revenue received from penalties to customers who were out of compliance. She also commented on her personal conservation efforts and the possibility of SWRCB changing its conservation regulations at some point in the future. Mr. Ben Parker, resident, stated that in an effort to conserve water, some customers had let their lawns die and were still assessed penalties. Director Beverage made a motion, seconded by Director Hawkins, directing staff to present the draft reserve policy to the Board at a future meeting for formal consideration. Motion carried 5-0. Minutes of the YLWD Board of Directors Special Meeting Held June 14, 2016 at 8:30 a.m. 3 2016-106 6.2. Draft Operating Budget for FY 2016/17 Mrs. Lugo provided an overview of the Board's previous discussions related to the draft budget. She explained that staff had prepared two financial scenarios for the Board's review based on a 12% and 8% incremental increase (or bounce back) in water demand as compared to year end projections for the current fiscal year. Mrs. Botts then reviewed staff's demand comparisons and the 12% bounce back scenario with financial projections through FY 2020. Staff also responded to questions from the Board regarding the Capital Replacement Reserve and the Capital Improvement Program. Mrs. Botts then reviewed the 8% bounce back scenario and noted that it had been prepared for comparative purposes only. She also presented staff's projections for potential reduction of the monthly service charges during FY 2016/17 and explained that they were subject to change following completion of Raftelis' formal financial analysis. Mrs. Botts clarified that should the Board elect to reduce the monthly service charges using staff's calculations, that both scenarios would allow the District to cover its projected expenses for FY 2016/17. The Board and staff then discussed the following topics: feedback received from the City of Yorba Linda and Placentia-Yorba Linda Unified School District regarding their respective anticipated increases in outdoor irrigation; water production trends following institution of Stage 1 water conservation measures, customer participation in the turf removal rebate program; estimated percentage of customers who let their lawns turn brown in order to conserve water; and the District's original 5-year financial plan. Mr. Jeff Decker, resident, asked for clarification regarding the two financial scenarios presented during the meeting and the potential reduction of the monthly service charge. Mrs. Lugo explained the impact of increased water demand on the District's finances and the importance of setting rates that reflect the cost of service. Mr. Decker also commented on the projected revenues and bounce back increments in the two financial scenarios. Mr. Kent Ebinger, resident, asked for clarification regarding the forecasted funds available for transfer to the Capital Replacement Reserve in the forecast for FY 2015/16 in each of the scenarios versus the forecast contained in the FY 2015/16 budget document for the same line item. Mrs. Lugo explained that the budget for FY 2015/16 contained forecasted financial information which was subject to change. The Board and Mrs. Lugo then responded to questions from Mr. Ebinger regarding the handling of revenue received from administrative penalties and the District's reserve funds. Mr. DeCriscio then provided an overview of staff's cost saving efforts in relation to water production during the current fiscal year. Minutes of the YLWD Board of Directors Special Meeting Held June 14, 2016 at 8:30 a.m. 4 2016-107 Additional discussion regarding each of the financial scenarios continued. Vice President Beverage suggested that the Board consider a scenario with a bounce back of 15% the first fiscal year and then 17%, 20%, and 22% for the following fiscal years. Mrs. Lugo noted that regardless of which scenario the Board decided to move forward with, the potential refunding of the certificates of participation and extension of the line of credit would be dependent on a budget containing 5-year projections that were substantiated and demonstrated financial responsibility. Each of the Directors then shared which scenario or scenarios they'd like to consider further. Mr. Gagen commented on SWRCB's self-certification process and the potential for mandatory conservation regulations being reinstated. Mr. Jeff Decker, resident, commented on the District's most recent financial statements and the forecasted net revenue for FY 2015/16 in the financial scenarios. Mrs. Lugo briefly responded to his concerns. President Collett requested that staff bring back two scenarios for the Board's review starting with a 12% and a 15% bounce back. He noted that the next Board meeting to discuss the draft budget was scheduled Thursday, July 7, 2016 at 8:30 a.m. and that approval of the final draft budget was scheduled for a special meeting scheduled July 21, 2016. President Collett then thanked staff for their work. Mrs. Lugo then responded to questions from the Board regarding the effective date of the final budget. 7. ADJOURNMENT 7.1. The meeting was adjourned at 4:20 p.m. The next Regular Board of Directors Meeting will be held Thursday, June 23, 2016 at 8:30 a.m. Annie Alexander Assistant Board Secretary Minutes of the YLWD Board of Directors Special Meeting Held June 14, 2016 at 8:30 a.m. 5