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Home My WebLink About2011-03-25 - Board of Directors Meeting Agenda Packet Yorba Linda Water District AGENDA YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS WORKSHOP MEETING Friday, March 25, 2011, 8:00 AM 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL Michael J. Beverage, President Phil Hawkins, Vice President Ric Collett Robert R. Kiley Gary T. Melton 4. PUBLIC COMMENTS Any individual wishing to address the Board is requested to identify themselves and state the matter on which they wish to comment. If the matter is on the agenda, the Board will recognize the individual for their comment when the item is considered. No action will be taken on matters not listed on the agenda. Comments are limited to matters of public interest and matters within the jurisdiction of the Water District. Comments are limited to five minutes. 5. DISCUSSION ITEMS This portion of the agenda is for matters that cannot reasonably be expected to be concluded by action of the Board of Directors at the meeting, such as technical presentations, drafts of proposed policies, or similar items for which staff is seeking the advice and counsel of the Board of Directors. Time permitting, it is generally in the District's interest to discuss these more complex matters at one meeting and consider formal action at another meeting. This portion of the agenda may also include items for information only. 5.1. Fiscal Year 2011/12 Budget Discussion (Budget Kick Off Presentation) 6. CLOSED SESSION The Board may hold a closed session on items related to personnel, labor relations and/or litigation. The public is excused during these discussions. 6.1. Public Employee Performance Evaluation Pursuant to Section 54957 of the California Government Code Title: General Manager 7. ADJOURNMENT 7.1. The next regular meeting of the Board of Directors will be held April 14, 2011 at 8:30 a. m. Items Distributed to the Board Less Than 72 Hours Prior to the Meeting Pursuant to Government Code section 54957.5, non-exempt public records that relate to open session agenda items and are distributed to a majority of the Board less than seventy-two (72) hours prior to the meeting will be available for public inspection in the lobby of the District's business office located at 1717 E. Miraloma Avenue, Placentia, CA 92870, during regular business hours. When practical, these public records will also be made available on the District's internet website accessible at http://www.ylwd.com/. Accommodations for the Disabled Any person may make a request for a disability-related modification or accommodation needed for that person to be able to participate in the public meeting by telephoning the Executive Secretary at 714-701-3020, or writing to Yorba Linda Water District, P.O. Box 309, Yorba Linda, CA 92885-0309. Requests must specify the nature of the disability and the type of accommodation requested. A telephone number or other contact information should be included so the District staff may discuss appropriate arrangements. Persons requesting a disability-related accommodation should make the request with adequate time before the meeting for the District to provide the requested accommodation. ITEM NO. 5.1 AGENDA REPORT Meeting Date: March 25, 2011 Subject: Fiscal Year 2011/12 Budget Discussion (Budget Kick Off Presentation) ATTACHMENTS: Draft Budget Assumptions for BOD Workshop 03252011.doc Budget Assumptions Backup Material Draft Budget Guidelines _FY2011-12_BOD.pdf PowerPoint Presentation Backup Material Capital Improvement Program for FY 2010-11.pdf PowerPoint Presentation Backup Material Yorba Linda Water District Draft FY 2011/12 Budget Draft Budget Assumptions General Assumptions • Operating Expenses and Revenues are divided into two enterprise funds - the Water Fund and the Sewer Fund. Capital expenditures are also divided between these two funds, accordingly. • The budget assumes a water loss factor no greater than 5% (the difference between water purchased and water sold). This includes water used for water quality assurance purposes, water distribution and sewer collection systems maintenance, fire protection purposes, and unaccounted water losses due to water main leaks, inaccurate or stuck meters and water theft. • The District will receive 100% of its share of the ad valorem property tax revenue or approximately $1.23M, an increase of 8% and $130,000 from the prior year. • Regular fuel is estimated to average $4.25 per gallon throughout the year, an increase of $1 per gallon (31 over the prior year. • Electric and natural gas prices will increase by a factor yet to be determined. Water Related Assumptions Revenues • The District will provide potable water service to an average of 24,200 metered water services, an increase of approximately 400 service connections from the prior fiscal year. • Water supply restrictions and associated water allocations will be lifted. However, demands and water sales will continue to be lower than historical norms. • The Draft Budget assumes water demands based on 90% of historical water usage from the baseline three-year average from FY 2006/07-2008/09. The budgeted assumes a yearly demand of 22,350 acre feet (AF). • Water Revenues are calculated with the existing rate structure of $11.73 per month fixed charge and $2.52 per billing unit consumed, which is 100 cubic feet (ccf) or approximately 750 gallons per billing unit. Page I 1 Yorba Linda Water District Draft FY 2011/12 Budget Variable Water Costs • Variable Water Costs include treated and untreated import water purchased from Municipal Water District of Orange County (MWDOC), groundwater purchased from Orange County Water District (OCWD), and electric and gas utility costs (energy) to pump it throughout the community. These expenses account for over 40% of the total water operating budget and vary with demand variations throughout the year. • MWDOC's fixed charge (retail connection charge) will increase from $5.75 to $6.25 per meter, and is charged in the beginning of the fiscal year, based on the number of service connections (meters) in YLWD's service area. This charge is estimated at $151,250. • MWDOC's demand (incremental) charge will decrease from $6.75 to $4.25 per acre foot, and is added to the rates charged by Metropolitan Water District of Southern California (MWD) based on import water purchased throughout the year. These charges will amount to approximately $49,300. • YLWD will participate in two choice programs through MWDOC including the Water Use Efficiency and School Education programs. Costs for participation are estimated at $21,100. YLWD may opt to participate in the Huntington Beach Desalination Project for an additional $2,200 in the next fiscal year. • MWDOC also charges a pass-through (with no additional increment) of MWD's Readiness to Serve (RTS) and Capacity Charges. These charges are estimated at $601,300 in this budget. • MWD's current rate of $744/AF for treated import water will increase effective January 1, 2012 to $794/AF. • Approximately 11,600 AF of treated import water will be purchased from MWDOC throughout the year at an average rate of $769/AF. This amounts to approximately $8.92M. • MWD's current rate of $527/AF for untreated water will increase effective January 1, 2012 to $560/AF. • Approximately 450 AF of untreated import water will be purchased from MWDOC throughout the year at an average rate of $544/AF for a total of $244,800. Page 12 Yorba Linda Water District Draft FY 2011/12 Budget • MWD's Water Supply Condition will be very good and Water Supply Allocations will be lifted. Therefore no allocation penalties will be assessed or factored into the budget. • OCWD will set the basin production percentage (BPP) at 65% for groundwater pumped out of the basin and the replenishment assessment (RA) at $255/AF. • YLWD will utilize local groundwater supplies to the maximum allowable and economical level, which will result in a water supply ratio of 52% (import) to 48% (groundwater). • A total of 10,750 AF will be pumped from the groundwater basin to maximize the benefit of the BPP without incurring a penalty for over pumping the basin. YLWD will pay OCWD approximately $2.85M including annexation surcharges. • Energy increases have not been factored in yet for FY 2011/12. Sewer Related Assumptions • The Sewer Fund will be charged 7% of the administrative overhead. • The District will provide sewerage collection services to an average of 17,500 sewer service connections. • Sewer maintenance charges will remain fixed at $5.50 per month for single family residential (SFR) customers with associated charges for multi-family and commercial accounts. Human Resource Assumptions • Salaries and benefits may require modification from the prior year's budget pending execution of labor agreements and approved memorandums of understanding (MOU's). • The recently vacated positions of Engineering Technician II and Storekeeper will not be filled in this fiscal year. • The District will continue to hold several other authorized positions vacant throughout the budget year. Page 13 Yorba Linda Water District Draft FY 2011/12 Budget • Existing filled positions that become vacant throughout the year may be refilled at the discretion of the General Manager in accordance with the authority granted by the Board of Directors. • The Draft Budget will assume staffing levels at an average of 74 full time employees with benefits throughout the year. • If the City of Yorba Linda's sewer system is transferred to YLWD, two maintenance workers will be added to the authorized number of full time employees with benefits. • Staff will develop and utilize an intern program for consideration and approval by the Board, to augment human resource needs on special projects whenever practical and to provide working experience for qualified candidates. Page 14 Yorba Linda Water District Proposed FY 2011/12 Budget Assumptions, Guidelines Presented By: and Objectives Ken Vecchiarelli, GM Board Budget Workshop � - March 25, 2011 k%z± 0 • Key Business Objectives — Complete Cost of Service/Rate Structure Alternatives Study (in progress) — Develop Five-Year Financial Plan (model developed-plan in progress) — Implement Financial Reserve Policy (plan adopted-implementation in progress) — Complete OCWD Annexation (CEQA - Dec. 2011) — Complete IT Business Systems Implementation (provide additional training anci support tnrougnout ciepartments) — Initiate AWWA/WEF QualServe Benchmarking & Efficiencies Program (self assessment completed, consider peer review next) ze J � J .2 . ! .' c :.r - • Key Business Objectives (Cont'd ) — Install Vehicle Fleet GPS Program (completed — explore and develop utilization and reporting tooisj — Support Sewer Service Area Development (Sewer Master Plan completed — research financing options) — Complete Urban Water Management Plan Update (on target for CUITIpletion by July 1, 2011) • Customer Service Improvements — Support Expanded Online Bill Pay (ACH beta tested) — Implement Enhanced Public Affairs and Outreach Program (progress ` With IilUltr LU whit!) _ _ • Capital Improvement and Replacement Projects — Complete Hidden Hills Reservoir (cumpieceCl d11U iri service) — Complete Highland Reservoir (completed and in service) — Drill & Equip Well No. 20 (drill and testing complete-equipping in design) — Complete Sewer Master Plan (completed) — Value of completed projects to add to depreciation = $16.2M (CIP Overview Presented by Steve Conklin at end) Ar • Capital Improvement and Replacement Projects — Continue aggressive CIP/CRP plan in excellent bidding environment — $17.5M projects in design and construction — $16.6M projects in planning — Approximately $10M per year over next two years in existing projects — $4M over next three years in new CRP's including meter replacements and R&R of pressure reducing stations i Jr • Improve Preventative Maintenance Program — Implement, train and support CMMS ($450-$500K) • Strengthen Employee Recognition & Workforce Engagement Programs • Increase Public Affairs/Government Relations Outreach • Explore Opportunities for Expanding Services • Maximize Utility of District Property j' Input from Board and Stakeholders... i J 3 • Variable Water Costs & Water Revenue Basis — Water conservation of 10% from average FY 2006-09 — Demand estimate 22,250 acre feet — MWD rate Increase 7.5% (eff. January 1, 2012) — OCWD BPP 65% with RA of $255/AF — MWDOC 80% fixed charges & 20% demand — MWDOC $6.75/metered connection and $4.25/AF increment charge — MWDOC "Choice" Budget $23,300 — YLWD revenue based on current rates and 95% recovery Ar it 'tea•' m; • ti� �� r �� • � f F - TBD (currently $5M+)-- Depreciation Increase — Completion of Improvement and Replacement Projects $13 .6M -- Variable Water Cost ( Increase $1M ) — Net Effect of MWD Increases for Import Water Costs — Buying More Water at this higher rate $7.8M -- Salary-Related Expenses — Funding average of 74 FTE's for Full Year — Include Benefits, Reclassifications & Merit air ~mr Ar • +$440,000 — Capital Equipment Outlay — Replace 1999 Sewer Vactor • ($400,000) —Supplies & Services — 10% Target Reduction in Supplies and Services Expenses — ($235,000) -R&R Contingencies taken out of Ops Supplies and Services • +$235,000 — R&R Maintenance Reserve Reallocate Water Emergency Reserve for R&R Contingency Water Reserves — $ 1.82 Million Annually (Based on 10-Yr Horizon) • $1.5M in Capital Repair and Replacements • $320K in Vehicle and Equipment Outlay Sewer Reserves — Current Charge of $1/month ($180,000/yr) for R&R — $165,000 Annually (Based on 25-Yr Horizon) • $75K additional needed for Capital Repair & Replacements • $90K in Vehicle and Equipment Outlay ��` ~ # L �~ 20% $2.7M FY 2011/12 y% $1.1 ■ Power ■ Import Water Ground Water Total Budget: $ 13.6M i Am Variable Water Costs ($13.5M) 30 1i 01 N Long Term Vehicles& Debt($.9M) Equipt.($.9M) Supplies& 1.9% 1 ` 2/ Services($4.OM) 9% Capital Improvement ($12.2M) 27 Val Depreciation($5.4M) 12% FY 2011/12 iotai Budget: $ 44.71VI a FY 2011/12 3% Variable Water Costs Salaries& Benefits Supplies & Services Depreciation Long Term Debt Vehicles& Equipment Budget: $32.5M i 4- QUESTIONS ? i J 1 A-MIL r r Capital Improvement Program for FY 2010- 11 Substantial Progress Continues Projects Completed in FY 10- 11 • Highland Reservoir Construction • Hidden Hills Reservoir Construction • Well Upgrades ( Nos. 1, 5 & 12 ) • Anaheim Intertie Upgrades • Zone Interconnection Stub-ups • Mixer at Hidden Hills Reservoir • Vista del Verde Valve Replacement • Sewer Master Plan Projects in Design & Const in FY 10- 11 • Highland Booster Station Replacement • New Well No. 20 • Ohio & Oriente Pipeline Replacement • 2010 Waterline Replacement Project (6 sites) • Yorba Linda Blvd Booster Sta & Pipeline • Elk Reservoir Site Improvements ( Planned for Completion in FY 11-12 ) Projects in Planning in FY 10- 11 • Fairmont Reservoir, Booster Station & Site Improvements Project • South and West Wells & Pipeline Project • 2012 Pipeline Replacement Project ( 6 sites) Value of CIP Projects in Progress 16.2M Completed this FY $17.5M In Design & Construction In Planning $16.6 Potential New Projects • Water Meter Replacement Project • Pressure Regulating Stations Upgrade • Disinfection Booster Station at Hidden Hills Reservoir Current Projects in Construction Highland Booster Station Y Aa � A Zone Interconnect Stub- ups s �ju,1y VdV Valve Replacement Project IN VdV Valve Replacement Project