March 21, 2011
VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, March 21, 2011
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. Staff members present were: General Manager Arant, General Counsel de Sousa, District Engineer Grabbe, Director of Finance Jeffrey, Director of Operations Hoyle, Board Secretary Johnson, Manager of IT Pilve, Safety and Regulatory Compliance Assistant Olson, and Special Counsel Alpert. Spectators present: Ms. Jones of the Epler Company.
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 March 7, 2011
• Audit demand check numbers 128276 through 128463 for February 25 through March 10, 2011
• Board of Directors’ request for per diem compensation and reimbursement of expenses and report of expense reimbursements per Government Code
• Resolution Nos. 2011-11 and 2011-12 concurring in the nominations of W.D. “Bill” Knutson (Yuima Municipal Water District) and David T. Hodgin (Scotts Valley Water District) to the ACWA/JPIA Executive Committee.
ACTION AGENDA
2. Actuarial Valuation for Retiree’s Health Benefits Plan:
Director of Finance Jeffrey reported that Government Accounting Standards Board (GASB) Statement No. 45 requires the District to fund the Retiree Health Benefit Plan, calculate the Annual Required Contribution (ARC), and expense that value each year even if we choose not to fund it in a given year. CalPERS manages the District’s plan funding through the California Employers’ Retiree Benefit Trust (CERBT). Mr. Jeffrey also noted that the plan is closed to employees hired after July 1, 2008.
Ms. Marilyn Jones, of the Epler Company, presented an overview of the District’s Actuarial Valuation report.
First, Ms. Jones explained that each person in the plan is evaluated by hire date, age, and projected years of service to retirement date. Many of their assumptions are based on the District’s prior history. They then calculate future obligations and what should have accrued on your financial statement, as well as future medical costs.
The purpose of the actuarial is to update the District’s liability and update the actual costs from the report done two years ago. The primary purpose is to determine the accounting results necessary to fund these benefits. GASB 45, when it went in to effect two years ago, required the District to start accruing for these benefits rather than paying-as-you-go. If assets are not being set aside, you will have a large liability on your financial statement that grows rather quickly. The District is not required at this time to fund for these benefits, but is required to record the liability.
Because the District funds these benefits through CalPERS, an actuarial will have to be prepared on June 30, 2011 as part of a multi-employer plan, and then every two years from that point forward.
A summary of the valuation results as of July 1, 2010 are that the Total Projected District Paid Retiree Health Benefits will be $35.6M. The present value of the District Paid Retiree Health Benefits is $5.5M (using the CalPERS discounted rate of 7.75%). The accrued, or past service, liability equals $3,914,000. Of that amount, $815,000 has been pre-funded in a trust account, leaving $3,099,000 unfunded.
The resultant annual required contribution (ARC) of $446,000 is calculated by the 2010-11 FY benefit accrual of $172K (based on 7.75%), plus amortization of the unfunded liability over the remaining 28 years, $274K. Of the ARC amount, the expected District payments for Retiree Health Benefits for the current year are $136K, leaving $310K of additional liability.
Finance Director Jeffrey noted that when GASB No. 45 was implemented, and the District began funding through CERBT, a reserve was established for plan benefits by the amount previously earmarked, but not funded. As of July 1, 2010, that reserve was $1,520,468; enough to fund the ARC for three years.
Ms. Jones pointed out that the calculations are all based on the CalPERS current discount rate of 7.75%. Changes to this rate could have a significant effect. It has been reported that CalPERS will be opening up a selection of funds for the Health Benefits Trust as to whether you want to be more conservative or aggressive. This could also have an effect on the discount rate.
The Actuarial Valuation of the District’s Retiree Health Benefits Plan prepared by The Epler Company was received and filed.
3. Approval of Joint Agreements with County and Owner Regarding the Orchard Run Unit 2 Project:
District Engineer Grabbe reported that plans for the Orchard Run Unit 2 project have been completed and the owner, John Belanich, is ready to file the final map with the County. In accordance with the Subdivision Map Act and County requirements, the subdivision improvements need to be either completed or bonded prior to filing the final map. Mr. Belanich desires to delay construction of the facilities for up to two years by placing title of the property in a holding company and entering into a Joint Lien Contract with the County and District in lieu of posting bonds. To accomplish this, the following agreements must be approved:
Joint Agreement to Improve Major Subdivision – This standard County agreement identifies all subdivision improvements required for the project and provides terms and conditions to post securities for the improvements prior to allowing the final map to be recorded. The District approves the cost estimate for the facilities which sets the security amount. This agreement includes the cost of the subdivision improvements for Unit 2 and the cost of the water reclamation facility improvements necessary for all three units of the Orchard Run project. A separate security is required for the water reclamation facility improvements.
Joint Lien Contract and Holding Agreement – These agreements transfer title of the owner’s property to a holding company and place a lien on the property in lieu of providing bonds. No improvements to the property can be started, nor can any lots be sold, until an acceptable form of security is substituted and the lien released. The District has attached additional conditions for the release of the lien which include:
- Securing release of Unit 1 prior to Unit 2;
- Entering into a Water Reclamation Facilities Agreement and Recycled Water Use Agreement;
- Complete and obtain District approval of an access road crossing Moosa Creek and lift station plans;
- Resubmitting Unit 1 and Unit 2 plans for review, and updating if required.
The agreements are for two years and may be extended once by the DPLU Director and after that by the Board of Supervisors.
Mr. Grabbe noted that the Orchard Run Unit 1 project completed similar agreements in order to file that map and is requesting approval to enter these agreements for Unit 2.
Upon motion by Aleshire, seconded by Stone and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2011-10
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE VALLEY CENTER MUNICIPAL WATER DISTRICT
APPROVING THE JOINT AGREEMENT TO IMPROVE MAJOR SUBDIVISION,
THE JOINT LIEN CONTRACT AND HOLDING AGREEMENT
FOR THE ORCHARD RUN UNIT 2 PROJECT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Haskell
4. Resolution to Participate in the California Water/Wastewater Agency Response Network (CalWARN):
Safety and Regulatory Compliance Assistant Olson gave a brief history on how the California Water/ Wastewater Agency Response Network began. In light of recent world events, it seems prudent to evaluate the benefits of joining this group.
The mission of CalWARN is to support and promote statewide emergency preparedness, disaster response, and mutual assistance for public and private water and wastewater utilities. CalWARN functions in coordination with the State Office of Emergency Services (OES) and is organized into six regions. Each region elects a chair to sit on the statewide steering committee which also includes the CA Utilities Emergency Association, the Department of Water Resources, the American Water Works Association, the California Rural Water Association, and the California Sanitation Risk Management Authority.
The District currently has a mutual aid agreement with the San Diego County Water Authority which does not include aid for any private water or wastewater utilities or for anyone outside San Diego County.
Ms. Olson stated that there is no cost to join CalWARN. The Mutual Aid Agreement meets the FEMA requirements for reimbursement. Members are not obligated to respond to a request for assistance and may withdraw some or all of its resources at any time, for any reason, during an emergency.
There are currently 310 members in CalWARN including SDCWA, Metropolitan and Los Angeles DWP. Since this membership is specific to the water and wastewater industry and offers the District a broader area of available resources, approval to join was recommended.
Upon motion by Polito, seconded by Aleshire and unanimously carried, the following resolution, entitled:
RESOLUTION NO. 2011-09
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE VALLEY CENTER MUNICIPAL WATER DISTRICT
TO PARTICIPATE IN THE CALIFORNIA WATER/WASTEWATER AGENCY
RESPONSE NETWORK (CALWARN)
2007 OMNIBUS MUTUAL ASSISTANCE AGREEMENT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, Aleshire and Stone
NOES: None
ABSENT: Haskell
5. Annual Review of Board Member Per Diem:
Per Board direction, the Board of Directors’ per diem is reviewed annually for consideration of modification. The Board may increase its per diem by 5% for each calendar year since the date of the last adjustment, which was February 1993. Therefore, the Board could increase its current $100 per diem rate to a maximum of $240.69 per day of Board business.
Upon motion by Aleshire, seconded by Polito and unanimously carried, the Board elected to retain its current $100.00 per diem compensation.
GENERAL MANAGER’S AGENDA
6. Miscellaneous Informational Items:
- According to February’s status report, water sales appear to have stabilized.
- General Manager Arant attended the first meeting of the Urban/Rural Roundtable. Their purpose is to assess the food system in San Diego County. They are concerned about the health of residents, childhood obesity, and providing access to fresh foods to all segments of society. Attendees included a wide array of people from farmers to food marketing. The group is funded by the USDA. It was unclear where this group is ultimately headed but appears to be a good forum for stressing the issues of water supply, quality, and price.
- The Farm Bureau will be meeting on March 23rd to develop a strategy for approaching Metropolitan about agricultural discounts and price differentials.
- The four North County Ag Agencies met for the second time to discuss functional consolidations. The group hopes to come up with a work product by mid-April. They are looking into forming a Joint Powers Authority to provide and purchase services.
BOARD OF DIRECTOR’S AGENDA AND REPORTS ON MEETINGS ATTENDED
7. Director Aleshire reported that the ACWA-Health Benefits Authority met in Sacramento March 10th and 11th. ACWA has been invoicing the HBA group for providing space and personnel assistance. Discussions regarding moving to another facility and hiring their own personnel continue. The group will be meeting again to develop a statement of work for use in acquiring quotes from ACWA and third party administrators.
The Director of Health Benefits, Barbara Duggen, announced her resignation effective the end of July. Future discussions will be held to decide who the new director will work for and ultimately report to.
8. Director Polito reported that he attended a meeting of the Farm Bureau. Discussions centered around gathering support for slowing down the water rate increases with emphasis on saving local agriculture.
CLOSED SESSIONS
9. Closed sessions were called by President Broomell at 3:42 p.m. pursuant to:
• Government Code §54956.9(c), Conference with Legal Counsel, Anticipated Litigation
Number of potential cases: 1
• Government Code §54957, Public Employee Discipline/Dismissal/Release
• Government Code §54957.6, Conference with Labor Negotiators
Agency Designated Representation: Gary Arant
Employee Organization: Valley Center Employees Association
ADJOURNMENT
10. Upon motion by Aleshire, seconded by Polito and unanimously carried, the meeting was adjourned at 4:34 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary