HomeMy WebLinkAbout2017-04-27 - Ad Hoc Citizens Advisory Committee Meeting Agenda Packet
AGENDA
YORBA LINDA WATER DISTRICT
CITIZENS ADVISORY COMMITTEE MEETING
Thursday, April 27, 2017, 6:00 PM
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
2. ROLL CALL
3. PUBLIC COMMENTS
Any individual wishing to address the committee is requested to identify themselves and state the matter on
which they wish to comment. If the matter is on this agenda, the committee Chair will recognize the individual for
their comment when the item is considered. No action will be taken on matters not listed on this agenda.
Comments are limited to matters of public interest and matters within the jurisdiction of the Water District.
Comments are limited to three minutes.
4. ACTION CALENDAR
This portion of the agenda is for items where staff presentations and committee discussions are needed prior to
formal committee action.
4.1. Review of Minutes from Meeting Held April 20, 2017
Recommendation: That the Committee review the minutes and provide requested
revisions to the Facilitator.
4.2. Committee's Recommendations to the Board of Directors
Recommendation: That the Committee formulate and approve recommendations to
the Board of Directors on the following topics: conservation program, administrative
penalties, and conservation reserve; financial reconciliation and customer refund;
replacement and refurbishment of capital facilities and other elements of the Capital
Improvement Plan; water rate structure; communications and transparency; and
overall implementation process.
5. DISCUSSION ITEMS
This portion of the agenda is for matters such as technical presentations, drafts of proposed policies, or similar
items for which staff is seeking the advice and counsel of the Committee members. This portion of the agenda
may also include items for information only.
5.1. Future Meeting Schedule and Agenda Items
6. ADJOURNMENT
6.1. The next Ad Hoc Citizens Advisory Committee meeting will be held Thursday, May 4,
2017 at 6:00 p.m.
Items Distributed to the Committee 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 Committee 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. 4.1
AGENDA REPORT
Meeting Date: April 27, 2017
Subject:Review of Minutes from Meeting Held April 20, 2017
STAFF RECOMMENDATION:
That the Committee review the minutes and provide requested revisions to the Facilitator.
ATTACHMENTS:
Name:Description:Type:
2017-04-20_-_Minutes_-_AHCAC.docx Minutes Minutes
Minutes of the Ad Hoc Citizens Advisory Committee Meeting Held April 20, 2017 at 6:00 p.m. 1
MINUTES OF THE
YORBA LINDA WATER DISTRICT
AD HOC CITIZENS ADVISORY COMMITTEE MEETING
Thursday, April 20, 2016, 6:00 p.m.
1717 E Miraloma Ave, Placentia CA 92870
1. CALL TO ORDER
The April 20, 2017 meeting of the Yorba Linda Water District’s Ad Hoc Citizens
Advisory Committee was called to order at 6:00 p.m. The meeting was held in the
Training Room at the District’s Administration Building located at 1717 East
Miraloma Avenue, Placentia California 92870.
2. ROLL CALL
COMMITTEE MEMBERS PRESENT
Terry Harris (Chair) Pamela Hymel
Dennis Anderson Ben Parker
Lindon Baker Cristy Parker
Jeff Decker Kenneth Tam
Kent Ebinger
YLWD STAFF PRESENT
Malissa Muttaraid, Public Affairs Representative
3. PUBLIC COMMENTS
Brief comments were received from the public, encouraging the committee to stay
on the topic of rates and not be distracted with other issues, and to consider other
revenue sources such as property tax assessments.
4. ACTION CALENDAR
4.1. Review of Minutes from Meeting Held on April 13, 2017
After correcting the spelling of the name of a member of the public and
correcting a typo in the “Public Comments” section, the minutes were
approved.
4.2. Committee’s Recommendations to the Board of Directors
a. Malissa Muttaraid gave a brief presentation on the history, status and
administration of the YLWD conservation and efficiency program.
Materials relevant to her presentation are to be placed on the
committee’s HUB on the website
b. The committee discussed in detail a proposed recommendation by
Dennis Anderson in favor of budget-based tiered rate structure with
Minutes of the Ad Hoc Citizens Advisory Committee Meeting Held April 20, 2017 at 6:00 p.m. 2
zoned energy charges, and public comment was taken. Unanimously,
the committee reached tentative agreement on the rate structure
recommendation, and specific language will be presented to the
committee for final approval at the next meeting.
c. The committee discussed a proposed recommendation from Jeff Decker
that ratepayers be refunded $72 as part of the current budget year
reconciliation, and public comment was taken. After discussion, the
committee agreed unanimously to recommend to the Board that
ratepayers be refunded an amount in the range of $50-90 to be credited
against the fixed charge. Specific language will be confirmed at the next
meeting
d. The committee discussed, and public comment was taken on, a
proposed recommendation from Jeff Decker, and amended by Terry
Harris, that until a budget-based tiered rate structure takes effect, that
current rates remain in effect and that an annual reconciliation against
the adopted budget occur to determine refunds if necessary. The
committee unanimously adopted the recommendation, with specific
language to be confirmed at the next meeting.
e. The committee discussed and public comment was taken on a proposal
from Jeff Decker that the CIP budget and financial planning
documentation show explicitly all developer contributions into capital
projects. The recommendation was unanimously adopted, with specific
language to be confirmed at the next meeting.
f. The committee discussed, and public comment was taken on a proposal
that the Board issue a formal statement regarding the facts and
circumstances of the budget reconciliation to accompany a refund. The
committee agreed unanimously in principle with the proposed
recommendation, but agreed to wait until the next meeting to review
specific language.
5. DISCUSSION ITEMS
5.1 Future Meeting Schedule and Agenda Items
The next meeting is set for April 27, 2017 at 6:00 pm. The agenda will be a
continuation of both discussion and action on recommendations to the
Board.
6. ADJOURNMENT
6.1. The meeting was adjourned at 8:47 p.m.
TJH
OTHER MATERIALS SUBMITTED DURING THE MEETING
Preamble/Introduction
The Ad Hoc Citizens Advisory Committee was charged by the Board of Directors to provide
recommendations regarding both the structure and sufficiency of water rates in the Yorba Linda Water
District, and we are pleased to offer a set of recommendations here.
Our recommendations are intended to improve the YLWD rate structure by making it more financially
stable, more resilient to changing circumstances, easier to understand, and more equitable, while
providing the District with the rate revenues needed for the cost of service, including operations,
maintenance, capital projects, and maintaining adequate financial reserves.
Our recommendations are intended to promote stability,water efficiency,transparency, and adherence
to the letter and the spirit of governing laws. And our recommendations are intended to promote
financial accountability to ratepayers through careful budgeting and reconciliation, providing refunds to
ratepayers if warranted.
MATERIALS SUBMITTED BY: Terry Harris
MEETING DATE: April 27, 2017
Ad Hoc Citizens Advisory Committee
Yorba Linda Water District
DRAFT RECOMMENDATIONS
1. Budget-based Rates
DRAFT 4/20/2017
Fixed Charges Base Variable Charges forwater use
below water budget water u se ove r wate r budget
Repair& Energy
Base Fixed Replacement Total Base Variable Total
a
Fixed Variable Variable
Water Efficiency Program
1
Char Fixed Charge Charge by
Charge a Charge Charge Zone x Charge
by Zone
Inefficient Water Use 3 $$/Unit
$ $ $ + I $/Unit $/Unit $/Unit + Excessive Water Use e $$$/Unit
Note:
1 Amount attributable to the fixed charge and the base variahle charge to be determined by Board policy.
2 Zones to be defined based on water pressure zones(i.e.Zone 675)to cover energy costs and R&R for that Zone.
s 1nefficientwater usage would be defined as the amount of water used over parcels water budget,but less than excessive use.
R Excessive water usage to be defined.
(a) Explore budget based water rates using the following proposed rate structure. (See diagram)
(i) Base fixed charge
(ii)Variable water charge based on water budgets to be developed for each property. Budgets
to be based on indoor water use (i.e. people per household) and outdoor water use (area of
landscaping)
(iii) Zone-based energy variable charges
(iv) Zone-based R&R fixed charges
(b) Develop an appeal and variance system for ratepayers to dispute and resolve potential issues with
calculated water budgets.
(c) Organize a collaborative group of staff and citizens to assist with development and implementation
of budget based rates.
(d) Apply to SAWPA for available grant funds to defray the cost of developing budget based rates.
Tentatively adopted 4/20
2. Near Term Rate
(a) In anticipation of a timely push to adopt tiered budget-based rates, and to avoid the costs of a rate
study and prop 218 analysis, and to avoid further confusion for rate-payers, we recommend no
immediate change to the current base rate and commodity rates.
MATERIALS SUBMITTED BY: Terry Harris
MEETING DATE: April 27, 2017
(b) Until the new budget-based rates are adopted, rate revenue should be reviewed annually against
cost-of-service and reconciled with the adopted budget and cash flow projections. Any surplus should
be returned to the customer as a credit to the account. Any deficit should be balanced with the rate
stabilization reserve.
Tentatively adopted, as edited, 4/20
3. Refund
(a) We recommend that YLWD refund $50-90 per household in a reconciliation of the FY 2015-2016
budget.
(b) We recommend a detailed public statement by the Board to explain the rationale behind this refund,
to correct any prior misstatements, and to commit to new budget accountability processes moving
forward.
Tentatively adopted 4/20 (Jeffrey Decker, edited by Terry Harris)
4. Efficiency Program
(a) In anticipation of a timely push toward tiered budget-based rates, and in anticipation of new
permanent state water efficiency standards, we recommend that the District begin a collaborative
process for planning and budgeting a robust efficiency program to be funded by inefficient and wasteful
tiers of the new rate structure.
(b) Dedicate the Conservation Reserve Fund (currently consisting of penalty funds already collected) to
consist of surcharges from inefficient/abusive water sales in the tiered rate system.
(c) Operate the efficiency program's first year out of existing penalty funds in the reserve,while
collecting surcharges from first year inefficient/abusive water sales. At the end of first year(and end of
every year thereafter) recalculate inefficient/abusive surcharge based on actual program costs and
actual past year sales.
(Edited to include suggestions from Lindon Baker)
S.Administrative Penalties Rebate
1. As soon as possible, restore some public trust by refunding the remaining administrative penalties pro
rata to customers who paid them, via a bill credit.
2. As soon as possible (and before another state law or drought conservation mandate or crisis
purportedly"ties YLWD's hands"), revise existing administrative penalty Ordinance 16-01 to:
a.take into account the equitable factors underlying water budget rates (i.e., size of household,
size of irrigable area, etc.); and
MATERIALS SUBMITTED BY: Terry Harris
MEETING DATE: April 27, 2017
b. explicitly change to a per diem water usage allowance to deal with the different billing period
lengths (i.e., explicitly allow larger usage limits for billing periods that exceed 28 days).
6. Education Program: Budget-based Rates
(a) In anticipation of a timely push toward tiered budget-based rates,we recommend that the District
begin design and preliminary implementation of a comprehensive rate-payer and water-consumer
education and marketing program regarding important details and deadlines for the new rate structure
implementation.
(b) Issues to be addressed by the education program should include (but are not necessarily limited to):
-Values and reasoning behind the structural changes
-Clear guidance as to what water budgets are and how they are set
-Clear guidance for variances and appeals processes
-Tools and resources for all types of users for meeting efficiency targets
7. Low Income/Fixed Income Rate Assistance Study
Due to the short timeframe for the ad hoc committee, we were unable to study rate assistance
programs for low income and fixed income rate-payers. We recommend that the District review such
programs in other water districts, and evaluate the need for a similar program in this district, including
budget and source-of-funding recommendations.
8.Annual Prop 218 Analyses
As part of the adoption of budget-based rate structure,the District should commit to an annual Prop
218 review to provide transparency and maintain flexibility, especially during the initial years of the new
structure.
9.Transparency: Capital Budget
(a) For transparency, clearer and more frequent reporting of capital expenditures is necessary to
understand the nature and scope of capital work underway at the District at any given time. A
"profit/loss" statement for capital work, should be made available at least quarterly.The statement
should clearly show not only capital expenses, but transfers to and from reserves attributable to
particular projects.
(b) Capital budgets—both long term and short term --should also be clearly and quantitatively
reconciled annually to demonstrate progress and to anticipate shortfalls in funding for needed capital
projects. In particular, a detailed annual R&R budget should be established and tracked and reported.
(c)The Asset Management Plan should be updated as soon as possible, and the District's performance
under the previous plan should be evaluated for accuracy of assumptions and projections.
MATERIALS SUBMITTED BY: Terry Harris
MEETING DATE: April 27, 2017
(d) Once updated,the Asset Management Plan should be updated regularly as new information
becomes available. For example,the District's "ugly list" should be regularly integrated into the
comprehensive management plan rather than a separate list of concerns.
10.Transparency: Capital Budget Developer Payments
We recommend that YLWD include expected developer payments as an offset to its Capital Budgets.
Tentatively adopted 4/20
11.Transparency: Reserves
(a)The District should strive for clearer and more regular reporting of reserve balances and activity in
each reserve category. In particular, expenditures from an "emergency" reserve should be more clearly
attributable to a particular emergency; expenditures from the capital reserve should be more clearly
attributable to a particular capital project.
12. Strategic Planning
(a)The District should plan and budget for an update (or complete re-write) of its comprehensive
master plan/strategic plan documents.
(b)The plan should be developed collaboratively with stakeholders.
(c)The plan should reflect new realities for efficiency standards, budget-based rates, advanced meters,
and modern communications strategies.
13.Transparency: Metrics
a)The committee recommends that the Board of Directors formally adopt a set of ratios(management
metrics)to be used to gauge district performance. The definition of the denominators and numerators
of such metrics should cite specific line items from financial statements, budgets and forecasts, and
might include the following:
Numerators: Cash & Short-term investments; unrestricted reserves; restricted reserves;total
revenue; operating revenue; total costs; operating costs; District area (acres); District
population; salaries and benefits cost; supplies and services costs; variable costs; debt, interest
expense and others.
Denominators: miles of mains; asset net book value; asset replacement cost; number of
employees; and others.
Other metrics that can be used are debt service coverage; interest coverage; debt.
MATERIALS SUBMITTED BY: Terry Harris
MEETING DATE: April 27, 2017
Comparisons can be made between budget and actual; current year forecast to next year
budget; Current year actual to next year budget; as well as to other water
suppliers. Comparisons might also be made over multi-year periods to see trends.
b)To assure comparisons of different periods are meaningful, a well-defined methodology of financial
budgeting and forecasting must be adopted and adhered to.
14. Professional Services Costs and In-House Planning
(a)To the extent that outside contractors are necessary to complete planning documents and rate
studies (et cetera), such contracts should be competitively bid.
(b)The District should consider adding permanent in-house planning staff in an effort to avoid and
minimize professional services contracting costs, and to provide oversight of professional services
contracting.
15.Transparency: Staffing
(a)The District should consider a comprehensive review of staffing needs and organizational structure.
In particular,the District should consider eliminating long-vacant positions, bringing more professional
staffing to minimize consultant contracting, rebalancing workloads, and to minimize overtime. In
addition, salaries and benefits should be reviewed for competitiveness in the current regional market,
with an eye on uncontrolled liabilities to the District.
(b)The District should consider revising its merit-based salary increases to provide greater rewards to
fewer employees for truly exceptional performance. Under the current system,too many employees are
rated too highly, straining the salary pool.
(c) Our recommendations should be implemented prior to upcoming contract negotiations with
represented employees.
MATERIALS SUBMITTED BY: Terry Harris
MEETING DATE: April 27, 2017
INTRODUCTION
In November 2016,voters overwhelmingly elected new majority leadership to the YLWD Board.As
candidates, a majority of the newly elected Board pledged to"Put Customers First" by,among other
actions:
(a) Providing safe,clean and reliable water
(b) Reducing rates by cutting waste and inefficiencies
(c) Returning excess revenue to customers
(d) Requiring developers to pay their fair share of capital improvements
(e) Improving financial transparency
In March 2017,the new YLWD Board appointed an 11-member Adhoc Citizens Advisory Committee to
examine and make recommendations regarding YLWD's rate structure and rate sufficiency.The
Committee offers the following recommendations,with the ultimate goal of better enabling YLWD to
Put Customers First.
1. Budget-based Rates
Under Prop 218,fees or charges for water or sewer service shall not(a) exceed the funds required to
provide the service or(b)exceed the proportional cost of service attributable to a parcel.
The YLWD service area includes several water pressure zones that have significantly different energy
costs associated with pumping water to them. Also,there are installation, repair and replacement costs
for infrastructure that clearly benefit only customers in a particular geographic region of the district.
In addition, household size and irrigable acreage per parcel vary widely throughout the district. The
Committee believes that consideration of these factors should be taken into account in order to
establish an equitable rate structure that encourages conservation without interfering with customers'
basic enjoyment of their individual property.
Based on third-party presentations made to the Committee,the Committee believes that the following
water budget based rate system may be an appropriate way to encourage conservation while ensuring
equity among customers:
MATERIALS SUBMITTED BY: Cristy Parker
MEETING DATE: April 27, 2017
3. Refund
In the Committee's discussions regarding rate sufficiency,the Committee concluded that it appears that
YLWD customers were charged more than the cost of service following the September 2015 rate
increase. While it is difficult to precisely quantify the overcharge,the Committee recommends that
YLWD refund $50 to$90 per customer via a bill credit.
Regardless of whether YLWD may have already spent the specific"overcharge money"on something
else, money is fungible,and the Committee believes that a refund is appropriate and that sufficient
funds are or can be made available for the refund.
5. Administrative Penalties Rebate
In 2015, YLWD instituted an administrative penalty scheme that collected approximately$1.69 million
from customers.These penalty funds could not be used for"cost of service,"since they were not
collected via the Prop 218 process.
The penalty scheme was arbitrary and inequitable in that it did not take into account the reality of
different customers' basic needs and it resulted in unpredictable levying of penalties by not properly
adjusting water allocations for different billing period lengths.
YLWD publicly and repeatedly stated that the penalties were needed to ensure that YLWD could pay any
penalties YLWD could have incurred if its customers did not meet the state's 36%conservation
mandate. Given that YLWD paid zero penalties to the state, is not in danger of owing any future
penalties, and has self-certified a 0%conservation rate,the key stated purpose for which YLWD claimed
the penalties were collected no longer exists.
Prop 218 prohibits use of fees and charges collected under Prop 218 for any purpose other than that for
which they were imposed. While the penalty funds were not collected pursuant to Prop 218,this same
concept of not using the remaining penalty funds for purposes other than paying state penalties seems
appropriate.
MATERIALS SUBMITTED BY: Cristy Parker
MEETING DATE: April 27, 2017