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HomeMy WebLinkAbout2017-06-27 - Board of Directors Meeting Minutes (B) 2017-127 MINUTES OF THE YORBA LINDA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING Tuesday, June 27, 2017, 6:30 p.m. 1717 E Miraloma Ave, Placentia CA 92870 1. CALL TO ORDER The meeting was called to order at 6:39 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 Assistant ALSO PRESENT Andrew Gagen, Partner and General Counsel, Kidman Law LLP Beth Haney, Councilmember, City of Yorba Linda 4. ADDITIONS/DELETIONS TO THE AGENDA General Manager Marcantonio indicated there were no changes to the agenda and that additional materials had been distributed to the Board and made available to the public. 5. INTRODUCTIONS AND PRESENTATIONS 5.1. Elected Official Liaison Reports None. 6. PUBLIC COMMENTS Julia Schultz (resident) spoke against the issuance of a customer refund and in favor of establishing a rate stabilization reserve. Minutes of the YLWD Board of Directors Regular Meeting Held June 27, 2017 at 630 p.m. 1 2017-128 7. CONSENT CALENDAR Director Hall indicated he would need to abstain from voting on Item Nos. 7.2. and 7.5. as he wasn't present at the meetings. Finance Manager Lugo responded to questions from Vice President Nederhood regarding the timing of a payment listed on Item No. 7.6. Director Hawkins made a motion, seconded by Director Nederhood, to approve Item Nos. 7.1., 7.3., 7.4., 7.6., and 7.7. on the Consent Calendar. Motion carried 5-0. Director Hawkins made a motion, seconded by Director Nederhood, to approve Item Nos. 7.2. and 7.5. on the Consent Calendar. Motion carried 4-0-1-0 with Director Hall abstaining. 7.1. Minutes of the Board of Directors Workshop Meeting Held March 21 , 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.2. Minutes of the Board of Directors Special Meeting Held March 22, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.3. Minutes of the Board of Directors Regular Meeting Held March 28, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.4. Minutes of the Board of Directors Regular Meeting Held April 11, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.5. Minutes of the Board of Directors Special Meeting Held April 18, 2017 Recommendation: That the Board of Directors approve the minutes as presented. 7.6. Payments of Bills, Refunds, and Wire Transfers Recommendation: That the Board of Directors ratify and authorize disbursements in the amount of$1,814,608.97. Minutes of the YLWD Board of Directors Regular Meeting Held June 27, 2017 at 630 p.m. 2 2017-129 7.7. Declaration of Restrictive Covenants with Bernardo and Ana B. Flores Recommendation: That the Board of Directors authorize the President and Secretary to execute a Declaration of Restrictive Covenants with Bernardo and Ana B. Flores. 5. INTRODUCTIONS AND PRESENTATIONS CONTINUED 5.1. Elected Official Liaison Reports Councilmember Haney reported on her recent tour of MWD's Diemer Water Filtration Plant and the City's 4th of July Celebration. 8. ACTION CALENDAR 8.1. Adopting a Public Funds Investment Policy for Fiscal Year 2018 Finance Manager Lugo explained that the District's chief fiscal officer was legally required to present an investment policy to the Board for consideration on an annual basis. The purpose of the policy is to establish procedures for a prudent and systemic investment program in support of the District's overall mission. The Board and staff briefly discussed the future issuance of an RFP for banking services. The Board voted 5-0 on a Roll Call vote to approve Resolution No. 17-16 adopting a Public Funds Investment Policy for Fiscal Year 2018 and rescinding Resolution No. 16-18. 8.2. Appropriations Limit for Fiscal Year 2018 Finance Manager Lugo explained that the District was legally required to adopt an Appropriations Limit and factors used to calculate this number annually. This limit assures that government agencies do not assess and collect taxes in excess of the controlled limits. Historically, the District has received a small amount of property tax revenue which is substantially lower than the calculated limitation. The Board voted 5-0 on a Roll Call vote to approve Resolution No. 17-17 adopting the Appropriations Limit for Fiscal Year 2018. Minutes of the YLWD Board of Directors Regular Meeting Held June 27,2017 at 6:30 p.m. 3 2017-130 8.3. Financial Reserves Policy for Fiscal Year 2018 Finance Manager Lugo explained the purpose of this policy and the recommended revisions. The Board and staff discussed current reserve categories and target levels as compared to those recommended by Fieldman Rolapp & Associates, the District's financial advisors, and in the 2015 rate study performed by Raftelis Financial Consultants. They also discussed relationships between reserve levels, debt coverage ratios, days of cash on hand, and credit agency ratings; projected reserve balances ending FY17 and beginning FY18; and the District's unfunded accrued liabilities. Vice President Nederhood suggested eliminating the Emergency, Maintenance, and Administration Reserves, and updating the District's purchasing policy. Finance Manager Lugo noted that the District's debt management and proposed reserves policies were geared towards maintaining the YLWD's current credit agency ratings. If a future rating surveillance finds a material difference in the District's days of cash and reserve levels as compared to what was presented in the Official Statement for the 2017A refunding bonds, its possible YLWD's credit ratings could be downgraded. Vice President Nederhood clarified that he was suggesting to subsume the above listed reserve categories with the Operating Reserve, not eliminate the reserve amounts. The Board and staff continued discussing various metrics considered by credit rating agencies. Director Hawkins suggested that reserve categories under $500K be combined with a similar reserve. Finance Manager Lugo suggested that the Maintenance and Administration Reserves be combined with the Capital Replacement Reserve as associated purchases would be capitalized. Operations Manager DeCriscio explained the historical purpose and management of the Maintenance Reserve in relation to the District's purchasing policy. Finance Manager Lugo noted that staff was currently working on revising the District's purchasing policy. The Board and staff discussed the difference between and management of the Operating and Emergency Reserves; best practice recommendations for segregation of reserves; and potential drawbacks of combining reserve categories. Terry Harris (resident) commented on the Ad Hoc Citizens Advisory Committee's (AHCAC) recommendations in regards to the District's reserves. Finance Manager Lugo responded to questions from an unknown resident regarding the composition (cash versus investment) and management of the District's reserves. Minutes of the YLWD Board of Directors Regular Meeting Held June 27,2017 at 6:30 p.m. 4 2017-131 Julia Schultz (resident) spoke against the combining of reserve categories. Vice President Nederhood suggested that if the Emergency Reserve was to remain segregated, the definition of such be worded more precisely in the policy. Director Nederhood made a motion to eliminate the Emergency, Maintenance, and Administrative Reserve categories in the proposed Financial Reserves Policy for Fiscal Year 2018. Motion failed for lack of second. Director Hall made a motion, seconded by Director Hawkins, to combine the Maintenance and Administrative Reserve categories with the Capital Replacement Reserve category in the proposed Financial Reserve Policy and approve Resolution No. 17-18 Adopting the Financial Reserves Policy as amended for Fiscal Year 2018 and Rescinding Resolution No. 16-08. Motion carried 5-0 on a Roll Call vote. The Board then directed staff to revise the District's purchasing policy to accommodate the changes described above. Finance Manager Lugo indicated the revised policy would be presented to the Board at a regular meeting in late July or August for consideration. 8.4. Sewer Rate for Fiscal Year 2018 Finance Manager Lugo explained that in compliance with Proposition 218, a public hearing was held in September 2015 to consider rates as presented in the FY16-20 Water and Sewer Rate Study Report. Staff is requesting the Board increase the monthly sewer service rate based on customer type for FY18 as identified in Year 3 of the Rate Study. Director Hawkins made a motion, seconded by Director Hall, to approve Resolution No. 17-19 Setting Sewer Rates Effective August 1, 2017 and Rescinding Resolution No. 16-11. Motion carried 5-0 on a Roll Call vote. 8.5. Operating Budget for Fiscal Year 2018 (Financial Summaries) General Manager Marcantonio provided an overview of key financial information contained in the District's proposed operating budget for FY18. He noted that there was no anticipated increase in water rates. Vice President Nederhood suggested the proposed FY18 budget for supplies and services expenses be reduced by approximately $300K. Director Hawkins indicated that approximately $200K may be more reasonable considering the District's involvement in pending litigation. Minutes of the YLWD Board of Directors Regular Meeting Held June 27, 2017 at 630 p.m. 5 2017-132 General Counsel Gagen reviewed the benefits of participating in the case and recommended the District's continued involvement due to the potential long-term financial consequences of dropping out. Vice President Nederhood also suggested the Board consider reincorporating any expense items removed from the budget following development of the District's strategic plan. General Manager Marcantonio indicated that this would be possible. The Board and staff then discussed deferring or modifying various expenses identified in the FY18 budget including: institution of 100% paperless billing to reduce postage costs; updating the Asset Management Plan (AMP); implementation of customer engagement/water usage analytics software; engagement of legislative and public affairs consultants; performance of an employee compensation survey; and distribution of the customer newsletter in electronic versus print form. Brief discussion followed regarding the reasons for employee turnover. Terry Harris (resident) commented on the Ad Hoc Citizens Advisory Committee's (AHCAC) recommendations in regards to the District's reserves and rate structure, and updating the asset management and strategic plans. He also proposed that the Board wait until after the strategic planning process was complete before considering modifications to the budget. Julia Shultz (resident) also suggested the Board go through the strategic planning process prior to modifying the budget. The Board then discussed removing the following expenses from the FY18 budget and reconsidering their necessity following the completion of a strategic plan: legislative consultant services ($60K); public relations consultant services ($50K); employee compensation survey ($60K); and print publication and distribution of the customer newsletter ($47K). Director Hawkins made a motion, seconded by Director Jones to: (1) remove the above listed expenses totaling $217K from the Operating Budget for Fiscal Year 2018; (2) consider adding the same listed expenses back to the Operating Budget for Fiscal Year 2018 following completion of the strategic planning process, and (3) approve Resolution No. 17-20 adopting the Operating Budget for Fiscal Year 2018 as amended and rescinding Resolution No. 16-09. Motion carried 5-0 on a Roll Call vote. Minutes of the YLWD Board of Directors Regular Meeting Held June 27, 2017 at 6:30 p.m. 6 2017-133 Finance Manager Lugo noted that the fully illustrated budget document would be presented to the Board for review in July prior to being submitted to the Government Finance Officers Association's budget presentation award program. 8.6. Final Environment Compliance for the Hidden Hills Reservoir Project Engineering Manager Conklin explained that in 2010, the District began efforts to restore an area in Chino Hills State Park impacted by construction of the Hidden Hills Reservoir as required by conditions established in the CEQA Mitigated Negative Declaration. The District's consultant, Chambers Group, has worked over the last six years to restore native vegetation in this area to at least 70% of its former state. Unfortunately, the achieved percentage of restoration is not to the satisfaction of the federal and state resource agencies reviewing the work. Rather than continue these efforts with the hope of meeting these agencies expectations, staff is recommending the District negotiate with them to purchase offset land-bank mitigation property to compensate for the shortfall in order to end the required mitigation work. The Board and staff then discussed the consultant's restoration efforts. Director Jones made a motion, seconded by Director Hall, to (1) approve budgeting $120,000 for the purchase of offset land-bank mitigation property and $40,000 for consulting, permitting and related costs, for a cumulative total of $160,000 for FY 2018; and (2) approve a $23,892 Change Order increase to the Professional Services Agreement with Chambers Group which is included in the $40,000 amount. Motion carried 5-0. 8.7. Request for Governor Brown's Concurrence with Listing of Orange County North Basin Project on National Priorities List Engineering Manager Conklin explained that OCWD was asking each of the groundwater producer agencies to send a letter requesting Governor Brown's concurrence with listing of the Orange County North Basin Project on the EPA's National Priorities List. He also reviewed the benefits of doing so. Director Hawkins made a motion, seconded by Director Jones, to authorize the General Manager to execute and submit correspondence requesting Governor Brown's concurrence with listing Orange County Water District's North Basin Project on the National Priorities List. Motion carried 5-0. Minutes of the YLWD Board of Directors Regular Meeting Held June 27,2017 at&30 p.m. 7 2017-134 9. DISCUSSION ITEMS Director Hawkins made a motion, seconded by Director Jones, to defer discussion of Item Nos. 9.1. and 9.2. to the next regular meeting. Motion carried 5-0. 9.1. Budget to Actual Statements for Month Ending May 31, 2017 9..2, Cash and Investment Report for Period Ending May 31, 2017 10. REPORTS INFORMATION ITEMS, AND COMMENTS 10.1. Directors' Reports None. 10.2. General Manager's Report None. 10.3. General Counsel's Report General Counsel Gagen provided guidance to the Board regarding the use of e-mail in relation to the Public Records Act and the Ralph M. Brown Act. 10.4. Future Agenda Items and Staff Tasks None. 11. COMMITTEE REPORTS 11.1. Interagency Committee with MWDOC and OCWD (Miller/Nederhood) ■ Next meeting is scheduled July 27, 2017 at 4:00 p.m. 11.2. Joint Agency Committee with City of Yorba Linda (Miller/Hawkins) ■ Minutes of the meeting held June 12, 2017 at 4:00 p.m. will be provided when available. ■ Next meeting is scheduled September 18, 2017 at 4:00 p.m. at YL City Hall. Minutes of the YLWD Board of Directors Regular Meeting Held June 27,2017 at 6:30 p.m. 8 2017-135 11.3. Joint Agency Committee with City of Placentia (Miller/Nederhood) ■ Next meeting yet to be scheduled. 12. INTERGOVERNMENTAL MEETINGS The Directors reported on their attendance at the following meetings. 12.1 LAFCO — June 14, 2017 (Nederhood —As Needed) 12.2 YL Planning Commission — June 14, 2017 (Hawkins — As Needed) Director Hawkins did not attend this meeting. 12.3. OC Water Summit — June 16, 2017 (Hawkins/Jones/Miller/Nederhood) 12.4. MWDOC — June 21 , 2017 (Nederhood) 12.5. OCWD — June 21, 2017 (Jones) 12.6. YL City Council — June 26, 2017 (Nederhood) 13. BOARD OF DIRECTORS ACTIVITY CALENDAR 13.1. Meetings from June 28 — September 30, 2017 The Board reviewed the activity calendar and made no changes. 14. CONFERENCES, SEMINARS, AND SPECIAL EVENTS 14.1. CBWCD Symposium on Statewide Conservation — June 29, 2017 Director Hawkins made a motion, seconded by Director Hall, to approve Director attendance at this event if desired. Motion carried 5-0. 15. ADJOURNMENT 15.1. The meeting was adjourned at 9:31 p.m. Annie Alexander Assistant Board Secretary Minutes of the YLWD Board of Directors Regular Meeting Held June 27, 2017 at&30 p.m. 9