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Agenda Packet - EVWD Board of Directors - 03/14/2012
East Val ley Water District 3694 HIGHLAND AVE" SUITE#30, HIGHLAND, CA BOARD MEETING March 14, 2012 5:30 P.M. AGENDA - -- - - - - - - - - - - - - -- - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - --- "In order to comply with legal requirements for posting of agenda, only those items filed with the District Secretary by 12:00 p.m. on Wednesday prior to the following Thursday meeting not requiring departmental investigation, will be considered by the Board of Directors". - - -- - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - -- - CALL TO ORDER PLEDGE OF ALLEGIANCE - - - - - - - -- - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --- - - - - - -- - - - - - - - - - - - - PUBLIC COMMENTS - At this time, members of the public may address the Board of Directors regarding any items within the subject matter jurisdiction of the East Valley Water District. The Board of Directors may BRIEFLY respond to statements made or questions posed. Comments are limited to three minutes per speaker. AGENDA - This agenda contains a brief general description of each item to be considered. Except as otherwise provided by law, no action shall be taken on any item not appearing on the following agenda unless the Board of Directors makes a determination that an emergency exists or that a need to take immediate action on the item came to the attention of the District subsequent to the posting of the agenda. 1. Approval of Agenda 2. CONSENT CALENDAR-All matters listed under the Consent Calendar are considered by the Board of Directors to be routine and will be enacted in one motion. There will be no discussion of these items prior to the time the board considers the motion unless members of the board, the administrative staff, or the public request specific items to be discussed and/or removed from the Consent Calendar. a. Approval of the board meeting minutes for February 22, 2012 b. Accept and file the Financial Statements for January 2012 C. Accounts Payable Disbursements: Accounts Payable Checks #231611 through #231831 which were distributed during the period of February 9, 2012 through February 27, 2012 in the amount of$1,625,706.00. Payroll and benefit contributions for the period ended February 27, 2012 and included checks and direct deposits, in the amount of$220,715.18. Total Disbursements for the period $1,846,421.18. d. Directors' fees and expenses for February 2012 1 NEW BUSINESS 3. Approve the District's Mid-Year budget review OLD BUSINESS 4. Approve Committee recommendations regarding AB 3030 legislation REPORTS 5. General Manager/ Staff Reports 6. Committee Reports: a. Legislative & Public Affairs Committee b. Personnel Committee 7. Legal Counsel Report 8. Consultant Report 9. Oral comments from Board of Directors CLOSED SESSION 10. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property: 0297-061-22, 0297-061-23, 0297-051-17 District negotiator: John Mura, General Manager Negotiating parties: Ron Amott Under negotiation: Price and terms of payment ADJOURN PLEASE NOTE: Materials related to an item on this agenda submitted to the Board after distribution of the agenda packet are available for public inspection in the District's office located at 3654 E. Highland Ave, Suite 18, Highland, during normal business hours. Also, such documents are available on the District's website at www.eastvallev.ore subject to staff's ability to post the documents before the meeting. Pursuant to Government Code Section 54954.2(a), any request for a disability-related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above- agendized public meeting should be directed to the District's Administrative Manager at (909) 885-4900 at least 72 hours prior to said meeting. 2 BOARD AGENDA STAFF REPORT East Val ley Meeting Date:March 14,2012 Water District Public Hearing: ❑ Discussion Item: ❑ Consent Item: March 9, 2012 TO: GOVERNING BOARD MEMBERS FROM: GENERAL MANAGER/CEO SUBJECT: FINANCIAL STATEMENTS FOR JANUARY 2012 RECOMMENDATION: Staff recommends that the Board of Directors accept and file the attached financial statements. BACKGROUND/ANALYSIS: Balance Sheet There was little change in Total Assets during January; restricted bond proceeds were reduced by Requisition #6 to reimburse the District for a progress payment on the membranes being built for Plant 134. Change in financial condition indicators during January: • the current ratio (current assets to current liabilities) increased from 1.64:1 to 1.96:1 with the payment of some large payables that existed at the end of December • coverage of current liabilities by cash improved from 112%to 127% for the same reason Revenue & Expenses Statement Operating Revenue Water sales were $156,088 above projection for January, during which the District sold 569,649 HCF (426.1 MG) of water. As shown in the graph below, the January spike in sales (due to a dry winter) is unusual compared to the previous two years when sales continued downward trends at least through February. Page 1 SR#0075 AGENDA DATE: MARCH 14, 2012 SUBJECT: FINANCIAL STATEMENTS FOR JANUARY 2012 Sales Volume by Month -Current Fiscal Year (with 2 previous yrs for comparison) 1,200,000 1,100,000 J 1,000,000 900,000 800,000 \ 700,000 \ \ — 2009-10 600,000 \ 500,000 — .2010-11 400,000 300,000 2011-12(Mar-Jun est.) 200,000 100,000 IJ\J PJOoSeQa. Oca.�o� Oec, \ac �y�o fat PQt�yA >Jp Other District operating revenues were $28,082 over projection in January, and Sewer Treatment revenue, which is passed through to the City of SB, was $53,878 higher than projected, pending changes recommended in the mid-year budget review. Operating Expenses Operating Expenses were $121,690 under budget in January, and are $853,162 under budget year-to-date: • Source of Supply costs in January included purchase of 695 acre feet of imported water from SB Valley Municipal Water District at $125.80 per AF • Pumping costs continue to track below budget; $280,333 under budget through January, due to lower than anticipated power costs. • The Envirogen mobile water treatment unit at Plant 27 remained offline in January due to Flouride readings; Water Treatment costs are $154,903 under budget year-to-date Page 1 2 SR#0075 AGENDA DATE: MARCH 14, 2012 SUBJECT: FINANCIAL STATEMENTS FOR JANUARY 2012 • Sewer Treatment costs remained higher than revenues in January as bills to customers were pro-rated reflect the number of days before and after the January 1 rate increase based on their billing period. For example, customers billed on January 3rd were billed for 28 days under the old rate and 3 days at the new rates. Beginning in February, Sewer Treatment revenues and expenses will be exactly the same Operating Expenses Y-T-D •Genrl &Admin •Source ■Pumping •Water Treatment •Trans/Distribution •Wastewater Treatment Wastewater Collection Customer Accounts • General and Administrative variances include: • Labor and benefits are a combined $275,998 below budget due to vacant positions in IT and Administration. • Higher than projected contractual services as monthly consulting costs for the interim GM and for the former GM were not anticipated for January. This is addressed in the mid-year budget review. Capital Projects Capital expenditures during January included computers for new staff who have joined, or will join the District during the first quarter of 2012. Expenditures related to our CIP program totaled $647,958 during January,. This included: • $309,000 in costs for Plant 134 Page 13 SR#0075 AGENDA DATE: MARCH 14,2012 SUBJECT: FINANCIAL STATEMENTS FOR JANUARY 2012 $220,000 for design work on Plant 150 $24,000 for design of the Plant 143 blending tank • $36,000 for work at Eastwood Farms All of these costs are reimbursable by either SRF funding through the State, or by our 2010 bond proceeds REVIEW BY OTHERS: Not applicable FISCAL IMPACT: None Respec lly sub mitt d: Recommended by: AA John Mura Brian Tomp� ns General Manager, C 0 CFO ATTACHMENTS December Financial Statements Page 14 SR#0075 East Valley Water District Balance Sheet by fund - Unaudited January 31, 2012 Water Sewer Fund Fund Totals ASSETS UTILITY PLANT -at cost: Utility Plant in Service $123,862,670 $31,140,346 $155,003,016 Less: Accumulated Depreciation (36,746,393) (13,734 311) (50,480,704) 87,116,277 17,406,035 104,522,312 Construction in Progress 14,125,412 171,463 14,296,875 101,241,689 17,577,498 118,819,187 RESTRICTED ASSETS: Customer I Constr. Deposits 1,797,733 99,598 1,897,331 Capacity Fees 254,580 27,916 282,496 Rate Stabilization Reserve 229,941 96,366 326,307 Construction Funds 12,630,401 199,035 12,829,436 Debt Service Funds - Trust Accts 1,681,903 1,681,903 16,339,978 394,999 16,734,977 CURRENT ASSETS: Cash and Investments 18,805,681 3,844,848 22,650,529 Less: Restricted Cash and Investments 16,339,978 394,999 16,734,977 2,465,703 3,449,849 5,915,552 Accounts Receivable (net of allowance) 1,470,716 1,470,716 Interest Receivable 875 8,388 9,263 Assessments receivable 85,028 Other Receivables 139,601 85,028 Grants Receivable 437,266 139,601 437,266 Inventory 934,416 934,416 Prepaid Expenses 130,593 130,593 5,664,198 3,458,237 9,122,435 OTHER ASSETS: Deferred financing charges 554,269 18,115 572,384 Property held for resale 751,842 684,725 1,436,567 Due from Other Funds 7,000,000 7,000,000 1,306,111 7,702,840 9,008,951 TOTAL ASSETS 124,551,976 29,133,574 153,685,550 Balance Sheet Page 1 East Valley Water District Balance Sheet by fund - Unaudited January 31, 2012 Water Sewer Fund Fund Totals LIABILITIES AND EQUITY LONG-TERM LIABILITIES: 2010 Revenue Bonds $30,670,000 $765,000 $31,435,000 Premium on 2010 Rev Bonds 2,055,768 96,740 2,152,508 DWR Loans 2,180,945 2,180,945 Due To Other Fund 7,000,000 7,000,000 Less: Deferred Amt on Refunding (510,222) (510,222) 41,396,491 861,740 42,258,231 CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS: Customer service deposits 1,692,833 1,692,833 Construction deposits 104,900 99,598 204,498 Accrued interest payable 999,855 24,683 1,024,538 2,797,588 124,281 2,921,869 CURRENT LIABILITIES: Accounts payable 2,415,437 3,771 2,419,208 Accrued payroll and benefits 357,008 49,803 406,811 Compensated absences 535,225 228,893 764,118 Long Term Debt - amt due within one yr 991,329 75,000 1,066,329 4,298,999 357,467 4,656,466 TOTAL LIABILITIES 48,493,078 1,343,488 49,836,566 EQUITY: Invested in Utility Plant 79,790,381 17,542,633 97,333,014 Restricted: Capacity Fees 254,580 27,916 282,496 Designated: Rate Stabilization Reserve 229,941 96,366 326,307 Unrestricted / Undesignated (4,216,004) 10,123,171 5,907,167 Income Year To Date 3,677,148 517,233 4,194,381 TOTAL EQUITY 76,058,898 27,790,086 103,848,984 TOTAL LIAB AND EQUITY 124,551,976 29,133,574 153,685,550 Balance Sheet Page 2 m a °oo 000°OOO o 0 80 0 0 G o °o0°a 0oO oOg OO°o°°OpO°omo 000 oo m 000000 O0�00 0O vi v OOOO C; o o o d CD 0v= o coc cviocc vi A Om���< N mvin am p N Ca n�OmiOr NN O .m- Nye- N Ol Yl tII�� N �m�m�NfOm a Qm �vnm r N M N o°0000 On �m inno°°000°o (Op 0000000 0 OOOOO OOno �n m N OI OpOphNNN N Nm O N0O t0 m�N�ON 10 <(�)m�OON� d �Fa N��VI��' �D ON O mMN YNj �fC OiOO C, V Mrz -Oi Olohm O 6 } N < NYfV'C�)q m fO��Nrn NN N K nm W m of w c O d NOlO�OOOm Om N mVtD�-Nt0O n mmmr<a Nm n > mNmm�0O O 'O N{7mr N ON m ' '(7 m O '�mNntm{7 ' fp mNm— m mm amamnm m pN to N morfcQN mm N mmr r mO .r K l7 NN�Na O m Oml OJ NN�NNOmIm P�� m�vmm Q mNNt Ih V O O on N O O Nm 0 0 0 0 0 0 0 0 0 0 O O O O O O O O M_ �d mN O{i mm m N V O a tl V N W ac�m m v j LL U y ; O O N N O O 00 N 0000000000 O 00000 0 0 O O O O O O O O O O (S O m t7 N h NQ c4i m m umi vmi 9 D G N W KN om OOO OOO m mmoOOOOOOO 0 00OOOOO 0 O000 ooino .O oa moo m rm o Y1N nmoo�O m m Oogo m W _ ono Nmn N Ot7 h m t7��-OOr t� wmoo,O f0 Omvwa7 a0N�O1�O d r A } 1°m J y 7 g J C mmo Onm°o m noo�000 om v> moav�on m Q N � w wn poO� a ° n (p m n oom a > > 3 O a a �i n v�'PP R"m o 'yi ��$°n°$ m r co cV O1� mN� m m o 0N�c oai W 0 '¢ Y C d E Y A Y N w _ m c c E) m w C w N W U w m ZI Z QC7. bdrU.�ddd.e NuTod LW W iR y T7L m� N L.d S Q r°� y6 o c J a o LU C W W 2' t � w o mc o �O W G.a M`.mc 0 a dd�8wcd E i aU€cwr U.b o wEl�. y f E4Lt1 f L N U w U Z dm w II d E— o P-204 2e � LLw — ` iC € Is m E b � E W c c ` C tmwEJ W ove _'� a A N o W O o5 0 O =U$J N HW`w y Uyy%%m I IO a f 3 Coco O 0000000 0 O N OOOOS O 00000 00 O y V:Rqcl o00 .o tm jpy vmo0 t74JON vim ah N ca amaavri m �imwmm m a ¢m ` y p_ d n y°O°oS 0 -S00000N too C _ mOn' m O omNO mr O m ato mYlN N Nmt7WN t7} lh G ❑ d NpN0t7 t7r Nll1 m K r? m N C)t7 t7 N W m d J N pp O >W m ~ f10i�mm� M hlo: . 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N 00 O O O 0 N � Q� mm r 0 O+Am O m� r A O A 6 N m fA0 m t7 fO m r m OI h m x m N N N 7 m N ~ mpOmm V mam A OO ONOymy O > GO r uN1.O O H N tm0 O ONNA N m �� fG A m m YN-< N m m m A m M h W N Nm 0cj0 00 0 N wmN N O 0000 O O A A O om N . r m q A 7 � ; N000 N rm0 O 00000 O O l0 O lO V N y tm0_C' N IQ b N t7 V N q� m t7 O r N � Oi ID O C N W xC4 0000 O ONO N 00000 O O l`7 N 01 m0 O m wow 01 O O r p� H W Nh O A Nm0 m O O m } W m A J C m v Nmoo r omm m 0000m m m � v r N O A q N m WY '¢ C d E y A y N O Z, n a c ° MS E ac E WU ° m in m W Uj 7C Q v m H w y L v ... m W 1 u n o a y c c ] p Z .a c 8 uj 0 o U W u o mm ca Wgcoo E';� ' Z w Q EEca ua` �� XS nn2on K Ka W m S $ y y Z°c °°' o WO EQy wt a Ox w W 0:M C yc� � C fAmmm QaC4w�W o NW O V (? y � a`�� o m o.a� H� m � E�� ~ WW Z Z > s � 0 a aoA� aW m �� s000 w oN�` ac¢i3 cic�3 Xp a w Z U W °¢ Z EAST VALLEY WATER DISTRICT CAPITAL IMPROVEMENT PROGRAM INCLUDING CAPITAL BUDGET FOR FISCAL YEAR 2011 - 2012 Current Year Actual Updated through January 2012 Page 1 EAST VALLEY WATER DISTRICT Capital Improvement Program Current Year Actual Updated through January 2012 Prior Current (Memo) Projects -By Type Years Year 2011-12 2012-13 Actual Actual Budget Year Source of Supply Plant 150 Wells - Lower Zone Wells (2) - - - Plant 24 Drain Line 14,486 407 240,000 Sunrise Ranch Wells (4) - - - Total Source of Supply Projects 14,486 407 240,000 Treatment Facilities Plant 134 - Upgrade Technology 4,271,639 4,267,099 7,211,715 1,253,895 Plant 134 - Membrane Replacement Plant 150 - Lower Zn Perch Treat. PI - Phase 1 1,993,126 683,497 650,000 241,150 Plant 150 - Lower Zn Perch Treat. PI - Phase 2 - - - - Plant 152 - Inter. Zone Perch Treat. Plant - - - Total Treatment Projects 6,264,765 4,950,597 7,861,715 1,495,045 Pumping Facilities Plant 9 - Rehab Forebay and Booster Station - - 30,000 270,000 Plant 40 - Inter to Upper Zone Transfer 2,221 400,000 - Plant 127 - Lower to Inter Zone Transfer - - - - Plant 12 - Replace Boosters /Well - - - 500,000 Plant 134 - Upper to Canal Zone Transfer - - - 520,000 Plant 39 - Inter to Upper Zone Transfer - - - Plant 25 - Inter to Upper Zone Transfer - - - - Plant 143 - Inter to Upper Zone Transfer 32,120 123,437 900,000 550,000 Total Pumping Projects 34,341 123,437 1,330,000 1,840,000 Wastewater Collection System Sewer System Studies / Planning 181,049 - 200,000 100,000 Sewer Main Lining 51 117,000 450,000 Conejo Main Replacement 933,496 - - Total Wastewater Collection Projects 1,114,596 317,000 550,000 age Projections 2013-14 2014-15 2015-16 2016-17 Beyond Project Year 3 Year 4 Year 5 Year 6 Year 6 Totals 825,000 1,100,000 1,925,000 3,300,000 3,300,000 - 14,893 - 4,400,000 4,400,000 825,000 8,800,000 9,639,893 - - 9,792,633 16,990,000 1,025,000 - - - 20,932,774 - 5,050,000 2,850,000 - - 7,900,000 - - - - 19,160,000 19,160,000 16,990,000 1 6,075,0001 2,850,000 - 19,160,000 57,785,407 - - - 270,000 - 200,000 - 202,221 300,000 - - 300,000 500,000 - - - 1,000,000 - 780,000 - - - 1,300,000 - 2,200,000 - - 2,200,000 - 400,000 - - 400,000 - - - - 1,400,000 2,105,557 800,000 980,000 2,600,000 - 1,400,000 7,777,778 - - - - - 281,049 450,000 450,000 450,000 450,000 1,800,000 4,050,051 - - 933,496 450,000 450,000 450,0001 450,000 1,800,000 5,264,596 Page EAST VALLEY WATER DISTRICT Capital Improvement Program Current Year Actual Updated through January 2012 Prior Current (Memo) Projects - By Type Years Year 2011-12 2012-13 Actual Actual Budget Year 2 Transmission & Distribution System 6th St 20" Pipeline - Plants 11 & 12 to 150 131,985 - 180,000 400,000 Live Oak Main Replacement 207,080 115,000 - Harlan Lane Main Replacement 7,957 90,000 70,000 Cunningham / Hillview/ Crest/ Bruce 631,254 - - - 6th St 30" Pipeline - Plant 151 to Plant 40 726,931 14,013 3,675,000 2,000,000 6th St 30" Pipeline - PI 40 to PI 143 - - - - 9th St 12" Pipeline - Del Rosa to Sterling - - - AMR Meter Replacement Program - 33,838 300,000 300,000 Plant 59 Recoating - - 50,000 250,000 Plant 143 - 10mg Inter Zone Storage - - - - Reservoir-Greenspot Rd S Curve - Reservoir-Seven Oaks Dam Rd - - - - Relocation of Facilities for Other Agencies 88,378 32,003 100,000 150,000 Eastwood Farms Assessment District 171,772 424,014 2,211,399 - Baseline Gardens 75,953 107,296 - - Total Trans & Distribution Projects 2,041,310 611,163 6,721,399 3,170,000 General Projects GIS Implementation 598,643 48,361 100,000 - Headquarters Building - Total General Projects 598,643 48,361 100,000 TOTAL CAPITAL IMPROVE. PLAN PROJECTS 10,068,141 5,733,964 16,570,114 7,055,045 Miscellaneous/ Developer Projects Developer Water Facilities (Reimb by Fees) 226,444 25,343 Developer Sewer Facilities (Reimb by Fees) (17,590) 6,493 Regional Treatment Plant 24,246 Seven Oaks Dam (SAR) Discharge 206,057 Northfork Replacement (Highland Ave @ VFW) 52,409 2010 Flood Clean Up - Highland (4,023) 2010 Flood Clean Up - EVWD Facilities 146,241 21,320 TOTAL MISC / DEVELOPER PROJECTS 633,784 53,156 - Total Capital Projects 10,701,925 5,787,120 16,570,114 7,055,045 Projections 2013-14 2014-15 2015-16 2016-17 Beyond Project Year 3 Year 4 Year 5 Year 6 Year 6 Totals 531,985 207,080 77,957 631,254 - - 2,740,944 1,300,000 1,000,000 5,400,000 7,700,000 700,000 - - 700,000 300,000 300,000 300,000 300,000 1,533,838 - - - - - 250,000 - - 10,700,000 10,700,000 - - 10,700,000 10,700,000 - - - - 10,700,000 10,700,000 150,000 150,000 150,000 150,000 - 870,381 - - - - 595,786 - - - - 183,249 450,0001 2.450,0001 1,450,0001 450,000 37,500,000 48,122,473 - - - - - 647,004 - 10,000,000 10,000,000 10,000,000 10,647,004 18,690,000 9,955,000 7,350,000 1,725,000 78,660,000 139,237,151 251,787 (11,097) 24,246 - 264,936 18,690,000 9,955,0001 7,350,0001 1,725,000 78,660,000 139,502,087 BOARD AGENDA STAFF REPORT Meeting Date: March 14,2012 East Valley Water District Public Hearing: O Discussion Item. C Consent Item: MARCH 5, 2012 TO: GOVERNING BOARD MEMBERS FROM: CHIEF FINANCIAL OFFICER SUBJECT: DISBURSEMENTS RECOMMENDATION: Approve the attached list of accounts payable checks and payroll issued BACKGROUND/ANALYSIS: Listings of accounts payable checks, and the total for payroll and benefits costs incurred, are submitted to the board of directors for review and approval with each board packet. The attached check register, and the total for payroll cited below, were disbursed during the period February 9, 2012 through February 27, 2012. Accounts payable checks for the period included check numbers 231611 through 231831 for a total of$1,625,706.00. The source of funds for this amount is as follows: Unrestricted Funds $ 778,636.19 Bond Financing $ State Financing $ 847,069.81 Payroll and benefit contributions paid for this period totaled $220,715.18. Total disbursed during the period February 9 to February 27, 2012 is $1,846,421.18. REVIEW BY OTHERS: This agenda item has been reviewed by the Chief Financial Officer and the Accounting Supervisor. Page 1 SR#i0071 AGENDA DATE: MARCH 14, 2012 SUBJECT: DISBURSEMENTS FISCAL IMPACT: $1,846,424.18 (budgeted expenditures) Respectf Ily submitted- Zmended b John Mura Brian W. 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BACKGROUND/ANALYSIS: The Board has instructed staff to list all director fees and expenses as a separate agenda item to show full fiscal transparency. Only after Board review and approval,the expenses will be paid. REVIEW BY OTHERS: The Director fees and expense report have been reviewed by the Administrative Manager. FISCAL IMPACT: The fiscal impact associated with this agenda item is $6,950.25, which is included in the current fiscal budget. Respectfully submitt d Recommended by- John Mura Brian W. To ins, General Manager/CEO Chief Financial Officer Attachments: Monthly summary report February fees and expenses reports Page 11 SR#0073 Z U m (W/) cai m w z N N N J w O a U x W C p O O Q O O O (n O O O U w n n w w r ^ ^ w' LL Z cn W n rn o m Lo U) m cn c+i 0 0 3 m X w 0 00 °o o °0 0 00 °o 0 0 N a O O O N N O p W N M u7 O LL n n O W n O r N O N N (W7 Z m N n N m 0-1 W CL X U (Y cn CO o O o O o O O o 0 O O d F cn n n LU ❑ W W O N cOD c00 M O c^O r Lu U C LL _ W W N O QO ❑ > Oo w w J ❑ N ¢ Z 0 n r J C cr o¢ o a F (D w U U o 0 0 0 0 0 0 0 0 0 0 °o °o 0 w W W N p O O O C W N V N ^ ❑ LL W coo v n n W U N N m w X O O 0 O O O O O O O U) N O O N ^ ^ U W w o 0 0 � LL w U) n my v N rn n r ❑ W z w w > a w xW z o 00 00 00 °o °0 00 0 0 O_ m o v0i o 0 0 0 0 0 W o 0 (n W r r r r r r N O O w w K a > u z m m J } w J CO Q d J a U O w ¢ w ¢ ¢ z ¢ ¢ w O z ❑ �- a 2 � t- w o w ¢ O F U N N (n r O � O Z p � m H Q U 0 O W (JJ n of N O W of (D 01 G7 Mo - on M n o m mm O d e m Moo V Q (') pj W m (O It O N n co N r n (O m W N r r r r r M n r r N M W 7 Z o O 0 U 0 j O J W J W C7 N m M O (O (p t0 O n M T M W N Y (O t0 N N ul O) N uo'i r r r r � a x � °v v w cn LL LL K W m W U Q a ° N W W O O O r U o 00 Z M N N N F N W U C� G� W Q W ct: W Z co LU J O W LL Q U LL O U C) U) Of LL 0 Z r r r r r r r r r r r r r r r r r r_ r N N N N N N m W �"' 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 p p N N N N N N N N N QcW N N N N N N N N N N N N_ N N N_ N N N N N N N 0 `1 N V V M ` n t l N c°'i N 1° « Or ON N N \ m a (O O N m O> N O> N N LL n n n nnm rnm .-- r O c °m Z ° U U U U U U U U (/j U O O O O O O O O (n O T O O N LL W 0 0 O 0 0 0 L > y 0 a 0 .0c 6I c K W O N N N d a c N j a 0 Z u c a o o a o o o o w E—L o � p°. o y o o w 0 m o ° 0 0 3 3 4 3 ❑ 3 3 3 y 03 U W 3 3 3 3 3 3 v 3 0 vy O a°°i .c c c ° 5 S 5 aNi (n � o �_ 3 U j Q LL mm N N j N m N N N j W (� (°p N N N j N W N N L lV (n O C cU U) U N 20 U) m �5 LL 2 22a (p 2 (D 2 M Q i- 0 0 0 U U) 2 (n 0) N r O) M J (0 r O r r 0 Q V 0) (O V O W r r C7 z °o K Z o W co � O J J Q 2 0 Z_ NN m Q < Y N N J J Q � LL ww w w co U) ¢ Q o LL LL U) w w W o O Q a N W W p O U u� 00 Z M Cl) F N W W Q UJ rcw zU) Ow LL Q U U- O U O � � LL Q O mZ r r r r r r r r W F O 0 O O O O O O LLI Q W N N N N N N N N (O N L r N r LL❑ LL 00 a, O O p O U U U U U O O O O O O C Cl O ❑ cC) uj LL. 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Of W N U a- x o N uJ o o °o U ui N oN r0 uJ 0' U Q ui (L W L_ Ln Y O W u Q U U- 0 O O w Q LL O C7 N (D Lu r C) 00000 N O N O F- W N N N_ N N N N � N O N O `2 N — p NNN � rN `OM LL- O rn p p O O O w U) O w w w rl W "' rL a0 v00 m E o 0 u o c Q m p Z o ,? 2 w m o d o o E W c C] D E � LCX m 3 0 3 3 m 30 3 3 E omw mm0 J r wN two ta ,_ w w r m m Co m m LL m U UI d 0 O 2 ° 2 2 2 U' 2 Q m 2 0 U o n � g r N N0 Cl) J N V Q '- V tD fm LLJ "1 r 2 Z U` r O Z W N N (D r N D F O J co d Li z 0 O Y LU _ y) vi cc Y :> a W W ° (C (if O 0 W (L (L U) J W — Of Q a N w llJ O O O O O t0 N O 0 0 0 O M N OO > O to O W 0 H N (Y W ED W Q W W ccW zW DY O (L Q ) O U o � � LL O Q Z ` O O O O O O O O O O W N N N O N N N N N N N cl, LLJ '.� N N r N N N LL O C O t t L L U E E p U C U U 0 0 0 c o( j o 0 pU U op � p0 O W N N W 'CL a c < Q a E E .5 w -0 w Z 2 L L V C 0 3Q O O1 C W O 0 C m p 0 J H C (0 m Q .0 .0 U) Q LL p7 L L N J N D UI U W N rn 01 c0 U1 0 U U W N m O � of S (n F- / ci s w Lo CO m i \ / ( @ \ $ / o ± 2 / } / < §LL \ % < G G CL �Lj \ \ j \ E ) ( + ± ay S ± 2 LL < i ) co ( [ / - _ - _ - _ U. \ ) � ( � ( { ) � C) R \ \ \ \ ( \ f ± » \ 22\ 2 ! ±7 > / ) & » / 0® � 2 L) C)3 / 2 $22 << < m , 5see4a � ± 222 § 2 < < 2 ) co / m §. m � \ / a \ ( 0 LU co \ } § } } \LLI 0— � � w ) \\ / } ~ ) ) § � 5 / / \ % / � 2 5 ( \ (N ° } f \ § 0 » \ \ / � z ) { G [ u / C) 2 EAST VALLEY WATER DISTRICT DIRECTOR'S FEES AND EXPENSE REPORT DIRECTOR Ben Coleman MONTH Feb 2012 Board Meetings 8 Conferences and Other Meetings DATE ORGANIZATION PURPOSE 1-Feb SBVWCD Meeting at the San Bernardino Valley Water Conservation District. 2-Feb EVWD Finance Committee Meeting at EVWD building 8-Feb SBVMWD Reservior Committee Meeting 9-Feb USAWRA Upper Santa Ana Water Resources Association 14-Feb EVWD Legislative and Community Affairs Committee meeting 15-Feb SBCC San Bdno Chamber/Com, Rich Atwater, So Cal Water Committee 16-Feb EVWD Finance Committee Review Midyear Budget 17-Feb CSDA CSDA Leadership Academy, Finance and Fiscal Responsibility 27-Feb ASCSD Meeting with the Association of San Bdno County Special Districts 29-Feb EVWD Meet with John Mura about Statregic Planning Meeting TOTAL#OF MEETINGS 10@ $175.00 each $ 1,750.00 Travel Expenses: (Details on Back) $ 106.21 Total Director's Meetings & Expenses $ 1,856.21 Director's Signature / � Less Any Advance Payments $ Date of Board Approval TOTAL DUE DIRECTOR $ 1.856 21 Administrative Manager Miscellaneous Notes TRAVEL EXPENSES Lodgings: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ $ $ $ TOTAL LODGING $ Personal Auto: (Detailed receipts attached') PARKING DATE FUNCTION ATTENDED MILES FEES 17-Feb CSDA Training. The board's Role in Finance and Fiscal Accountabilit 50.3 $ 27-Feb Association of San Bernardino County Special Districts 78 $ TOTAL FEES $ CURRENT RATE. $0.555 TOTAL MILES 1283 $ 71.21 Meals: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ $ $ $ TOTAL MEALS $ Other: (Detailed receipts attached') DATE FUNCTION I NATURE OF EXPENSE AMOUNT 27-Feb Dinner ASCSD meeting $ 35.00 TOTAL OTHER S 35.00 J ORIGINAL RECEIPTS REQUIRED TRAVEL EXPENSES $ 106.21 EAST VALLEY WATER DISTRICT DIRECTOR'S FEES AND EXPENSE REPORT DIRECTOR Matt Le Vesque MONTH February 2011 Board Meetings 8-Feb, 22-Feb Conferences and Other Meetings DATE ORGANIZATION PURPOSE 2-Feb Valley District Mtg. w/ACOE, SBCFCD re Water Quality/Water Conservation 6-Feb EVWD Mtq. w/ Dr. Mathis, J. Mura re Strategic Planning 7-Feb EVWD Mtg, w/J. Mura, J. Morales re meeting agendas 8-Feb 'CSDA Board Protocols 10-Feb EVWD Employee Leaders meeting 13-Feb EVWD Mtg. w/J. Mura, J. Morales re Strategic Planning Process 14-Feb EVWD Legislative & Public Affairs Committee 15-Feb SB Chamber Southern California Water Committee 16-Feb EVWD Plant 134 w/J. Mura, C. Roberts, J. Morales _ 16-Feb 'EVWD Mtq. w/J. Mura, J. Morales re meeting agendas 23-Feb EVWD Eastwood Farms Public Meeting 24-Feb EVWD Mtq. w/J. Morales, J. Mura re ACWA 24-Feb 'EVWD Mtg, w/J. Mura, J. Hendricksen re Strategic Planning Schad. TOTAL# OF MEETINGS 10 @ $150.00 each S 1,500.00 Travel Expenses: (Details on Back) $ 31.08 Total Director's Meetings & Expenses $ 1,531.08 Director's Signature Less Any Advance Payments $ Date of Board Approval TOTAL DUE DIRECTOR$ 1,531.08 Administrative Manager Miscellaneous Notes TRAVEL EXPENSES Lodgings: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ $ S TOTAL LODGING $ Personal Auto: (Detailed receipts attached') PARKING DATE FUNCTION ATTENDED MILES FEES 6-Feb Mtg. w/ Dr. Mathis. J. Mura re Strategic Planning 28 $ 28-Feb Mtg. w/ B. Mathis, J. Mura re Strategic Planning 28 $ TOTAL FEES S CURRENT RATE: $0.555 TOTAL MILES 56 $ 31.08 Meals: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ $ $ TOTAL MEALS $ Other: (Detailed receipts attached') DATE FUNCTION / NATURE OF EXPENSE AMOUNT S $ S TOTAL OTHER S ORIGINAL RECEIPTS REQUIRED TRAVEL EXPENSES S 31.08 EAST VALLEY WATER DISTRICT DIRECTOR'S FEES AND EXPENSE REPORT DIRECTOR Matt Le Vesque MONTH February 2011 Board Meetings Page 2 Conferences and Other Meetings DATE ORGANIZATION PURPOSE 28-Feb EVWD Mtg. w/B. Mathis, J. Mura re Strategic Planning mt . 29-Feb EVWD 'Mtg. w/J. Mura, J. Henrdickson re March 1arrangements TOTAL#OF MEETINGS_@ $150.00 each S Travel Expenses: (Details on Back) $ Total Director's Meetings & Expenses $ Director's Signature Less Any Advance Payments $ Date of Board Approval TOTAL DUE DIRECTOR$ Administrative Manager Miscellaneous Notes TRAVEL EXPENSES Lodgings: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ $ $ S TOTAL LODGING $ Personal Auto: (Detailed receipts attached') PARKING DATE FUNCTION ATTENDED MILES FEES $ $ $ $ TOTAL FEES $ CURRENT RATE: $0.555 TOTAL MILES $ Meals: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ $ $ $ TOTAL MEALS $ Other: (Detailed receipts attached') DATE FUNCTION I NATURE OF EXPENSE AMOUNT $ $ $ TOTAL OTHER $ ORIGINAL RECEIPTS REQUIRED TRAVEL EXPENSES $ EAST VALLEY WATER DISTRICT DIRECTOR'S FEES AND EXPENSE REPORT DIRECTOR: _Morales MONTH _Feb 2012 Board Meetings: _8, 22 Conferences and Other Meetings DATE ORGANIZATION PURPOSE 3 EVWD Meet with General Manager/agenda review 13 EVWD Strategic Planning 14 EVWD Legislative / Public Committee 16 EVWD Surface Water Treatment Plant Tour / Agenda Review 23 EVWD Review Legislation (w/ Legislative Analyst) 24 EVWD Legislative / Public Committee TOTAL # OF MEETINGS-8_ @ $150.00 each $1200.00 Travel Expenses: (Details on Back) $ Total Director's Expenses $233.60 Total Director's Meetings & Expenses $1433.60 Director's Signature Less any Advance Payments $ Date of Board Approval TOTAL DUE DIRECTOR $1433.60 TRAVEL EXPENSES Lodgings: (Detailed receipts attached*) DATE FUNCTION ATTENDED AMOUNT $ TOTAL LODGING $ Personal Auto: (Detailed receipts attached*) DATE FUNCTION ATTENDED MILES PARKING FEES $ $ $ 9� TOTALFEES $ TOTAL MILES x $.555 per mile-$ Meals: (Detailed receipts attached*) DATE FUNCTION ATTENDED AMOUNT $ TOTAL MEALS $ Other: (Detailed receipts attached*) DATE FUNCTION ATTENDED AMOUNT 03/06 Travel to ACWA State Legislative Conference ( incurred 2/21)_ $233.60 $ $ TOTAL OTHER $233.60 * ORIGINAL RECEIPTS REQUIRED TRAVEL EXPENSES $233.60 (Enter this total on the front of form) EAST VALLEY WATER DISTRICT DIRECTOR'S FEES AND EXPENSE REPORT DIRECTOR Sturgeon MONTH 02/12 , 2011 Board Meetings 8 & 22 Conferences and Other Meetings DATE ORGANIZATION PURPOSE 01 SBVWCD Board Meeting 02 EVWD Meet with CEO 04 LACMA Air Quality Committee Tour 09 KPOC Negotiating, Enacting & Managing Seminar 14 Inland Action Meeting 23 Highland C of C Chamber Mixer 27 ASBCSD Meeting 28 EVWD Meet with CEO 29 SB County Meeting TOTAL# OF MEETINGS 8 @ $150.00 each $ 1 ,200 . 00 Travel Expenses: (Details on Back) $ 1 , 137 . 96 Total Directors Meetings & Expenses $ 2 ,337 . 9 6 Directors Signature Less Any Advance Payments$ Date of 2 , 337 . 96 Board Approval 03/14/2012 TOTAL DUE DIRECTOR$ Administrative Manager Miscellaneous Notes rA'FE FUNCTION ATTENDED AMOUNT C;3106 ACWA - Hotel Room for Kip $ 156 . 48 03/06 ACWA - Hotel Room for Matt Le Vesque $ 156 . 48 $ $ TOTAL LODGING $ 312 . 96 Personal Auto: (Detailed receipts attached*) PARKING DATE FUNCTION ATTENDED MILES FEES $ $ $ TOTAL FEES $ CURRENT RATE. $0.51 TOTAL MILES $ Meals: (Detailed receipts attached') DATE FUNCTION ATTENDED AMOUNT $ $ TOTAL MEALS $ Other: (Detailed receipts attached') DATE FUNCTION/ NATURE OF EXPENSE AMOUNT 03/06 ACWA Airfare 5 . 00 03/14 Water Education Foundation Registration $695 . 00 02/29 SB County Registration 50 . 00 01/31 IEEAC Registration 40 . 00 02/TH D Registration $ 35 . 00 TOTAL OTHER $ 825 . 00 ORIGINAL RECEIPTS REQUIRED TRAVEL EXPENSES $ 1 , 137 . 96 - *a EAST VALLEY WATER DISTRICT DIRECTOR'S FEES AND EXPENSE REPORT DIRECTOR WILSON MONTH_ 2(M4- Board Meetings 2/8;2/22 Conferences and Other Meetings DATE ORGANIZATION PURPOSE 6-Feb BTAC Monthly Meeting 9-Feb USAWRA 16-Feb EVWD Finance Committee 2-Feb EVWD 1. 21-Feb EVWD Mtg. With Gen Mgr TOTAL#OF MEETINGS 7 @ $175.00 each $ 1,225.00 Travel Expenses: (Details on Back) $ Total Directors Meetings & Expenses $ 1.225.00 Director's Signature /J�f' ti Less Any Advance Payments $ Date of TOTAL DUE DIRECTOR$ 1 225.00 Board Approval Administrative Manager Miscellaneous Notes BOARD AGENDA STAFF REPORT Meeting Date: March 14,2012 East Val ley Public Hearing: ❑ tooWater District Discussion Item: ❑ Consent Item: ❑ March 9, 2012 TO: GOVERNING BOARD MEMBERS FROM: GENERAL MANAGER/CEO SUBJECT: MID YEAR BUDGET AMENDMENTS —FISCAL YEAR 2011-12 RECOMMENDATION: Review and approve the recommended changes to the 2011-12 budget, which will result in an additional $152,000 available for transfer to Reserves at year-end. BACKGROUND/ANALYSIS: Attached is a mid-year budget review document with which staff is recommending several adjustments to the 2011-12 fiscal year budget. Should all of the proposed adjustments be approved by the Board, staff projects that the District will have an additional $152,100 to contribute to Reserves and the end of the fiscal year. The proposed adjustments include changes in revenue projections related to the Sewer Treatment rate increase, as well as changes in expenditure projections. Changes to expenditure projections are the result of costs arising during the first half of the fiscal year that had not been anticipated, as well as requests from staff to fund some initial steps toward making East Valley Water District a best in class water utility agency. The format of this document differs from previous year presentations in two ways: 1) columns have been rearranged so that the current adopted budget is presented first, and 2), numbers for each cost center are summarized rather than presented in line item detail. A more detailed discussion of staff's proposed budget adjustments follows. Operating Revenue The first adjustments are to revenues presented on pages 2 & 3. Sewer Treatment revenue has been recalculated to reflect the Treatment rate increase that was adopted by the board on November 22nd. The result is an increase in Treatment revenue of $542,000 to be realized over the period January through June. Page 1 1 SR#0075 AGENDA DATE: MARCH 14, 2012 SUBJECT: MID YEAR BUDGET AMENDMENTS —FISCAL YEAR 2011-12 Staff also recommends decreasing the Installation Charges revenue to $0. Developer fees should not have been included in the budget as they are unpredictable, therefore, staff recommends removing the $20,000 in projected revenue from the budget. Total proposed increases to operating revenue are $522,000. Operating Expenses Staff is proposing some substantial adjustments to three operating cost centers. The first is Pumping. Through mid-year, both facilities maintenance and electrical power are tracking well below budget. Staff proposes reducing the budget for each by $100,000. Next is Transmission & Distribution (T&D). Labor is well below budget due to the fact that 2 positions that had been funded for 2011-12 are vacant and will not likely be filled until next fiscal year. Staff feels that$100,000 can safely be cut from the labor budget. At the same time, projected T&D Labor Credits — a contra-expense account that tracks labor costs that are being redirected from operations and capitalized to capital projects - need to be reduced significantly. Vacant staff positions, along with a shift in policy away from using in- house labor on major pipeline replacement projects, has resulted in very little labor being capitalized. Staff recommends reducing the T&D labor credit by $500,000, in effect increasing the Operating Budget by that amount. Finally, significant adjustments are necessary to General and Administrative(G&A) Expense. These are increases to Contractual Services totaling $317,000, which include: • the State Advocate for the entire fiscal year, only funded one month originally • assistance from Engineering Consultants for project management • six months of assistance from former General Manager • unanticipated additional two months for interim GM (November December) • assistance from PR firm in creating CC&R mailer for distribution • grant writing and research assistance, and • assessment district accounting Staff also recommends increasing the Postage budget by $11,000 to cover costs related to the Prop 218 hearing which was not included in the original budget. Finally, G&A Labor Credits need to be adjusted for Engineering Labor costs that were projected to be capitalized in Capital Projects. Due to vacant positions and a backlog on projects, staff recommends reducing the G&A labor credit, thereby increasing operating expenses, by $230,000, Total proposed increases to Operating Expenses are $758,900 Page 12 SR#0075 AGENDA DATE: MARCH 14,2012 SUBJECT: MID YEAR BUDGET AMENDMENTS —FISCAL YEAR 2011-12 Capital Replacements Staff is proposing the following changes to the Capital Replacement schedule based on updated cost information and developing needs. The board approved the purchase of a new sewer Vactor in the adopted budget for a price not to exceed $366,000. After gathering the cost information for preparation of the budget, fleet management staff became aware of a federal purchasing program that could be utilized by East Valley Water District. The pricing under this program allowed the District to order the Vactor at a savings of$60,000. Staff is recommending a decrease to the budget for this item of$60,000. With the savings on the new Vactor, staff recommends investing up to $16,000 to have the rear engine and pump on the old Vactor (unit 46) rebuilt so that this unit can serve as a back-up. Having a second vactor available for sewer use would increase the District's responsiveness and self-sufficiency in the case of a major sewer overflow. Staff also recommends replacing the District's valve exercise machine—our current one is nearly 30 years old and is broken. We have been presented with the opportunity to purchase a modern valve exercise machine, complete with a GPS locator and data logger, at a reduced price. This machine was used as a demo by the vendor, and they are offering to sell it to EV WD for$50,000, approximately $7,000 cheaper than a bid received form a competitor for a new machine. Finally, staff recommends adding $15,000 in Capital Replacements for purchase of an appropriate Board Room table. Total proposed increases to Capital Replacements is $21,000 Capital Improvement Program Limitations on Engineering / Project Management resources during the first half of the fiscal year have delayed some of the projects approved in the adopted budget. SRF funded projects have remained a priority and were not affected by delays, but every project is important to staff as demonstrated by the request for additional assistance from engineering consultants above. Staff proposes increases in authorized expenditures for the following projects. The requested increases on Plants 134 and 150 are the result of accelerating costs forward to this fiscal year and are not project cost overruns. Further, costs on these projects are funded through state grant/ loans or by our bond proceeds rather than operating revenues and rates The addition of costs for the S curve reservoir project is to perform an ALTA survey on the property • Plant 134-$1,100,000 • Plant 150 design-$440,000 • S Curve reservoirs-$26,000 Page 13 SR#0075 AGENDA DATE: MARCH 14, 2012 SUBJECT: MID YEAR BUDGET AMENDMENTS —FISCAL YEAR 2011-12 Projects that staff is recommending be delayed until next fiscal year are: • Plant 40 booster pumps - $400,000 • Pipeline projects connecting Plants 11 and 12 to Plant 150-$180,000 • Harlan Lane main replacement$90,000 In addition, staff recommends reducing funding for the following projects by the listed amounts: • 6'"Street pipeline connecting Plant 151 to Plant 40-$2,450,000 • Plant 143 blending tank- $530,000 Total proposed decreases to CIP expenditures is $2,110,000; $730,000 of which is labor is-labor cost being shifted back to operations as explained above under Labor Credits. The remaining $1,380,000 are design and contract costs, substantially funded by 2010 bond proceeds, which can easily be re- encumbered next fiscal year. REVIEW BY OTHERS: Finance Committee FISCAL IMPACT: Increase projected excess of Revenue over Expenditures for fiscal year 2011-12 by $152,100 Respectfully submitted: Recommended by: Ul/�, � AIA, .sC., John Mura, I Brian Tompki , General Manager, C O CFO ATTACHMENTS Fiscal 2010-11 audited financial statements Page 14 SR#0075 East Valley Water District MID YEAR BUDGET REVIEW FISCAL YEAR 2011 -2012 Page 1 East Valley Water District Fiscal 2011-12 Mid-Year Budge[Review REVENUE OPERATING REVENUES: water Sales 12,785,000 7,436,796 12,750,000 12,765,000 Water System(meter)Charges 4,129,185 2,019,015 4,130,000 4,129,185 Sewer System Charges 3,965,000 2,023,349 3,965,000 3,965,000 Sewer Treatment Charges 5,819,000 3,066,084 8,361,6e0 542,000 6,361,000 Service Initiation Charges 78,000 58,013 90,000 78,000 Collection Charges (delinquenues) 270,000 182,464 275,000 270,000 Installation Charges 20,000 20,000 (20,000) - Permil&Inspection Fees 1,000 850 1,000 1,000 27,067,185 14,788,371 27,592,860 522,000 27,589,185 NON-OPERATING REVENUES Interest Income 33,000 34,542 55,000 33,000 Gain on Disposal of Assets Cooperative Agreements 42,000 47,483 55,000 42,g00 Olher 27,000 21,203 35,000 27,000 102,000 103,228 145,000 102,000 TOTAL REVENUE 27,169.185 14,889,599 27,737,660 522,000 27,991,185 Page 2 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review REVENUE OPERATING REVENUES: Water Sales Water System(meter)Charges Sewer System Charges Sewer Treatment Charges Rate Increase January 1,2012 Service Initiation Charges Collection Charges Installation Charges Developer contributions-should not be in the o Permit&inspection Fees operating budget NON-OPERATING REVENUES Interest Income 14 million in Bond Proceeds earning interest Gain on Disposal of Assets Cooperative Agreements Enemoc and So Cal Edison(pump efficiency rebates) Other TOTAL REVENUE Staff recommends revising the revenue budget to reflect an increase of$522,000 Projections through fiscal year and would allow an additional revision of$46,000 however,to be conservative,staff does not recommend increasing the budget by this eddibonal increment Page 3 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review EXPENDITURES OPERATING EXPENSES: SOURCE OF SUPPLY: 925,500 287,637 875,774 925,500 PUMPING 3,241,000 1,518,484 2,975,228 (200,000) 3,041,000 WATER TREATMENT 1,865,000 736,860 1,597,500 1,685,000 SEWER TREATMENT' 6,640,000 3,342,735 6,640,000 6,640,000 TRANSMISSION AND DISTRIBUTION' 1,277,880 791,130 1,582,000 400,000 1,677,860 WASTEWATER COLLECTION: 576,540 168,999 570,623 576,540 CUSTOMER ACCOUNTS 953,600 448,089 915,918 - 953,600 GENERAL AND ADMINISTRATIVE: 6,688,017 3,394,837 6,781,209 558,900 7,226,917 NON-OPERATING EXPENSE: 2010 Revenue Bond Interest 1,258,600 544,618 1,258,600 1,258,600 Interdepartmental Loan Capital Lease-Phone System 13,490 5,138 13,490 13,490 1,272,090 549,756 1,272,090 1,272,090 TOTAL OPERATING AND NON-OPERATING EXPENSES 23,239,807 11,218,527 23,210,342 758,900 23,998,507 OTHER USES OF FUNDS Capital Replacements 725,500 1,520 740,000 21,000 746,500 Contribution to Capital Improve.Plan Rmlects 1,737,000 730,064 1,327,000 (410,000) 1,327,000 Contribution to Rate Stabdintion Fund 298,100 298,100 298,100 Debt Service Principal - 2010 Revenue Bonds 1,188,978 583,162 1,168,976 1,168,978 3,929,578 1,314,736 3,534,075 (389,000) 3,540,578 TOTAL EXPENDITURES 27,169,185 12,533,263 26,744,420 369,900 27,539,085 EXCESS OF REVENUE OVER EXPENDITURES 2,356,336 993,240 152,100 152,100 Pape 4 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review EXPENDITURES OPERATING EXPENSES: SOURCE OF SUPPLY. PUMPING: Edison demands down and Pump repairs down WATER TREATMENT SEWER TREATMENT: TRANSMISSION AND DISTRIBUTION: 2 unfilled vacancies-realized savings of$700,000 District staff not expected to complete full slate of CIP projects for 2011-12, 5500,000 expected to be capitalized to projects needs to be added beck to operating budget WASTEWATER COLLECTION CUSTOMER ACCOUNTS GENERAL AND ADMINISTRATIVE: Increase in postage for unanticipated rate hearing notices (s11,000) Increase in contract costa with consultants during reorganization NON-OPERATING EXPENSE: 2010 Revenue Bond Interest Interdepartmental Loan Capital Lease-Phone System TOTAL OPERATING AND NON-OPERATING EXPENSES OTHER USES OF FUNDS Capital Replacements Contribution to Capital Improve.Plan Projects , Contribution to Rate Stabilisation Fund Debt Service Principal 2010 Revenue Bonds TOTAL EXPENDITURES EXCESS OF REVENUE OVER EXPENDITURES Page 5 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review r CAPITAL REPLACEMENTS Administration Mutual Water Company Stock 5,000 - 5,000 5,000 Suite 30 Furniture 5,000 - 20,000 15,000 20,000 Finance N/A - - - Information Systems - Computer Hardware Upgrades 25,000 1,520 25,000 25,000 MS Office 2010 0 - - - Enterprise Antivirus 10,000 - 3,500 10,000 Customer Service - Additional Ports for IVR 9,000 - 9,000 9,000 Engineering - GPS Data Loggers 17,000 - 17,000 17,000 Production - Well Rehabs (11A,120,142) 260,000 - 260,000 260,000 Field - Dump Trailers(2) 13,500 - 13,500 13,500 Gale Valve Machine - 50,000 50,000 50,000 Wackers(2) 7,000 - 7,000 7.000 New Vector 388,000 - 308,000 (60,000) 308,000 Retrofit Unit 116 vactorfor water use 8,000 - 8,000 8,000 Repair unit 46 as backup vector 16,000 16,000 16,000 725,500 16520 740,000 21,000 746,500 Page 6 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review CAPITAL REPLACEMENTS Administration Mutual Water Company Stock Suite 30 Fumiture Board Room Table Finance N/A Information Systems Computer Hardware Upgrades MS Office 2010 Enterprise Antivirus Customer Service Additional Pons for IVR Engineering GPS Data Loggers Production Well Rehabs (11A,120,142) Field Dump Trailers(2) Gate Valve Machine This is a GIS ready valve exercise machine;current machine is broken Wackers(2) New Vector Bid came in klwer than expected Retrofit Unit 116 vector for water use Repair unit 46 as backup vector Utl¢e savings on new vector-beck up vector mould enhance response to sewer system ovemowa Page 7 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review ® - r CAPITAL IMPROVEMENT PROGRAM Supply Facilities None Treatment Facilities Plant 134-Upgrade Tech.,Exp to 8MGD 6,645,079 3,958,028 7,745,079 1,100,000 7,745,079 Plant 160.Ph 1,12,000 gpm Perchl Trtmt 650,000 447,166 1,0801000 440,000 1,090,000 Pumping Facilities Plant 9-Rehab Forebay It Booster Stn 30,000 30,000 30,000 Plant 40 Boo item 400,000 (400,000) Plant 59 Recoating 50,000 - 50,000 50,000 General GIS Implementation 100,000 19,901 100,000 100,000 Transmission&Distribution System Plants 11 6 12 to Plant ISO 180,000 (180,000) Harlan Lane Main Replacement 90,000 - (80,000) - Live Oak Main Replacement 115,000 - 115,000 115,000 6th Street-Plant 161 to Plant 40 3,737,000 14,013 1,225,000 (2,450,000) 1,287,000 Plant 24 Drain Line 240,000 407 240,000 240,000 Greenspot Rd 5 Curve Reservoir 26,000 26,000 28,000 Plant 143 Reservoir I Blending Tank 900,000 99,062 370,000 (530,000) 370,000 AMR Meier Replacement Program 300,000 26,560 300,000 300,000 Eastwood Fame-Assessment District 2,211,399 388,456 2,211,399 2,211,399 Baseline Gardena-Assessment District 107,296 Collection System Sewer System Management Plan 200,000 50,000 200,000 Sewer Main Lining 117,000 117,000 117,000 Miscellaneous Projects-(Paid from Operations) City Utility Relocations 100,000 31,213 100,000 100,000 Annual CIP Expenditures 18,065,478 5,092,102 13,758,476 (2,084,000) 13,981,478 Recap By Funding Source Contribution From Operating Budget 1,737,000 (410,000) 1,327,000 2010 Bond Proceeds 5,205,750 (1,887,750) 3,338,000 SRF Loan Proceeds 5,180,657 48,750 5,239,607 SRF Grant 2,992,668 195,000 3,187,668 Owner Assessments 889,203 - 889,203 Reserves 50,000 (50,000) 16,085,478 (2,084,000) 13,981,478 Page 8 East Valley Water District Fiscal 2011-12 Mid-Year Budget Review Supply Facilities None Treatment Facilities Plant 134-Upgrade Tech.,Exp to aMGD Progreess payments for membranes earlier than expected Plant 160-Ph 1,12,000 gpm Perchl Trim[ Design expected to be completed this fiscal year Pumping Facllldes Plant 9-Rehab Forebay&Booster Stn Plant 40 Boosters Defer project to next fiscal year Plant 69 Recasting General GIS Implementation Transmission&Distribution System Plants 11&12 to Plant 160 Defer project to next fiscal year Harlan Lane Main Replacement Defer project to next fiscal year Live Oak Main Replacement 6th Street-Plant 161 to Plant 40 Construction will not commence in current year as expected Plant 24 Drain Line Greenspot Rd 3 Curve Reservoir ALTA Survey Plant 143 Reservoir/Blending Tank Construction will not commence in current year as expected AMR Meter Replacement Program Eastwood Forms-Assessment District Baseline Gardens-Assessment District Collection System Sewer System Management Plan Sewer Mein Llning Miscellaneous Projects-(Paid from Operations) City Utility Relocations Page a BOARD AGENDA STAFF REPORT Meeting Date: March 14,2012 East Valley Water District Public Hearing: ❑ Discussion Item: ❑ Consent Item: ❑ March 8, 2012 TO: GOVERNING BOARD MEMBERS FROM: GENERAL MANAGER/CEO SUBJECT: AB 3030 RECOMMENDATION: Accept the Legislative Committee recommendation regarding AB 3030 as follows: 1. Employ an enhanced commitment to the Joint Powers Authority Advisory Committee 2. Improve Communication with the City of San Bernardino Water Department 3. Continue to monitory legislative efforts that consider amending AB 3030 4. At this time, East Valley Water District will not take any formal position on this issue look toward working with Water/Waste Water Coalitions to sponsor and support any legislative remedy 5. Continue to monitor and update the Board of Directors on any activity related to this legislation BACKGROUND/ANALYSIS: The Board of Director requested that the Legislative Committee identify and review various options that would prevent rate inconsistencies with the East Valley Water District, and the City of San Bernardino Water Department through the Joint Powers Authority for waste water treatment activities. Page I 1 SR#0074 AGENDA DATE: MARCH 14,2012 SUBJECT: AB 3030 Reeb Governmental Relations was instructed to provide the Legislative Committee a report that identified options for consideration. A copy of that report is attached to this staff report for your review. The findings included the following: 1. No legislative actions but improve and formalize coordination and communication with the City of San Bernardino Water Department. 2. Amend State law to Enable District to Pass-Through City Rate Increases 3. Amend JPA to Provide A Governance Role for District 4. Change the Governance Model 5. Amend Statute Relating to Proposition 218 Implementation After several meetings and a detailed review, the Legislative Committee recommends that the previously stated recommendations be approved by the Governing Board. This represents a practical, achievable approach to prevent future rate inconsistency, while maintaining the District's commitment to transparency and public involvement. REVIEW BY OTHERS: District Council has reviewed this agenda item. FISCAL IMPACT: There is no fiscal impact associated with this agenda item. Respectfully submitted, John J. Mura General Manager/CEO Attachments: Memo from Reeb Government Relations, LLC Page 12 SR#0074 Reeb Government Relations, LLC MEMORANDUM DECEMBER 13, 2011 TO: Robert DeLoach, Interim General Manager East Valley Water District FROM: Bob Reeb Reeb Government Relations, LLC SUBJECT: Sewer Treatment—Governance and Rate-Setting Analysis Introduction and Background The East Valley Water District (EVWD or District) is a California special district established in 1954 under Section 30000 et seq. of the California Water Code [County Water District Law]. Section 31100 of the Water Code specifies that the District may acquire, construct, and operate facilities for the collection, treatment and disposal of sewage, waste and storm water of the district and its inhabitants and may contract with any public agency including but not limited to sanitation districts for sewer outfall facilities. A district also may acquire, construct, and operate facilities for the collection, treatment and disposal of sewage, waste and storm water of inhabitants outside its boundaries; provided that it shall not furnish any such service to the inhabitants of any other public agency without the consent of such other public agency expressed by resolution or ordinance. The term "public agency" as used in Section 31100, includes a city, county, city and county, public district, municipal or public corporation, state agency or other political subdivision of the state, but shall not include a public utility subject to the jurisdiction, control and regulation of the Public Utilities Commission. Section 31101 authorizes the District to prescribe, revise and collect rates or other charges for the services and facilities furnished. Article XIIID of the California Constitution (also referred to as 'Proposition 218") requires the District to send notification of a proposed rate increase to all owners of real property within its service area who would be directly liable to pay for sewer service to the property at least 45 days prior to a public hearing at which adoption of the proposed rate increases will be considered. Proposition 218 defines a property-related fee or charge as, any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property-related service. Before a local government 1107 9th Street, Suite 510 I (916) 558-1926 PH Sacramento, California 95814 (916) 558-1932 FAX Memorandum December 13, 2011 Page 2 can charge a new property-related fee, or increase an existing one, Proposition 218 requires local officials to: • Identify the parcels to be charged. • Calculate the fee for each parcel. • Notify the parcels' owners in writing about the fees and the hearing. • Hold a public hearing to consider and count protests. • Abandon the fees if a majority of the parcels' owners protest. Property-related fees for sewer, water, or refuse collection services are exempt from the additional requirement that registered voters or property owners must vote to approve property-related fees. EVWD serves about 65,000 residents in the City of Highland, and portions of the City of San Bernardino and the County of San Bernardino, in a service area of about 30 square miles. The District is engaged in pumping, treating and distributing water to its customers, as well as maintaining a collection system for residential and commercial wastewater. The District does not provide sewer treatment services to its customers. Instead, the District contracts with the City of San Bernardino for sewer treatment in accordance with Joint Powers Agreements (JPA) dated 1957 and 1965, as amended. Under the JPAs, wastewater collected by the District's sewer mains is conveyed to the City of San Bernardino treatment plant for treatment. The JPAs also stipulate that the City and District will adopt uniform ordinances affixing sewer treatment charges for customers within their respective service areas, and that the rate setting body will be the City Council of the City of San Bernardino [NOTE: I did not have access to the JPAs for the purpose of writing this memorandum]. In accordance with the City Charter, members of the Board of Water Commissioners (BOWC) for the Municipal Water Department are appointed by the Mayor, subject to confirmation by the Common Council, and serve a six-year staggered term. The Board has the authority and power to establish and collect all water and sewer rates, and regulate and control the water and sewer system for the City of San Bernardino. The City Water Department has operated the Water Reclamation Plant (WRP) since 1973. The WRP is a 33 MGD Regional Secondary Treatment facility that provides wastewater treatment services for the City of San Bernardino, City of Loma Linda, East Valley Water District, San Bernardino International Airport, Patton State Hospital, and unincorporated San Bernardino County areas. On October 19, 2010, the BOWC conducted a sewer rate workshop to review the Sewer Treatment Rate Study Model (model) performed by R. W. Beck, Inc., a nationally recognized engineering and rate consulting firm. This study analyzed cost of service, developed revenue requirements, and designed new rates to meet the financial requirements of the sewer treatment facilities operated by the Water Department. The BOWC authorized submission of the model to the Mayor and Common Council for adoption of a two-step rate adjustment, approximating a system average of ten percent (10%) each, to be implemented February 1, 2011, and January 1, 2012, respectively. Sewer fees and charges were last adjusted January 1, 2009 and January 1, 2010, through a 2008 Sewer Rate Study conducted by R. W. Beck. That study proposed: a series of rate increases over a five-year period; coverage of debt service through rates; wastewater strength samples and discharge Memorandum December 13, 2011 Page 3 flows analysis by January 2011; and cost-based adjustments between classes based upon the additional sampling. Given the volatile economic conditions at that time, Department staff recommended two five percent (5%) across-the-board adjustments to sewer treatment rates effective January 2009 and January 2010, respectively. This offered the Department the opportunity to address any cost-of-service issues in January 2011. On June 15, 2010, the Department retained Beck to update the 2008 Sewer Rate Study, develop revenue requirements, and cost allocation studies. Beck's model summarized projected sewer revenue requirements for Fiscal Years 2011 through 2015, documents fiscal policy issues that affect revenue requirements, and provides detailed supporting calculations. Beck reviewed historical operating expenses, existing assets, existing debt service, projected expenditures, potential financing strategies, required capital improvements, local economic factors, and system flow and loading information. Revenue requirements were established utilizing an iterative process that reviewed various projected impacts of proposed rates. Beck then functionalized, classified and allocated costs among various customer classes based upon usage characteristics of each class. The model analyzed the results over a five-year period and arrived at rates that meet the needs of the utility at the lowest possible cost to the consumer. Residential customers saw a $1/month increase in their 2011 sewer treatment bills and a $1.50/month in 2012, respectively. Increases in commercial customer bills vary according to consumption and the classification in which the account resides. On January 10, 2011, the San Bernardino City Council held a public hearing to review the findings of a rate study performed by the engineering firm of R.W. Beck. Based on that study, the City Water Department staff recommended that the Council approve a two step sewer treatment rate increase, with incremental increases to become effective on February 1, 2011 and January 1, 2012. The rate increases recommended by City staff were approved. East Valley Water District did not pass through the City rate increases to its customers, instead taking time to investigate the basis for the amount of the increases. As a result, the District subsidized bills to District customers in 2011 by continuing to bill customers at old sewer treatment rates while remitting payment to the City at the increased rates. District representatives met with City Water Department staff and toured sewer treatment facilities. In the end, the District adopted sewer treatment rates being charged by the City as it was unable to subsidize the rate increases indefinitely. Statement of the Problem Proposition 218 defines a property-related fee or charge as, any levy other than an ad valorem tax, a special tax, or an assessment, imposed by an agency upon a parcel or upon a person as an incident of property ownership. The District conveys raw wastewater it collects from its customers to the City of San Bernardino for treatment and discharge. The District-City relationship is governed under Joint Powers Agreements. The District does not maintain an ownership interest in wastewater treatment facilities; neither does it share in the governance of those facilities. Therefore, when the City determines that a rate increase is necessary, it does not conduct Proposition 218 proceedings that involve property owners lying within District boundaries. The District must therefore submit the property-related fee increase to its property owners. This creates a cumbersome approach to the Memorandum December 13, 2011 Page 4 adoption of wastewater treatment-related fee increases as the timing of City rate increases as compared to District rate increases does not always coincide. Further, the District finds itself in a take-it-or-leave-it approach to wastewater treatment services. It must pay the fees as determined by the City or develop an alternative treatment option—necessitating a potentially cost-prohibitive and duplicative'treatment facility assuming the District was able to secure permits from various state and local agencies. Options to Resolve the Problem There are a number of options to resolve the problem facing the District; the list below might not be exhaustive on the subject. 1. No Action Under this option, the District would continue to collect and transmit wastewater to the City of San Bernardino for treatment. The District would pay City costs in the same manner as it does under the current JPAs. However, communications could be improved between the District and the City to avoid the necessity of two separate Proposition 218 proceedings—one for District water and wastewater collection services and a second for City wastewater treatment services. Communications could be informal in that District staff could more closely monitor BOWC agenda material and maintain close contact with City Water Department staff so that pending District rate increases could be coordinated with pending City rate increases to obviate the need for two Proposition 218 proceedings. A more formal communications model could involve a City-District working group that meets on a periodic basis to review City plans and finances. 2. Amend State Law to Enable District to Pass-Through City Rate Increases AB 3030 (Chapter 611, Statutes of 2008) authorizes a local publicly owned water utility to pass through rate increases from a wholesale water entity without notification of each rate increase as it would be imposed. As previously stated, Article XIII D of the California Constitution generally requires that assessments, fees, and charges be submitted to property owners for approval or rejection after the provision of written notice and the holding of a public hearing. Existing law, the Proposition 218 Omnibus Implementation Act, prescribes specific procedures and parameters for local jurisdictions to comply with Articles XIII C and XIII D of the California Constitution. AB 3030 authorizes an agency providing water, sewer, or refuse collection service to adopt a schedule of fees or charges that authorize automatic adjustments that pass through increases in wholesale charges for water or adjustments for inflation, if prescribed conditions are met, including, but not limited to, that the schedule of fees or charges not exceed a period of 5 years and that the schedule be adopted pursuant to existing law providing notice, protest, and hearing procedures for the levying of new or increased fees and charges by local government agencies. Memorandum December 13, 2011 Page 5 According to the Senate Local Government Committee analysis of AB 3030, "Public agencies that provide water, sewer, or refuse collection services must go through a new rate-approval process every time they adjust their property-related fees in response to unanticipated inflationary costs, such as increases in the wholesale cost of water. Requiring frequent rate- approval proceedings can cause delays, produce additional costs to ratepayers, and complicate long-term financial planning. AB 3030 simplifies the process of adjusting rates in response to inflation or wholesale cost increases while maintaining the fundamental ratepayer protections of Proposition 218. As a result, agencies that provide water, sewer, or refuse collection services will benefit from lower costs and greater revenue predictability. The pass-through authority provided under AB 3030 is limited to a wholesale-retail water relationship. I inquired as to the reason for this limitation. Apparently, the Howard Jarvis Taxpayers Association (HJTA) objected to a broader authority; e.g., the type of wastewater treatment-wastewater collection relationship the City of San Bernardino and the District share. HJTA argues that water service is different from wastewater service; i.e., a local agency that must rely in whole or in part on water imported by a wholesale water entity has no other option for water service. Therefore, allowing a pass-through is not ideal, but acceptable. In reality, the District likely has no option for wastewater treatment in today's fiscal and physical environment. Governor Arnold Schwarzenegger was in office in 2008. It is likely that AB 3030 was limited in scope out of concern that the Governor—a Republican—might veto a more far-reaching bill based on HJTA opposition. Also, the sponsor of the legislation was directly interested in the wholesale-retail water supply relationship. I would expect HJTA to oppose expanding AB 3030 to include wastewater, but securing a gubernatorial signature on such a bill might not be as great a challenge as in 2008. 3. Amend the JPAs to Provide a Governance Role for District This option would involve the District approaching the City to request its consideration of amendments to the JPAs to enable the District to have a greater voice in the management, planning and operations of the wastewater treatment facilities. Amending the JPAs could be challenging and time-consuming if the City were amenable, but the product of this option would be controlled at the local level, without the involvement of the State Legislature and Governor. The District, of course, could not leverage the City through negotiations over amendments to the JPAs, and therefore would be in a relatively weaker negotiating position should the City not desire to make significant changes. 4. Change the Governance Model The current approach to governance leaves the District at a distinct disadvantage in terms of controlling costs to its customers, let alone controlling the timing of and need for rate increases. The City owns and operates the wastewater treatment facilities. The entities that transmit wastewater to the City facilities pay their fair share of the costs associated with treatment and discharge. Memorandum December 13, 2011 Page 6 There are alternative governance models in California. For example, the Sacramento Regional County Sanitation District (SRCSD) provides regional wastewater conveyance and treatment services to residential, industrial and commercial customers throughout unincorporated Sacramento County; the cities of Citrus Heights, Elk Grove, Folsom, Rancho Cordova, Sacramento and West Sacramento; and the communities of Courtland and Walnut Grove. The wastewater travels through 168 miles of interceptor pipelines to the Sacramento Regional Wastewater Treatment Plant in Elk Grove, where approximately 150 million gallons of wastewater are treated each day and safely discharged into the Sacramento River. SRCSD's workforce is employed by the County of Sacramento through the Sanitation Districts Agency. As a special district, SRCSD contracts with the County to provide the workforce that conducts the day-to-day operations of the wastewater treatment and conveyance system. SRCSD's revenue is primarily generated from two sources: monthly customer rates and sewer impact fees paid by growth — or new users to the system. Other examples include the Los Angeles County Sanitation Districts, a confederation of 25 independent separate special districts that work cooperatively under a Joint Administration Agreement with one administrative staff, and the Orange County Sanitation District (OCSD), a special district established by the California State legislature and governed by a 25-member board of directors. The directors are comprised of elected representatives for each of the sewer agencies or cities within OCSD's 471 square mile service area. These arrangements provide cost savings through an economy of scale and avoidance of duplicate staffing. In provision of wastewater services, the Districts construct, operate, and maintain regional facilities to collect, treat, recycle, and dispose of sewage and industrial wastes. To clarify service provision responsibilities, local sewers and laterals, which connect to the Districts' trunk sewer lines, are the responsibility of the local jurisdictions. Each year, each of the Districts' Board of Directors is presented with a preliminary budget and projected service charge rates. If a rate increase is recommended, a public hearing is held and the Board sets the service charge rates by ordinance. In June, each Board is presented with a proposed budget for consideration and approval. Each District's Board of Directors annually reviews its preliminary budget, assesses forthcoming financial needs, and then recommends new rates, as needed. If a rate increase is recommended, a public hearing is held, the proposed rates are reviewed by the Directors, and then the Board sets the service charge rates by ordinance. As required under Proposition 218, public hearings that are associated with rate increases are noticed by individual mailers that are sent to each impacted property owner. County Sanitation Districts may be formed under Section 4700 et seq. of the Health and Safety Code. They are special districts governed by a board of directors made up of elected officials from the local government agencies served by the district. The board of directors for a county sanitation district is made up of elected officials from each city and public agency within the sanitation district and the Chairperson of the Board of Supervisors representing unincorporated areas. Memorandum December 13, 2011 Page 7 Section 4730.1 provides that a resolution of intention to form a county sanitation district and the order of formation of the district may provide that the governing body of the sanitation district can be constituted where the district would include territory which is within a city, other sanitation district, or public agency. The board of directors would be composed of the presiding officer of the governing body of each city, other sanitation district, and public agency and the chairman of the county board of supervisors. If the chairman of the county board of supervisors and the presiding officer of the governing body of each city, sanitation district, and public agency constitute an even number, a member of the county board of supervisors appointed by the board of supervisors or, in the alternate as determined by the board of directors, a resident of the district elected by the registered voters of the district for a four-year term, shall be a member of the board of directors of the district. Section 4710 provides that a board of supervisors desiring to form a county sanitation district shall adopt a resolution of its intention to do so. The resolution shall contain all of the following: • A statement of the intention to form a district. • The boundaries of the proposed district or some other designation of its territorial extent. • The name of the proposed district. • The time and place where objections to the formation of the district or to its extent will be heard. • Instructions to the clerk of the board to publish the resolution and notices of hearing. • When the proposed district includes parcels of noncontiguous territory, a statement that the proposed district will be in accordance with the master plan of county sanitation service as adopted by the board of supervisors or if the county has not adopted such a master plan then a statement that the proposed district is within the same watershed. Watershed as used in this section means to include only that area drained by gravity to the trunk sewer or sewers. Section 4711 provides that a district as formed may include unincorporated or incorporated territory, or both. The incorporated territory included in the district may include the whole or part of one or more cities. However, less than the whole of a city shall not be included in the district except by the vote of a majority of the governing body of the city. The district shall not include the whole or any part of another sanitation district or any other district formed for similar purposes unless the governing body of such other district shall consent thereto and the board of supervisors, after a hearing, shall find and determine by resolution duly adopted that the proposed inclusion of the whole or part of such other district within the district is in the public interest and the territory affected will benefit thereby. 5. Amend Statute Relating to Proposition 218 Implementation Section 4 of Article XIIID (Proposition 218) provides that an agency that proposes to levy an assessment shall identify all parcels which will have a special benefit conferred upon them and upon which an assessment will be imposed. Proposition 218 defines "District" to mean an area determined by an agency to contain all parcels which will receive a special benefit from a Memorandum December 13, 2011 Page 8 proposed public improvement or property-related service. There is a question, then, as to whether the City should be including parcels outside of its territorial boundaries, including parcels served by the District, Loma Linda and lying within unincorporated territory of the County of San Bernardino, when it adopts a wastewater treatment rate increase. The question is ripe for legal analysis to determine the proper answer. Of course, it would appear based on a plain reading of the State Constitution that the City could decide on its own to determine the area subject to its rates to include the area outside of the city and conduct one Proposition 218 proceeding on wastewater treatment rate increases. Failing that determination, the question could be the subject of litigation to determine whether an expanded "district' is permissive or mandatory. Finally, there is an option of amending state law to clarify that in a situation like that involving the City and the District (and the other JPA participants), the City must determine the "district' that will receive a special benefit includes all of the territory served by the JPA participants. Such an amendment would be made to Article 4.6. of Chapter 4 of Part 1 of Division 2 of the Government Code (commencing with Section 53750), known as the Proposition 218 Omnibus Implementation Act. The litigation and legislative options, of course, carry their own risks in terms of relations with the City and other local agencies served by the City Water Treatment Plant, as well as impacts to other unknown local agency situations similar to the subject entities herein. Next Steps The District Board of Directors, District staff and legal counsel should discuss the options raised herein; again, there might be options that have not been included. Pursuit of some of the options would necessitate conversations with other local agencies, statewide organizations; e.g., Association of California Water Agencies, California State Association of Counties, California Association of Sanitation Agencies, et cetera, and legislative staff.