CONTRA COSTA WATER DISTRICT

BOARD OF DIRECTORS

REGULAR MEETING

February 4, 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

                                                            Elizabeth R. Anello

                                                            Bette Boatmun

                                                            John A. Burgh

            Directors Absent:                       Karl L. Wandry, Vice President

            General Manager:                       Walter J. Bishop

            Legal Counsel:                           Robert B. Maddow

            District Secretary:                      Sharon L. Burris

 

President Campbell noted that Vice President Wandry was absent and that he had previously notified the Board. 

 

PLEDGE OF ALLEGIANCE

 

Principal Engineer Jeff Quimby led the pledge of allegiance.

 

ADOPTION OF AGENDA

 

Minor revisions were made to Agenda Item No. 1.a. – Future Services – February.  Revisions were also made to Agenda Item No. 2.b. – Minutes – January 7, 2009. 

 

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 – February

            b.   Expenses – January

            c.   Compensation – January

2.         Approve the following minutes: 

            a.  December 17, 2008

            b.   January 7, 2009  

 

3.         Approve the warrant register dated February 5, 2009.

 

4.         Adopt Resolution No. 09-02 authorizing the execution of four quitclaim deeds of easement to Clayton Valley Shopping Center, LLC; Lowe’s HIW, Inc.; Willows Center Concord, LLC; and PH Holdings, LP to relinquish easement rights no longer required by the District. 

 

5.                   Approve the substitution of a subcontractor, Dees-Hennessey, Inc., in place of the listed subcontractor, Eagle Shotcrete, for the shotcrete work on the Loop Canal Capacity Improvements to Martinez Reservoir Project. 

 

President Campbell reminded the Board that approval of the consent calendar would include revised Agenda Item Nos. 1.a. and 2.b. 

 

MOTION:  Burgh/Boatmun to approve the consent calendar.  The motion carried by a unanimous voice vote. 

 

ACTION

 

6.                   Authorize an agreement with Department of Water Resources to participate in the 2009 Drought Water Bank for purchase of transfer water in an amount up to 20,000 acre-feet for a total cost not to exceed $6,000,000. 

 

Mr. Bishop reported that the agreement with the Department of Water Resources (DWR) allows the District to participate in a drought water bank to purchase water transfers.   The District has requested to receive up to 20,000 acre-feet of water with an estimated cost of approximately $300 per acre-foot.  The actual amount of water to be purchased and price would be determined when the supply conditions were better known.  DWR is the lead agency for California Environmental Quality Act (CEQA) associated with the transfer and the District would rely on their environmental review previously done in the Future Water Supply Study. 

 

President Campbell asked if there were any public comments.  There were no comments. 

 

MOTION:   Boatmun/Anello to authorize an agreement with Department of Water Resources to participate in the 2009 Drought Water Bank for purchase of transfer water in an amount up to 20,000 acre-feet for a total cost not to exceed $6,000,000.  The motion carried by a unanimous voice vote. 

 

DISCUSSION AND INFORMATION

 

7.                   Review and comment on the Draft Ten-Year Capital Improvement Program and Financial Plan for Fiscal Years 2010 – 2019.   

Mr. Bishop reported that the Assistant General Manager of Planning/Operations and Maintenance Jerry Brown and Director of Finance Brice Bledsoe would be presenting the Draft Ten-Year Capital Improvement Program (CIP) and Financial Plan for fiscal years 2010-2019. 

 

Mr. Brown reported that the draft CIP and Financial Plan were before the Board for comments and no action was required at this meeting.  He emphasized three key messages in the CIP:  anticipated revenue impacts were associated with the continuing dry conditions and the economic recession; the CIP reflects advancing the design and construction phase of the Los Vaqueros Reservoir Expansion (LVE); and it also reflects the completion of the Alternative Intake Project (AIP) early and within budget, and moving forward aggressively with the Rock Slough fish screens. 

 

Mr. Brown reviewed the funded and unfunded project levels in the CIP.   The funded projects increased by approximately $17.6 million due to the addition of a placeholder project for the LVE and the completion of projects, including the City of Brentwood Water Treatment Plant, the AIP, and a portion of the Canal Replacement Project.  The developer-funded portion of the Canal Replacement Project was shifted to a priority level 3 to reflect the economic downturn.  The total for unfunded projects had increased by $40.3 million, primarily due to the Rock Slough Fish Screen project.    

 

Using a table, Mr. Brown reviewed the project funding sources.  Comparing the 2009 CIP with the 2010 CIP, he reported that the most significant change was the debt funded increase of $41.3 million and revenue funded decrease of $26.0 million, which reflected financing of the AIP with long-term debt.  Changes in the Funded by Others category was attributed to removing $30 million of the state funding previously assumed for the AIP and the addition of a placeholder for the LVE. 

 

President Campbell commented positively on the Funded by Others category and how it benefited the District.    

 

Mr. Brown referenced a table reflecting the ten programs in the CIP.  Comparing the 2009 CIP to the 2010 CIP, he identified two significant changes:  the Delta Projects Program and Untreated Water Supply and Transport Program.  The Delta Projects Program reflected a $34.8 million increase, and the Untreated Water Supply and Transport Program projected a $21.2 million decrease.  He also noted that the title of the Water Demand Reduction Program had been changed to the Water and Energy Demand Reduction Program to better link energy consumption and water. 

 

Mr. Brown used a table to identify the total CIP costs for all priority level projects.  He reported that the CIP funding totaled $583.1 million over a ten-year period and included ten programs.  He defined the projects in each of the program categories, comparing the funding levels in the 2009 CIP.  He identified the programs as:  Administrative Support Facilities; Delta Projects; Equipment and Capital Purchases; Expansion of Services; Future Water Supplies; Los Vaqueros Watershed and Recreation; Treated Water Distribution and Storage; Untreated Water Supply and Transport; Water and Energy Demand Reduction; and Water Treatment Facilities.  Mr. Brown then provided a summary of each program. 

Mr. Brown identified the newly funded projects and identified them as the LVE placeholder, heavy duty diesel engine retrofits, and laboratory equipment replacement.  New unfunded priority level 3 projects included the Energy Demand Reduction Implementation and Treated Water Emergency Connections Projects. 

 

Addressing Expansion of Services, Mr. Brown reported that the only project in this category was the $45.3 million City of Brentwood Water Treatment Plant Expansion Project.  Mr. Bishop reminded the Board that due to the downturn in the housing market that this project had been moved out to the year 2016 in the CIP. 

 

Responding to a question from President Campbell concerning a grey water demonstration project, Mr. Brown replied that one proposed project would be a demonstration in conjunction with residential use.  The District was also identifying another project onsite where wash water in the maintenance yard could be used in the landscape area. 

 

Mr. Brown then reviewed the operating costs compared to the FY09 CIP.  Costs were adjusted for inflation and included operating impacts from new projects.  The CIP included $18 million in the cost of water for Delta Vision and Delta Habitat Conservation Plan surcharge. 

 

Mr. Brown reviewed the incremental operating impacts of the 2010-2019 CIP.  Responding to a question from Director Boatmun concerning the incremental increase in staffing projected in FY10, Mr. Brown replied that it was an increase to the current 2009 CIP.  Mr. Bishop advised that the CIP reflected an increase in three positions, which demonstrated that the District was projecting to complete large operating projects with basically the same staffing.  The District’s goal was to increase the customer base and improve productivity. 

 

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

 

Director Burgh opined that progress should continue on the expansion of LV.  He also commented that he was pleased to see assets pledged to the program as part of the CIP and the leadership role the District had taken in the expansion.  President Campbell concurred with Director Burgh’s comments.

 

Mr. Bledsoe reported on the District’s Draft Ten-Year Financial Plan.  The financial plan was revised to reflect the impacts of the drought and economic downturn.  The plan assumes that the revenue downturns continue through 2010 and gradually recover to the normal planning assumptions by 2014.  The two key tools used to combat the financial impacts were the Drought Reserve Fund established by the Board in 2007 and the proposal to issue long-term bonds to finance the AIP.  Mr. Bledsoe advised that treated and untreated water growth assumptions were consistent with the 2009 CIP for the years 2015-2019. 

 

The Facility Reserve Charge (FRC) assumptions were reviewed.  Mr. Bledsoe reported that the District’s five-year average was assumed for FRC collections beginning in FY13.  FY10-FY12 reflected lower than average assumptions.  He advised that the assumptions were taken from District data and not Association of Bay Area Government (ABAG) as was done in previous years.   

 

President Campbell asked if existing data was being used to arrive at these assumptions.  Mr. Bledsoe responded, yes.  Discussion took place on the District’s assumptions vs. ABAG assumptions for FRC’s.  President Campbell commented positively that the District’s assumptions were very conservative.  Director Boatmun concurred with President Campbell that the District should maintain a conservative approach. 

 

A chart reflecting the projected revenue recovery due to the drought and economic downturn was reviewed.  Mr. Bledsoe advised that the Drought Reserve Fund and financing of the AIP with long-term bonds would help accomplish the drought recovery in the financial plan.  A decision whether to use long-term bonds for financing of the AIP would not need to be made for an additional two years. 

 

Mr. Bledsoe used a slide to demonstrate the current LV debt and the debt that would be issued for the AIP.  He reported that the AIP was a long-term project which would be paid for by the customers that benefited from it and would provide benefits for many years.  A slide reflecting the rate increases for treated and untreated water and comparing the 2009 and 2010 CIPs was presented.  An increase from 3.25% to 3.5% in FY11-FY14 in treated water rates was necessary to accommodate funding of the capital programs. 

 

Mr. Bledsoe reviewed the ten-year fundable expenditures totaling $1.9 billion.  The expenditure categories included:  operating, capital and debt service.  He identified the funding sources as:  rate revenues, FRCs, other revenues, outside funding, reserve use, and debt funding. 

 

Mr. Bledsoe reported that the Draft CIP and Financial Plan would be brought to the Board for consideration at the Board meeting on February 18.  He acknowledged the CIP team and identified them as Principal Engineer Jeff Quimby, Rate and Financial Analyst Wayne Niehus, and Project Controls Manager Lars Sandberg. 

 

Referencing page 11 in the Draft Ten Year Financial Plan, President Campbell asked if the Land Levy Tax ran out after 2010.  Mr. Bledsoe responded that the Land Levy Tax continues beyond 2010 under the assumption that the District can fund applicable projects.   

 

Responding to a question from President Campbell concerning the percentage of revenue received from water rates, Mr. Bledsoe replied that it was 65%-70%.  President Campbell asked what the percentage was ten years ago.  Mr. Bledsoe responded it was approximately 90%.  President Campbell commended staff for obtaining funding from outside sources and joint projects with other agencies to take the pressure off of rates.    

 

President Campbell asked if there were any other comments.  There were no other comments.

 

It was the consensus of the Board to bring the Draft CIP and Ten-Year Financial Plan for Fiscal Years 2010-2019 to the February 18 Board meeting for consideration of adoption.   

 

 REPORTS FOR DISCUSSION

 

8.       Schedule Future Meeting Dates and Times

 

Mr. Bishop reported that he and Executive Management Analyst Desiree Castello would be attending the California Urban Water Agencies meeting on February 5-6 in San Diego.   Assistant General Manager of Engineering/Construction Steve Welch would be Acting General Manager.  He also reported that he would be meeting with legislators in Washington, DC on February 12 and Mr. Brown would be Acting General Manager.   

 

REPORTS

 

9.         General Manager

 

Mr. Bishop commented positively on a meeting held on January 26 with City Managers in the District’s service areas concerning potential impacts of the drought. 

 

10.        Legal Counsel

 

Mr. Maddow did not have a report. 

 

11.               Board Members

 

Director Burgh reported that he spoke to both the Concord and Pleasant Hill City Councils over the last couple of weeks.  He added that the topic was unrelated to his position on the Board of Directors. 

 

Director Boatmun reported that she plans to attend the Water Education Foundation’s Executive Briefing on March 12-13 in Sacramento.  She also referenced an article from the Fresno Bee concerning special districts.  She reported that she had shared the article at the California Special Districts Association (CSDA) Education Committee meeting on January 28.  She also commented on a publication provided by CSDA, the Orange County Watch Dog, which referenced the salary of the Orange County General Manager.    

 

She also reported on the Association of California Water Agencies (ACWA) Board of Directors meeting held on January 29 & 30.  She advised that ACWA had joined with National Geographic to produce a consumer magazine on California water for individual agencies to purchase and distribute to customers.  She reported that former professional baseball player and coach Dusty Baker would be appearing in a promotional video on water conservation.  She advised that a status report was given to the ACWA Board on the Bay-Delta Conservation Plan (BDCP).  The presentation was given by environmental groups working with the State Water Contractors. 

 

Mr. Maddow added that he was also present at the ACWA Board meeting and at the BDCP presentation.  He commented that Assistant General Manager – Water Resources Greg Gartrell was acknowledged by the group and the District’s two-gate project was also mentioned. 

 

Director Anello reported that she would be attending the Retirement Committee meeting on February 20.  

 

President Campbell reported that he met with Contra Costa County Supervisor Mary Piepho on February 2 on matters concerning the Delta.  He also reported that he attended the Concord Mayor’s Luncheon on February 3.  He commented positively on the District’s quick response to a pothole in the street on Oakhurst Drive and requested that Director of Operations and Maintenance Pete Schoemann be informed.

 

At 7:37 p.m., President Campbell adjourned the meeting to the next regular meeting of the Board of Directors scheduled for February 18, 2009 commencing at 6:30 p.m.

 

 

 

                                                                                                                                                        

                                                                                                Joseph L. Campbell, President

 

ATTEST:

 

                                               

Sharon L. Burris

District Secretary