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HomeMy WebLinkAbout2017-08-24 - Board of Directors Meeting Minutes 2017-172 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS WORKSHOP MEETING Thursday, August 24, 2017, 4:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 4:32 p.m. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT J. Wayne Miller, President Marc Marcantonio, General Manager Al Nederhood, Vice President Steve Conklin, Engineering Manager Andrew J. Hall, Director John DeCriscio, Operations Manager Phil Hawkins, Director Gina Knight, HR/Risk and Safety Manager Brooke Jones, Director Delia Lugo, Finance Manager Annie Alexander, Executive Assistant Danielle Logsdon, Associate Engineer Kelly McCann, Senior Accountant Malissa Muttaraid, Public Affairs Representative Rick Walkemeyer, IS Administrator ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP Robert Porr, Senior Vice President, Fieldman Rolapp & Associates Paul Pender, Vice President, Fieldman Rolapp & Associates Lora Carpenter, Senior Associate, Fieldman Rollap & Associates Doug Brown, Partner, Stradling Yocca Carlson & Rauth Engineering Manager Steve Conklin introduced Danielle Logsdon, newly hired for the position of Associate Engineer. 4. PUBLIC COMMENTS None. President Miller commented on the status of Senate Bill 623 and an associated article in the OC Register. Minutes of the YLWD Board of Directors Workshop Meeting Held August 24, 2017 4:30 p.m. 1 2017-173 5. DISCUSSION ITEMS 5.1. Long Range Financial Plan Staff provided an overview of the topics to be covered during the workshop. Mr. Robert Porr briefly explained the benefits of developing a long range financial plan. Mr. Doug Brown then reviewed the role of federal regulators and the progressively heightened attention to disclosure information contained in official statements (OS) for bond offerings. He also reviewed credit rating agencies' considerations when determining ratings and conducting surveillance and the potential impact of significant changes in the District's financial policies or projections. He noted that agencies typically go through a strategic and/or long range financial planning process prior to making such changes. Jay Grewal (resident) commented on the normality of agencies routinely revising their financial policies. Discussion followed regarding the suggested timing and process for considering the potential issuance of a customer refund of the District's net position for FY17, possible consequences of violating bond covenants, and developing a plan for paying down the District's unfunded accrued liabilities. Jay Grewal (resident) commented on legal and financial obligations associated with bond covenants and various factors considered by credit rating agencies. Discussion continued concerning the estimated amount and future management of the District's unfunded accrued liabilities, the development of a policy to address same, subjects to be addressed during the financial planning process, ideal debt to equity ratios, and rating agencies' methodologies for determining credit ratings. Mr. Porr reviewed the purpose and benefits of a long range financial plan and recommended the Board defer consideration of major changes in financial policy until after the strategic planning process was complete. Discussion ensued regarding the 2015 rate study and the District's financial model and historical debt covenant ratios. Minutes of the YLWD Board of Directors Workshop Meeting Held August 24, 2017 4:30 p.m. 2 2017-174 Mr. Porr continued reviewing the long range financial planning process and associated elements, options, and phases. This included options for paying down the District's unfunded accrued liabilities, evaluating reserve levels, debt management, and implementation. Terry Harris (resident) spoke in favor of updating the strategic plan prior to developing a long range financial plan, including pay down of unfunded accrued liabilities in the FY18 budget, and issuing a customer refund of the District's net position for FY17. Jay Grewal (resident) spoke in favor of updating the strategic plan prior to developing a long range financial plan and commented on management of the District's debt covenant ratio and credit ratings. Discussion continued on the suggested time period for the long range financial plan, interest associated with the District's pension liability, and the potential benefits of establishing a trust with Public Agency Retirement Services (PARS). Director Jones reviewed some data and calculations he had compiled based off the District's historical Comprehensive Annual Financial Reports and requested staff feedback. Staff offered to review the information and report back at the next regular meeting. Staff requested the Board consider development of a long range financial plan in conjunction with updating the District's strategic and asset management plans (AMP) prior to considering the issuance of a customer refund. There was a lengthy discussion concerning potential revisions to the District's reserve levels, setting reserve targets, and recommended days of cash on hand. Also discussed were YLWD's debt covenant ratio and unfunded accrued liabilities, and potential issuance of a customer refund. Staff was then directed to provide the Board with a suggested minimum days of cash on hand and alternatives for paying down the District's unfunded accrued liabilities. Terry Harris (resident) spoke in favor of issuing a customer refund of the District's net position for FY17. Minutes of the YLWD Board of Directors Workshop Meeting Held August 24,2017 4:30 p.m. 3 2017-175 The Board requested staff include the following as discussion items on the agenda for the September 12, 2017 meeting and action items on the agenda for the September 26, 2017 meeting: ■ Management of District's Unfunded Accrued Liabilities ■ Disposition of Annual Net Income and Potential Customer Refund Discussion of the District's minimum and maximum reserve levels and reserve targets was also requested to be placed on the September 12, 2017 meeting agenda. Terry Harris (resident) suggested the Board take action on revisions to the District's reserve policy at the September 12, 2017 meeting. 5.2. July 2017 Budget to Actual Statements (To be provided at the meeting.) No materials were provided at the meeting and discussion of this item was deferred to the September 12, 2017 meeting. 6. ADJOURNMENT 6.1. The meeting was adjourned at 7:58 p.m. Annie Alexander Assistant Board Secretary Minutes of the YLWD Board of Directors Workshop Meeting Held August 24,2017 4:30 p.m. 4