December 7, 2009
VALLEY CENTER WATER DISTRICT
Regular Board Meeting
Monday, December 7, 2009
Time: 2:00 P.M.
Place: Board Room
29300 Valley Center Road
Valley Center, CA 92082
The Valley Center Municipal Water District Board of Directors’ meeting was called to order by President Broomell at 2:00 P.M.
ROLL CALL
Board members present were: Directors Broomell, Polito, Aleshire and Stone. Director Haskell was absent. Staff members present were: General Manager Arant, District Engineer Grabbe, Director of Operations Hoyle, Director of Finance Jeffrey, Board Secretary Stetson, Manager of Accounting Pugh, Project Manager Williams, and Manager of IT Pilve. Spectators present were: Messrs. Zizzi and Ross.
CONSENT CALENDAR
1. Upon motion by Polito, seconded by Stone and unanimously carried, the following consent calendar items were approved:
• Minutes of the Board meeting held November 16, 2009
• Audit demand check numbers 124172 through 124349 and wire disbursements for November 2009
ACTION AGENDA
2. Review of the 2008-09 Comprehensive Annual Financial Report (CAFR):
The District’s financial reports for the period ended June 30, 2009, were presented for the Board’s review, which include the Comprehensive Annual Financial Report (CAFR), Independent Auditor’s Report and Appropriations Limit Worksheet. The CAFR consists of three parts: the Introduction discussing activities of the District during FY 2008-09, the Financial Section which contains financial statements and management’s discussion and analysis, and the Statistical Section which provides a financial history of the District. Manager of Accounting Pugh provided the following summaries:
• In FY 2008-09 total meters increased to 10,408, however, active meters decreased by 6 to 9,690 of which 7,749 are residential, 461 are Commercial and
1,480 are agricultural meters. There were 66 new wastewater connections, 50 at the Moosa Treatment Facility and 16 at the Woods Valley Plant.
• Total water sales for the fiscal year were 33,014 acre feet, a reduction of 12.3% from the previous year. This reduction in water sales volume is due to the Interim Agricultural Water Program’s 30% reduction policy.
• Strategic Plan Specific Goals and their status were reviewed. They include GIS enhancements and procedures for data availability, SCADA improvements (construction of the initial 14 sites, installation of control panels and upgrading 16 motor starters), Lake Turner Solar Power Project was fully constructed and operational on December 30, 2008, Carlsbad Seawater Desalination Project (progress continuing toward final regulatory permits and obtainment of Local Resource Project funding from Metropolitan) Customer Online Account Access (work has begun), Information Technology Server Room Relocation (scheduled for completion by end of calendar 2009), and New District Website (redesigned with new website providing easier navigation).
• The ten Performance Measurement Standards were met with the exception of the unknown water loss which was 6.2% for calendar 2008 (goal is 5%). The water loss is attributed to the Automated Meter Reading (AMR) issue. The AMR meter registers have been replaced for the top 1,000 water users. Discretionary reserves were approximately 5 months operating and maintenance expenses (goal is a minimum 3 and a maximum 6 months O&M expenses).
• The General Fund Equity as of June 30, 2009, was reviewed. Net assets decreased $748,630 and fixed assets increased $1.1 million which includes $800,000 in contributed capital. Total reserves are $14.3 million which consists of discretionary reserves at $4.6 million, retirement health plan at $2 million, capital reserves at $6.7 million and ag. and vehicles at $1 million In FY 2008-09, $6.5 million was used for fixed assets.
• At the Lower Moosa Canyon Water Reclamation Plant, revenues increased 1.38% ($15,269) over the previous year due to increased connections. Contributed capital was down $207,360 from the prior year due to a decrease in contributions in kind. Change in net assets decreased from the previous year due to increased maintenance and permit fees.
• Total revenues at the Woods Valley Ranch Wastewater Plant include $11.6 million contributed capital to recognize conditional acceptance of the facilities and placing it into operation. Absent this contributed capital, the change in net assets was $89,025.
Mr. Michael Zizzi of the auditing firm Leaf & Cole, LLP, completed the audit of the District’s financial condition as of June 30, 2009, and the results of operations for
Fiscal Year 2008-09. Mr. Zizzi reviewed the Independent Auditor’s Report stating that the financial statements are the responsibility of the District and that the auditor’s responsibility is to express an opinion on the financial statements. The Report expresses that, in the auditor’s opinion, the District’s financial statements present fairly the financial position of the District at June 30, 2009, and the results of its operations for the year then ended in conformity with generally accepted accounting principles.
The Statement of Cash Flows for the Year Ended June 30, 2009, shows that cash and cash equivalents were $15.2 million. Cash and cash equivalents are in diversified investments including LAIF, San Diego County Treasurer’s pooled money fund and money market mutual funds. Net cash provided by operating activities was $10,822, however, total cash and investments decreased $1,299,408.
The actuarial contribution for the retirement medical liability is fully funded for the fiscal year. The District’s retirement plan prior service liability will be repaid over a 30-year repayment plan. The District’s other post employment benefit (OPEB) cost for 2008-09 was $476,396.
The appropriations limit worksheet in compliance with Article XIIIB of the California Constitution establishes a limit on how much tax revenue can be received and reflects the District’s appropriations limit from property taxes as of June 30, 2009, at $4,628,716 million. Leaf & Cole performed a review of the District’s computation of the Article XIII-B Appropriations Limitation and the District’s Appropriations Limit Worksheet and found no exceptions as a result of their procedures.
The District’s Comprehensive Annual Financial Report, appropriations limit worksheet, and Independent Auditor’s Report for Fiscal Year 2008-09 were received.
3. Affirmation of District Participation in the Carlsbad-Poseidon Seawater Desal. Project:
General Manager Arant reviewed that the Metropolitan Water District Board approved Local Resources Project funding for the Poseidon-Carlsbad Desalination Project which has the potential of contributing up to $250.00 per acre foot and $350 million in project support over the 25-year life of the Seawater Desalination Program funding agreement. Approval was granted with the addition of language that if a Metropolitan member is signatory to and benefiting from a Local Resources Project and is subsequently part of a successful effort to modify Metropolitan’s funding structure for Local Resources Projects, then the Local Resources Project funding for that particular project would terminate.
The District’s agreement with Poseidon Resources is to purchase up to 7,500 ac. ft. of desalinated water from the Poseidon-Carlsbad Desalination Project. The provision as noted above in Metropolitan’s Seawater Desalination Program (SDP) provides a remote possibility that the SDP Local Resources Project funding could be terminated. In the event that occurs, costs would be born by the nine contracting agencies. Both Poseidon and their financial consultant, Barclays, have opined that Metropolitan’s termination of funding is extremely remote. It was noted that if a majority of Metropolitan’s member agencies, including the San Diego County Water Authority representatives, were to vote to effect changes in Metropolitan’s funding policies and rate structure, it is logical that funding of impacted projects receiving Local Resources Project funds would be secured by the majority members.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the Board affirmed the District’s Participation in the Metropolitan Water District’s Seawater Desalination Program Agreement for the Carlsbad-Poseidon Seawater Desalination Project.
4. Termination of Corporate Facility Solar Project Agreement with Solar Electric Solutions:
A letter was received from Solar Electric Solutions in which it is exercising the termination clause of the Power Purchase Agreement with the District to construct and operate a solar powered carport facility within the District’s yard. Solar Electric Solutions was not able to proceed with construction of the project as it was not able to secure project financing.
Solar Electric Solutions funded an application for a CSI rebate reservation for the solar project, which can be utilized if a solar provider can accomplish commercial operation by April 10, 2010. Staff is in contact with potential solar providers regarding the proposed solar carport facility and other potential projects. However, at the present time, a funding source may be difficult to secure. An RFP prepared by Sophie Akins of Best, Best & Krieger for solar providers to evaluate the District’s facilities for a solar power purchase agreement may be feasible for the future.
The Board acknowledged and accepted the letter of termination from Solar Electric Solutions for the Power Purchase Agreement for the proposed Corporate Facility Solar Carport Project.
5. Approval of Design Contract Change Order No. 6 for the Rodriguez Road Pipeline Replacement Project:
Project Manager Williams reviewed that Kennedy/Jenks Consultants is under contract to prepare plans and specifications for the Rodriguez Road Pipeline Replacement Project consisting of 4,800 linear feet of 18 and 20-inch pipeline. A portion of the pipeline project is within the Sea Bright Development and, as such, a portion of the proposed pipeline project will be funded by the developer.
Design of the pipeline project has been modified several times. The most recent changes are design revisions that reflect new data provided by Sea Bright Development. Additionally, the District has requested that the change order include costs for addressing additional District comments. The total requested change order is not to exceed $8,500 to be funded by the developer ($3,629) and the District ($4,871). The revised contract amount for the design of the Rodriguez Road Pipeline Replacement Project including the proposed Change Order No. 6 is $151,591. Funds are available for completing design of the Rodriguez Road Pipeline Replacement Project.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2009-42
RESOLUTION OF THE BOARD OF DIRECTORS OF
VALLEY CENTER MUNICIPAL WATER DISTRICT
APPROVING CHANGE ORDER NO. 6 TO THE CONTRACT
WITH KENNEDY/JENKS CONSULTANTS FOR THE DESIGN
OF THE RODRIGUEZ ROAD PIPELINE REPLACEMENT PROJECT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Director Haskell
GENERAL MANAGER’S AGENDA
6. ACWA/JPIA Recognition:
General Manager Arant reported that the District has received recognition from its insurance carrier, ACWA/Joint Powers Insurance Authority, for its low ratio of paid claims and case reserves to deposit premiums for the Liability, Property and Workers Compensation insurance programs.
GENERAL COUNSEL’S AGENDA
7. Settlement Payment for the Armenta v. James Jones Company Litigation:
General Counsel de Sousa noted that the District received payment for the settlement of the Los Angeles Department of Water and Power, et al., ex rel. Nora Armenta v. James Jones Company case in the amount of $254,833.38 which includes recovered attorney’s fees and costs. The matter had been litigated because of inferior brass that had been used in their product which was exposed by a whistle blower.
BOARD OF DIRECTORS’ AGENDA
8. ACWA Conference:
Director Aleshire stated that in May, the ACWA Board directed the JPIA Executive Committee and Chief Executive Officer to develop a service agreement with the broker that would disclose total compensation. The ACWA/JPIA broker was including commission charges in the invoice for the Liability, Workers Compensation and Property Insurance programs. Director Aleshire reported that upon an inquiry as to the status of the service agreement to be developed, Director Aleshire was informed that it had been completed in July 2009 though the Executive Committee did not participate in its preparation. The contract was executed between the ACWA/JPIA Chief Executive Officer and the insurance broker. The broker of record is the firm that the broker works for, however, only the broker’s name is on the service agreement. The ACWA/JPIA Finance Officer had reservations concerning the large payments directly to the broker and felt it would be more appropriate to pay the carriers directly. As such, invoices were received for the insurance plans (3) and another two for the broker in the amount budgeted for the broker ($135,000) and another for $469,000. The wire transfer to the broker was not approved by the Auditor Controller of the ACWA/JPIA.
Members of the ACWA/JPIA Executive Committee met on Sunday prior to the start of the ACWA Conference to address this issue. An amendment of the service agreement to identify the payment to the broker was suggested. The Chief Executive Officer was not in agreement with the proposed changes. It was agreed to withdraw the payment of the warrants from the JPIA Executive Committee agenda and the matter will be considered during the meeting in January 2010.
Directors Aleshire and Stone commented that there were several informative presentations at the ACWA Fall Conference including the Governor’s speech advocating the Comprehensive Water Legislative Package and bond measure to be on the November 2010 ballot, and the session on the Bay-Delta Conservation Implementation Plan.
CLOSED SESSION
9. A Closed Session was called by President Broomell at 3:45 p.m. pursuant to:
·
Government Code §54956.9(b) – Conference with Legal Counsel, Anticipated Litigation
Number of potential cases: 2
·
Government Code §54957.5(a) – Conference with Labor Negotiators
Agency Representative: Gary T. Arant, General Manager
Employee Organization: Valley Center M.W.D. Employees’ Association
RECONVENE
10. The Regular Board meeting was reconvened at 4:40 p.m. There was no reportable action.
ADJOURNMENT
11. The meeting was unanimously adjourned at 4:41 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary