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HomeMy WebLinkAbout2009-07-01 - Board of Directors Meeting Minutes 2009-093 MINUTES OF THE ' YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS WORKSHOP MEETING July 1, 2009 1. CALL TO ORDER The July 1, 2009 workshop meeting of the Yorba Linda Water District Board of Directors was called to order by President Summerfield at 4:00 p.m. The meeting was held at the District's Administrative Office at 1717 E Miraloma Ave, Placentia CA 92870. 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL DIRECTORS PRESENT STAFF PRESENT John W. Summerfield, President Ken Vecchiarelli, General Manager William R. Mills, Vice President Art Kidman, General Counsel Paul R. Armstrong Annie Alexander, Executive Secretary Michael J. Beverage Ric Collett ' 4. ADDITIONS/DELETIONS TO THE AGENDA None. 5. PUBLIC COMMENTS None. 6. DISCUSSION ITEMS 6.1. Water Rate Increase Mr. Vecchiarelli introduced the item and began with a PowerPoint presentation regarding the need for a water rate increase and options available to the Board. A public hearing to consider a water rate increase has been scheduled for August 27, 2009 at 6:30 p.m. Notice of the public hearing and proposed water rate increase will need to be provided to District customers 45 days in advance in accordance with Proposition 218. Mr. Vecchiarelli also provided a handout to those in attendance regarding volumetric fixed rate options and average water consumption totals. Director Beverage inquired as to the status of a report he had requested regarding the budget deficit and related pass through costs. Mr. Vecchiarelli stated that the report was still in progress and would be ' completed within the next few weeks. 2009-094 Mr. Vecchiarelli summarized the FY 2009/10 Budget water revenues, expenses and projected deficit. The District will need to generate ' approximately $10.1M in additional revenue to balance the budget should the Board decide to fund 100% of the calculated depreciation. Mr. Vecchiarelli then briefly reviewed the following assumptions used in staffs recommended option for addressing the deficit and the resulting water rate increase: ■ Funding 50% of Depreciation and Amortization Instead of 100% ■ Setting the Fixed Rate Revenue at 25% of Total Revenue Needed ■ Setting a Volumetric Fixed Rate verses the Current One Size Fits all Model ■ Transferring Property Tax Revenue to Capital Reserves ■ Setting Commodity Rate Revenue at 75% of Total Revenue Needed Mr. Vecchiarelli also noted that funding for potential allocation penalties from MWDOC and OCWD was not considered in the formulas and models presented. Mr. Vecchiarelli then provided an overview of the District's average water consumption from 2004 to 2006. MWDOC has set the District's target import water allocation (imported water supplies) for FY 2009/10 to 15% ' below the 3 year average of our imported water demands. OCWD has also lowered the District's target groundwater allocation (the Basin Production Percentage or BPP) for FY 2009/10 to 62% of total demands within the OCWD boundaries. Since only 75% of the District's total demands occur within the OCWD boundary, a 62% BPP converts to a total YLWD system BPP of less than 47%. Penalties for exceeding either of these allocations will be extremely expensive for the District and its customers. The FY 2009/10 Budget and projected deficit does not include funding for potential penalties. A spreadsheet detailing penalty amounts will be included in the Water Rate Report. Mr. Vecchiarelli reviewed revenue projections using a volumetric fixed rate model generating 25% of the revenue needs. Using this model, the monthly fixed rate, also known as a standby or water availability rate, would be based on meter size. Implementation of a tiered water rate model was then discussed for the usage or commodity charge. Using an increasing block rate approach, water rates would increase over three or more tiers based on monthly water consumption averages and allowances within each tier. Using this model, the highest percentage of water users would not see large water bill increases for average water usage, and the highest water users would see only a nominal additional charge for above average usage. , 2 2009-095 The Board discussed the funding percentage for depreciation and ' amortization. Funding only 50% of depreciation would deduct approximately $1.9M from the projected deficit shortfall. Following discussion, the Board directed staff to include data for funding 25% and 0% of depreciation in the Water Rate Report. The Board then discussed staffs proposal to set the fixed revenue (monthly fixed charge) to 25% of the total annual revenue needed. Following discussion, a majority of the Board members were uncomfortable with the relatively high increase in this charge and directed staff to include a range of standby and commodity rate alternatives in the Water Rate Report. Mr. Vecchiarelli spoke regarding the option of transferring property tax revenue to capital reserves. Doing this would insulate affects on operating revenue should the District's property tax revenue be borrowed by the State. Following discussion, it was the consensus of the Board to consider this transfer further with the continued water rate discussion. Mr. Vecchiarelli spoke again regarding funding for potential penalties should the District customers collectively exceed water allocations set by MWDOC and OCWD. Mr. Vecchiarelli suggested that the Board include a provision in the water rate resolution that would allow the District to ' consider raising rates again during the second half of the fiscal year to pay for penalties if it became clear that demands were exceeding our allocation. If penalties were not projected to occur, no additional rate increase would be necessary. The Board then discussed how funds would be refunded to customers should the penalties not be as high as expected. 7. ACTION CALENDAR 7.1. Notice of Public Hearing to Consider 2009 Water Rate Report Mr. Vecchiarelli stated that this item would need to be brought back to the Board at a future meeting. Following discussion, the Board instructed staff to prepare this item for approval by the Public Information-Technology Committee at its meeting scheduled July 7, 2009. 8. ADJOURNMENT 8.1. On a motion by Director Beverage, seconded by Director Mills, the meeting was adjourned at 6:20 p.m. The next regular meeting of the Board of Directors will be held July 9, 2009 at 8:30 a.m. Kenneth R. Vecchiarelli Secretary 3