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HomeMy WebLinkAbout2017-06-19 - Board of Directors Meeting Minutes 2017-122 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS WORKSHOP MEETING Monday, June 19, 2017, 4:00 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 4:02 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 Art Vega, Information Technology Manager Annie Alexander, Executive Secretary Cindy Botts, Management Analyst Kelly McCann, Senior Accountant Melissa Muttaraid, Public Affairs Representative ALSO PRESENT Andrew Gagen, Partner, Kidman Law LLP Khanh Phan, Senior Consultant, Raftelis Financial Consultants 4. PUBLIC COMMENTS None. 5. DISCUSSION ITEMS 5.1. Presentation of 2017 Water Financial Model Update Ms. Delia Lugo introduced Ms. Khanh Phan from Raftelis. Ms. Phan provided a brief outline of her presentation and reviewed the following topics: financial challenges associated with managing water/wastewater systems; benefits of utilizing a financial model; importance of financial planning and financial policies; and the purpose of reserves. She also Minutes of the YLWD Board of Directors Workshop Meeting Held June 19,2017 at 4:00 p.m. 1 2017-123 covered the purpose of different reserve types and debt coverage ratios. Ms. Phan then summarized the District's current water related reserve types and existing minimum targets, and suggested water related reserve types and target ranges. Discussion regarding the relationships between reserve levels, debt coverage ratios, and credit agency ratings followed. Ms. Phan reviewed the purpose of a debt management policy, imitations on debt issuance, and debt coverage ratio requirements and target ranges. She then provided an overview of water related key assumptions and escalation factors as related to establishing a financial plan. Discussion ensued regarding projected personnel, water supply, and other operating expenses. Projected water sales scenarios, historical and anticipated conservation behavior, and a comparison of water capital improvement plan (CIP) budgets were also discussed. Ms. Phan briefly summarized the District's historical and current debt and the District's financial plan model. Further discussion regarding the District's reserve levels, debt coverage ratios, and debt management policy followed. Ms. Phan then reviewed each of the charts in the model's dashboard in detail and noted that the projected data reflected no increase in revenue through FY22. She explained that the model would be updated as new data became available for the purposes of evaluating the District's financial plan. Ms. Phan then demonstrated the model and the projected impact of various inputs. Discussion ensued regarding expenses in the draft FY18 budget, expenditures that qualify for capitalization, and the need for updating the District's Asset Management Plan (AMP). Ms. Phan continued demonstrating various components of the model as requested by the Board. Mr. Terry Harris (resident) commented on the Ad Hoc Citizens Advisory Committee's recommendations in relation to the District's finances, making the model available to the public, the suggested level of debt coverage, issuing a refund to customers, updating the AMP, and the need for studying budget based water rate structures. The Board discussed potentially deferring certain expenditures included in the draft FY18 budget, the importance of having a strategic plan, water reserve balances, and funding for CIP. Ms. Phan manipulated the model using inputs requested by the Board. The Board further discussed deferring and/or eliminating certain expenditures in the draft FY18 budget and requested a detailed report of supplies and services of same. The Board also requested a printout of each of the tables from the model. Discussion followed regarding costs associated with pending litigation, further analysis of the draft supplies and services budget for FY18, and the timeline for final review and adoption. Ms. Phan continued manipulating the model using various inputs requested by the Board. Discussion ensued regarding the administrative penalty reserve, reserve Minutes of the YLWD Board of Directors Workshop Meeting Held June 19,2017 at 4:00 p.m. 2 2017-124 levels, unfunded accrued liabilities, and the benefits of establishing a rate stabilization reserve. Ms. Cindy Botts indicated that the requested reports would be provided to the Board promptly. She noted that the draft FY18 budget financial summaries would be presented to the Board at the next regular meeting and that any requested changes would be incorporated into the fully illustrated document. Mr. Andrew Gagen was tasked with looking into the ramifications of dropping out of pending litigation. No other major concerns related to the draft FY18 budget or suggested reserve levels were raised. 6. ADJOURNMENT 6.1. The meeting was adjourned at 7:20 p.m. nnie Alexander Assistant Board Secretary Minutes of the YLWD Board of Directors Workshop Meeting Held June 19,2017 at 4:00 p.m. 3