CONTRA COSTA WATER DISTRICT

BOARD OF DIRECTORS

REGULAR MEETING

January 7, 2009

MINUTES

CALL TO ORDER

President Campbell called to order a regular meeting of the Board of Directors of the Contra Costa Water District at 6:30 p.m., at 1331 Concord Avenue, Concord, the regular meeting place of the Board.

ROLL CALL

Directors Present: Joseph L. Campbell, President

Karl L. Wandry, Vice President

Elizabeth R. Anello

Bette Boatmun

John A. Burgh

General Manager: Walter J. Bishop

Legal Counsel: Robert B. Maddow

District Secretary: Sharon L. Burris

PLEDGE OF ALLEGIANCE

Water Operations Manager Dave Huey led the pledge of allegiance.

ADOPTION OF AGENDA

There was a minor revision to Agenda Item No. 1.a. – Approve Directors’ Services/Business and Travel Expenses Future Services – January.

PUBLIC COMMENT

President Campbell asked if there were any public comments. There were none.

CONSENT CALENDAR

1. Approve Directors’ Services/Business and Travel Expenses

a. Future Services – January

b. Expenses – November/December

c. Compensation – December

2. Approve the minutes of November 20, 2008.

3. Approve the warrant register dated January 8, 2009.

4. Confirm the President’s recommended appointments for Board committees, liaison positions, and chairpersons.

5. Authorize execution of an agreement with ArcSine Engineering for consulting services for the Untreated Water Revenue Meters Project in an amount not to exceed $136,200.

6. Authorize execution of an agreement with Camp, Dresser & McKee, Inc. for professional engineering services in the amount of $239,000 in FY09 and $186,000 in FY10 for the Seismic Assessment and Improvements Project for a total amount not to exceed $425,000.

President Campbell removed Item No. 6 – Authorize execution of an agreement with Camp, Dresser & McKee, Inc. for professional engineering services in the amount of $239,000 in FY09 and $186,000 in FY10 for the Seismic Assessment and Improvements Project for a total amount not to exceed $425,000 from the consent calendar. He advised that Director Burgh had previously worked for Camp, Dresser & McKee and had requested the item be removed as he did not wish to vote on the item to avoid even the appearance of a conflict.

MOTION: Boatmun/Wandry to approve the consent calendar with the exception of Agenda Item No. 6. The motion carried by a unanimous voice vote.

Director Burgh advised that the Board’s policy states that when a Director feels there could be an appearance of a conflict of interest, even though there wasn’t one in his case, that the Boardmember is to leave the room until after the vote. He left the dais at 6:35 p.m.

MOTION: Campbell/Boatmun to approve Item No. 6 – Authorize execution of an agreement with Camp, Dresser & McKee, Inc. for professional engineering services in the amount of $239,000 in FY09 and $186,000 in FY10 for the Seismic Assessment and Improvements Project for a total amount not to exceed $425,000. The motion carried by the following vote of the Board: Ayes: Anello, Boatmun, Campbell, Wandry Absent: Burgh.

Director Burgh returned to the dais at 6:36 p.m.

ACTION

7. 2009 Rates – Public Hearing and Adoption

a. Conduct a public hearing to provide information and receive comments on proposed water rate, fee and charge adjustments for 2009; and

b. Adopt Resolution No. 09-01 amending Title 5 of the District’s Code of Regulations pertaining to untreated and treated water rates, charges and fees.

President Campbell explained the public hearing process. He reported that the Rate Setting Policy adopted by the Board stipulated that rates were to be at or below the rate of inflation.

Mr. Bishop advised that a presentation would be provided by Director of Finance Brice Bledsoe.

Mr. Bledsoe reviewed the key messages. He reported that the rate assumptions were reviewed by the Finance Committee on November 14 and approved by the Board on December 10. The revenue requirements were adopted by the Board on November 19.

The revenue requirements were used to generate the proposed adjustments for rates, fees and charges at the meeting this evening. He emphasized that the District operates as a responsible utility and protects the purchasing power of customers. Rate increases were below the rate of inflation over the past ten years. This was accomplished using budgetary cost control and revenue diversification through outside revenues.

Mr. Bledsoe reported that the proposed adjustments before the Board were identified in three categories. The first category was revenue increases. A 4.3% revenue increase was being proposed for both treated and untreated water compared to inflation at 4.6%. A typical treated water residential customer using approximately 370 gallons per day would have an impact of $2.37 per month on their bill.

Mr. Bledsoe reported that the second category was Facility Reserve Charge (FRC) adjustments. The adjustments for both treated and untreated water reflected both inflation and increasing the FRC to 95% of calculated value, as approved by the Board in January 2008, in order to reduce FRC subsidy. The proposed inflation adjustment for untreated water FRCs was 1%, resulting in an FRC of $4,843. The proposed inflation adjustment for treated water FRCs was 5%, resulting in an FRC of $17,704.

Mr. Bledsoe reported that other changes included adjusting the District’s fees and charges to cover the cost of service. The encroachment access permit fees and the backflow prevention surcharges were adjusted to reflect the actual costs. Clarification of FRC credit was also included for downsized and terminated meter services.

President Campbell explained when an encroachment permit would be used.

Mr. Bledsoe addressed the backflow prevention surcharge for private fire protection. Fees for this service would be adjusted to $248 for a double check valve and $383 for a reserve pressure device which would bring them inline with the actual costs of maintaining these devices.

Mr. Bledsoe reviewed the recommended action. He advised that pending Board adoption, rates would become effective February 1. The FRC adjustments would become effective April 1, due to a 60 day notification requirement.

President Campbell asked if the Board had any questions for the presenter. There were no questions.

President Campbell opened the public hearing at 6:50 p.m. and advised that he had three speaker’s cards.

Bird Morningstar, a Concord resident, was the first speaker. Mr. Morningstar referenced a phone conversation he had with one of his customers who had reduced his water consumption to 150 gpd by using Mr. Morningstar’s web page. He advised the caller that the District’s rates would be increasing. The caller indicated that he had received the card notifying him of the proposed increase and did not think that the 4.3% proposed increase was a large amount. The rates were reasonable. The concern was water rationing. He asked whether rates would increase if the District went to rationing. He questioned if the current proposed rate increase would affect the consumer if water rationing was imposed.

Mr. Bishop reported that the Board had a Drought Reserve Fund that could be drawn from to cover the fixed costs. The proposed increase would cover costs with the reserves set aside. This did not mean that the Board might not consider a penalty for customers who do not save water. This was a separate issue. The Board had been anticipating this and money was being set aside in case of a drought.

President Campbell recognized and acknowledged newly elected Clayton City Councilmember Howard Geller in the audience.

President Campbell invited Pleasant Hill resident Mr. Don Sallady to the podium. Mr. Salladay rescinded his speaker’s card and no longer wished to speak.

President Campbell invited Clayton resident Anita Stranik to the podium. Ms. Stranik provided a letter to the Board, which addressed her concern. She stated that the current recession started 13 months ago, with no end in sight. Home prices had dropped and stock portfolios had unfortunately lost an average of 40% of savings while job losses continue. She stated that this was a time for belt tightening in all sectors of the economy, including the public sector. Every household was figuring out how to decrease expenditures as a response to the down-turn in the economy. The current environment was not the time to increase the price of anything and that included water rates. She added that it was time for everyone to tighten their belts.

President Campbell reported that Walnut Creek resident Jerry Hicks had sent a letter concerning the water rates. He advised that he had had a telephone conversation with Mr. Hicks explaining the District’s plan and that Mr. Hicks was in agreement with what the District had planned. He advised that Mr. Hicks letter and Ms. Stranik’s letter would be included in the record.

President Campbell commented that he did not have anymore speaker’s cards and asked if there was anyone in the audience that would like to speak to the Board.

Mr. Cor Stam, a Concord resident, addressed the Board and echoed Ms. Stranik’s comments concerning the current economy and the cutbacks that customers were facing. Companies were cutting back 10% on their expenditures and he did not feel that public agencies should be exempt from the request. He urged the Board to reconsider. The increase was not excessive, but in these times maybe it was. As far as costs were concerned, he noted that the debt structure had been in place for 15 years now since the reservoir was built, and that this portion of the costs were fixed.

President Campbell asked Mr. Stam if he would like to complete a speaker’s card before he left and advised that they were on the credenza at the back of the Board Room.

President Campbell asked if anyone else would like to speak. There were no other speakers.

President Campbell closed the public hearing at 7:01 p.m.

Director Boatmun responded to the speakers’ concerns regarding rates. She advised that, given the difficult times that we are facing as individuals and groups, that a great deal of buying power was being lost. She advocated that rates be increased by small amounts on a regular basis. Otherwise, by postponing the increases, they would be done later and there would be a big jump in rates. She commented that she was at the District when a large increase was put into effect when Los Vaqueros Reservoir was built. It has paid off but people were in shock at the time. She added that if the Board delays some of the projects that are being done and had been planned for, they will be more expensive. Infrastructure would not be as top-notch as the District has attempted to make it. She acknowledged their concerns, but noted that the District also offers customers ways to save water. District staff make individual water audits for homes and yards, and they make suggestions on what can be done to conserve water. Showerheads and rebates for toilets and washing machines are offered. She warned that the ongoing maintenance that agencies do not do and watch carefully will be much more expensive in the future.

President Campbell asked if there were other comments.

Director Burgh commented that the District was obtaining approximately 30% of its operating revenue from sources other than the ratepayers. The District was one of the more successful districts in California. He complimented staff on the ability to collect money from outside agencies. He commented on the fixed costs incurred by the District. It was very true in round numbers that one-third of the budget goes to fixed costs for servicing loans and long-term debt. Approximately one-third was for staff salaries and services needed to run the District. The other third was for purchased goods, including power. He commented that inflation in the Bay Area during the past year was 4.6%. The District experiences major costs daily for purchased goods, including water treatment chemicals, which had risen 30% this year. Some of the purchases made by the District were for water quality to meet government standards. The District has no control over the cost of some important pieces of the operating budget, which had risen above general inflation during the past year. He advised that all consumers have an opportunity to conserve water. This savings would be reflected on the water bills. He also advised that the merits of the comments from all speakers were very well taken. He reiterated Director Boatmun’s comments concerning individual water audits.

President Campbell asked if there were any other comments. There were none.

President Campbell expanded on the water conservation audit program referred to by Directors Boatmun and Burgh. He explained the process and how it was funded.

Director Boatmun acknowledged Mt. View Sanitary District Director Stanley Caldwell in the audience and welcomed him to the meeting.

MOTION: Boatmun/Burgh to adopt Resolution No. 09-01 amending Title 5 of the District’s Code of Regulations pertaining to untreated and treated water rates, charges and fees. The motion carried by a unanimous voice vote.

DISCUSSION AND INFORMATION

8. Review and comment on status report on drinking water regulations and water research activities.

Mr. Bishop reported that Mr. Huey would be providing a presentation.

Mr. Huey introduced the new Water Quality Superintendent Jessica Edwards-Brandt, who was in the audience, to the Board. President Campbell welcomed Ms. Edwards-Brandt to the District.

Mr. Huey reported that the District was in full compliance with all current regulations. The District’s ongoing compliance strategy included the Water Treatment Plant Master Plan, the internal water quality regulatory workgroup, American Water Works Association (AWWA) participation, and Water Research Foundation (WRF) participation.

Mr. Huey reported on two recent regulatory developments. The first was the completion of the first round of unregulated contaminant monitoring. This federal rule was an information collection effort for the Environmental Protection Agency (EPA). The District only had detection for one of the 25 un-regulated compounds. Future study into potential health effects was required before a regulation could be developed.

Mr. Huey reported on the second regulation adopted this year, the California Water Works Standard, which sets strict standards for water system operation, design, construction and permitting. The District was also in full compliance with this regulation.

Mr. Huey then reported on a future regulatory development. The EPA Federal Advisory Committee signed an Agreement in Principal for the total coliform rule revision. Framework was in place for EPA to finalize the rule over the next two years. The rule establishes a new maximum contaminant level for E. Coli and total coliform monitoring becomes a system health indicator. The District will meet the new requirements by continuing the aggressive monitoring plans already in place.

Mr. Bishop commented that the District also participates on the Water Utility Council and had a voice in how this rule was negotiated.

Mr. Huey reviewed the WRF activities. He reported that the District had been a subscribing agency for 20 years and had been very active in the program. This gave the District access to project funding and reports. He reviewed some of the project highlights: evaluating effects of climate change on water utility planning and the Bay Area water utilities operations collaborative utility efforts, which address issues from workforce development to security needs. Included in these activities was the Advanced Treatment Study Phase 2 project, which completed a comprehensive pilot study at Bollman Water Treatment Plant.

Mr. Bishop advised that the subscription to this agency was very cost effective for the District.

Mr. Huey reviewed the fiscal impacts and advised that the District was sufficiently funded in the current operating budget to meet all current monitoring requirements. The Capital Improvement Program included placeholders to fund improvements required to meet pending and future regulations for water quality.

President Campbell asked if there were any questions for the presenter. There were no questions.

President Campbell commented that he and Director Boatmun had previously received this presentation at the Operations and Engineering Committee meeting on December 11.

President Campbell thanked Mr. Huey for the presentation.

President Campbell commented on the District’s water treatment plants and noted that they are ozone disinfectant plants.

REPORTS FOR DISCUSSION

9. Committee Report(s)

a. Finance Committee Post-Meeting Report (11/14/08)

b. Operations and Engineering Committee Post-Meeting Report (12/11/08)

c. Board of Supervisors’ – Transportation, Water and Infrastructure Post-Meeting Report (12/15/08)

President Campbell asked if there were any comments on the committee reports. There were none.

10. Schedule Future Meeting Dates and Times

Mr. Bishop referenced the upcoming Major Policy Calendar (MPC). He reported that the spring 2009 ACWA Conference would conflict with one of the Board meetings and that it was noted on the revised MPC. He also noted that actions related to drought response were reflected on the calendar. Also calendared were meetings related to the Los Vaqueros (LV) Expansion Project.

Director Boatmun reported that she would be attending a California Special Districts Association Education Committee meeting on January 28 in Sacramento.

REPORTS

11. General Manager

Mr. Bishop reported that the Department of Water Resources was releasing the LV Environmental Impact Report. He acknowledged Assistant General Manager – Water Resources Greg Gartrell and Senior Project Manager Marguerite Naillon for their efforts toward this accomplishment.

Mr. Bishop also reported on the District’s plan to fill the Public Affairs Director position while the recruitment was taking place. He reported that he would continue to be in charge of the federal legislation program. He would temporarily oversee the state legislation program with the assistance of a team led by Executive Management Analyst Desiree Castello and help from the Sacramento lobbyist Julee Malinowski-Ball. The remainder of the public affairs program would be overseen by Senior Public Information Specialist Jennifer Allen until the position was filled.

12. Legal Counsel

Mr. Maddow did not have any comments.

13. Board Members

Director Boatmun wished everyone a Happy New Year.

Director Anello commented on the New Year.

Vice President Wandry also wished everyone a Happy New Year.

Director Burgh extended Happy New Year wishes to everyone. He also commented positively on a bill passed by the legislature and signed by Governor Schwarzenegger to start the multi-year process for updating the building code to include grey water. Mr. Bishop noted that the District would have two demonstration grey water projects this year.

President Campbell reported that he and Director Boatmun attended an installation luncheon for Contra Costa County Supervisor Susan Bonilla, who was installed as President of the Board of Supervisors. He also advised that he and Director Boatmun had shared a table at the luncheon with staff from the offices of Congresswoman Ellen Tauscher and Assemblyman Tom Torlakson.

ADJOURNMENT

At 7:37 p.m., President Campbell adjourned the meeting to the next regular meeting of the Board of Directors, scheduled for January 21, 2009, and commencing at 6:30 p.m.

Joseph L. Campbell, President

ATTEST:

Sharon L. Burris

District Secretary