HomeMy WebLinkAbout2016-08-17 - Board of Directors Meeting Minutes 2016-158
MINUTES OF THE
YORBA LINDA WATER DISTRICT
BOARD OF DIRECTORS SPECIAL MEETING
Wednesday, August 17, 2016, 4:30 p.m.
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
The August 17, 2016 Yorba Linda Water District Board of Directors Special
Meeting was called to order by President Collett at 4:30 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 Hawkins 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 McAllister, Records Mgmt Admin
Kelly McCann, Senior Accountant
Malissa Muttaraid, Public Affairs Rep
OTHER ATTENDEES
Andrew Gagen, Partner, Kidman Law LLP
Sanjay Gaur, Manager, Raftelis Financial Consultants
Khanh Phan, Senior Consultant, Raftelis Financial Consultants
4. PUBLIC COMMENTS
None.
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5. DISCUSSION ITEMS
5.1. 2016 Update of Water Financial Plan
Mrs. Lugo explained that during the previous fiscal year, the State Water
Resources Control Board (SWRCB) had imposed conservation mandates
on water retailers in order to promote state-wide conservation and reduce
water waste. YLWD's conservation mandate was set at 36%. As such,
the District's water rates included in the 2015 Water and Sewer Rate
Study were based on a 36% reduction in volumetric revenue in the FY
2015/16 base year. Due to a recent change in SWRCB's regulations, the
District was able to self-certify at a 0% conservation mandate. This
modification is projected to increase customer consumption by
approximately 12% for FY 2016/17 as compared to FY 2015/16. During
June, YLWD entered into an agreement with Raftelis Financial
Consultants to update the District's water fund financial model due to the
decreased conservation mandate. Staff provided Raftelis with the
required data to update the model in order to determine the long-term
financial impact on the District. This included the water rates adopted by
Resolution No. 16-10 which were used for the base year. Mrs. Lugo then
introduced Mr. Sanjay Gaur and Mrs. Khanh Phan from Raftelis who were
in attendance to present the results and recommendations of their
analysis and receive feedback from the Board.
Mr. Gaur reviewed the agenda for his presentation and explained the
purpose for reserves." He commented on the capital cost and complexity
of water distributions systems and the inherent risks. He noted that the
District's financial policies should address predictable, unpredictable, and
unknown risks. Mr. Gaur explained the importance of having financial
policies that maintain solvency, provide guidelines for sound long-term
management, and enhance transparency. He further commented on the
purpose of reserves, reviewed the District's existing reserve policy as
compared to the industry standard, and summarized each of the financial
scenarios which were evaluated. 'He also provided a definition of pass-
through charges and noted that they had been excluded in all 3 scenarios.
Mr. Gaur then reviewed each of the scenarios in detail including the
impacts on water revenue and debt coverage, projected water reserves,
the Water Operating Financial Plan, and the Water Capital Improvement
Plan (CIP). Mr. Gaur and Mrs. Phan then demonstrated additional
scenarios as requested by the Board utilizing the financial model. Mrs.
Lugo noted that pay-off of the District's $7M line of credit with Wells Fargo
had been incorporated into the model for FY 2016/17 and that funding for
future CIP related expenses was identified as pay-as-you-go. Mr. Gaur
then responded to questions from the Board.
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Mr. Ben Parker, resident, requested demonstration of the debt coverage
ratio should the District's debt be reduced by half. Related discussion
followed. Mr. Gaur and the Board responded to questions from Mr. Parker
regarding analysis of the cost of service, adjusting the District's business
model, and paying off and/or refinancing the District's bonds. Mr. Gaur
and Mrs. Phan then demonstrated additional scenarios for Mr. Parker
using the financial model.
Mrs. Cristy Parker, resident, asked for clarification regarding the District's
current debt coverage ratio. Mrs. Lugo stated that it was 110% but that
125% is considered industry standard.
Mr. Gaur then responded to questions from the Board regarding the
number of other agencies Raftelis had been working with on similar
issues, water rate trends, and evaluating a tiered rate structure using the
financial model.
Mrs. Lugo stated that Raftelis would be providing a second presentation at
a future meeting after which staff will request further direction from the
Board. The Board and staff then discussed revising the District's reserves
policy and updating the District's strategic plan.
Mr. Gaur and Mrs. Phan left the meeting at this time.
5.2. Draft Updates to Conservation Ordinance
Mr. Micalizzi reviewed the purpose of-the District's water conservation _
ordinance and requested feedback from'the. Board regarding the revised
version included in the agenda packet. The Board then discussed the
following: appropriate drought response level for the prohibition of
filling/refilling of pools and spas; potential exceptions from penalties for
facilities that recycle their water; integrating the administrative penalty
ordinance with the water conservation ordinance;, maintenance of
landscaping necessary for fire protection; time limits on outdoor irrigation;
potential extension of the Governor's drought emergency declaration;
managing the impact of conservation on the District's distribution system.;
prohibition of ' non-recirculating ornamental fountains; identification of
exempt irrigation devices; and the refilling of ornamental ponds or lakes.
Following discussion, Mr. Micalizzi noted that this matter would be brought
back to the Board for further review at a future meeting.
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Mrs. Cristy Parker, resident, commented on the difficulty of enforcing time
limits on outdoor irrigation and incorporating some flexibility in the revised
ordinance. Mrs. Botts provided a brief overview of exemptions contained
in the current ordinance related to outdoor irrigation and associated
devices.
6. ADJOURNMENT
6.1. The meeting was adjourned at 6:09 p.m. The next Regular Board of
Directors Meeting will be held Thursday, August 25, 2016 at 8:30 a.m.
Annie Alexander
Assistant Board Secretary
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