minutes

Regular Meeting

Governing Board of Sweetwater Authority

January 24, 2007

The Governing Board of Sweetwater Authority held a regular meeting on Wednesday, January 24, 2007, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. Chair Beauchamp called the meeting to order at 3:30 p.m.

• ROLL CALL

Directors Present: Alkire, Beauchamp, Doud, Morrison, Pocklington, Thomas and Welsh

Directors Absent: None

Others Present: General Manager/Treasurer Bostad, Operations Manager Rogers, Legal Counsel Cowett*, and Board Secretary Schoonderwoerd. Staff members: Rick Alexander, Cynthia Berndt, Debra Farrow, Kevin Kasner, Scott McClelland, Sue Mosburg, Bill Olson, George Silva, Jim Smyth, and Tom Woodrum. Also present: Lin Wurbs

• PLEDGE OF ALLEGIANCE TO THE FLAG
Director Welsh conducted the pledge of allegiance to the flag.

• OPPORTUNITY FOR PUBLIC COMMENT (Government Code Section (54954.3)
There were no members of the public present for comment.

• CHAIR’S PRESENTATION

Chair Beauchamp reminded the Board that the value of events such as the dinners hosted by Best Best & Krieger and Sutter Securities at the ACWA Conference are reportable as gifts on the annual Statement of Economic Interests (Form 700). Best Best & Krieger sent courtesy letters to directors attending its hosted dinner event stating the event’s value for reporting purposes. Chair Beauchamp said that the Board may want to review and evaluate its participation in these events, and he reminded Board members to keep track of their attendance and to be aware of their Form 700 reporting obligations. Director Pocklington suggested that this item be brought through committee to develop a standard procedure following such events for notifying Board members of the value. General Manager Bostad stated that although Best Best & Krieger formally notified attendees at its ACWA function, staff obtained the same value information via email from Sutter Securities following its event and passed it on to those directors who attended. This information is kept on file with the Secretary. Chair Beauchamp added that even attending hosted hospitality suite functions are reportable if valued over $50.

ACTION CALENDAR ITEMS

1. ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED IN THE AGENDA
There were none.

2. APPROVAL OF MINUTES

Director Pocklington made a motion, seconded by Director Doud, that the Governing Board approve the minutes of the January 10, 2007 meeting. The motion carried.

3. APPROVAL OF DEMANDS AND WARRANTS

Director Doud made a motion, seconded by Director Alkire, that the Governing Board approve Warrants 108469 through 108610 including all voided checks. The motion carried.

4. OPERATIONS COMMITTEE (Meeting of January 17, 2007)

A. Director Doud was designated Operations Committee Chair for 2007. This was an information item and no action was required by the Governing Board.

B. Information Systems Supervisor Kasner gave a PowerPoint presentation reviewing Sweetwater Authority’s Water Quality Emergency Notification Plan. He briefed the Board on a new tool that staff is developing to manage the Plan in the event of a water quality incident. This tool is known as the Website Emergency Notification System (WENS). General Manager Bostad reiterated that this would be an important public relations plan in the event of an emergency. The system utilizes pre-approved message templates that are provided by the Department of Health Services (DHS) and allows for a rapid notification on the Authority’s internet site. It is a secure system accessible for updating by only designated staff from within the Authority’s network, which would avoid any false notification. A key benefit is the ability to utilize in-house staff for updates without involving the cost of outside consultants. Mr. Kasner demonstrated how, in the event of a water quality emergency, the Authority’s normal web page would be replaced with a page announcing the alert, giving customers instructions on what to do, and providing contact information for Sweetwater Authority and the DHS. The system is ready for in-house testing and will be brought back to the Board as development progresses. Mr. Bostad made note of other notification procedures being developed, and that the Authority adheres to specific DHS legal notification requirements in such emergencies. This was an information item and no action was required by the Governing Board.

*NOTE: Legal Counsel Cowett entered the meeting at 3:41 p.m.

C. Director Doud made a motion, seconded by Director Thomas, that the Governing Board allocate all remaining funds in the voucher program to single-family residence toilet vouchers, and transfer up to $20,000 from the Unallocated Reserve to fund anticipated single-family residence voucher requests between now and the end of the program on March 31, 2007. In response to Director Morrison’s concern, General Manager Bostad responded that the goal was to ensure that anyone who was on a backup list before the end of the program would be provided a voucher, and that the additional funding would be adequate to fund any increase in sign-ups. He added that CWA’s multi-family program will remain in effect. Director Morrison stated that at the time of the vote, some members of the CWA Board did not understand that these rebates were intended for replacement toilets and not new toilets, which may have affected their votes. The motion carried.

D. Director Doud made a motion, seconded by Director Thomas, that the Governing Board direct staff to proceed with improvements to the existing conventional Robert A. Perdue Water Treatment Plant in the amount of $200,000 for work described in staff’s memo and transfer the remaining $1,330,700 in the current fiscal year budget to the General Fund, with no further work invested in the membrane portion of the project.

General Manager Bostad addressed the Board on the history of this project. In the early stages, bench and pilot testing was conducted to determine what water quality improvements the Authority needed to implement at the plant. The key goal was to make improvements that would ensure continued compliance with the federal Safe Drinking Water Act and all state Department of Health Services laws. Pilot testing determined that chlorine dioxide was a very effective disinfectant that could be used to meet future requirements related to the control of chlorinated disinfectant byproducts. It was so successful, along with the cost of capital implementation being insignificant, that it was put into service three years ago. Chlorine dioxide has essentially solved disinfectant byproduct problems related to chlorine, which was a major goal of the upgrades to the treatment plant. Membrane treatment was investigated, which would have reduced coagulation chemical use. It is believed to be an effective approach, but the overall capital costs to implement the project increased from $22 to $35 million over the last three years, which created an issue of affordability. The $35 million cost of the project, which was estimated most recently after the drawings were completed to the 30 percent level, would prevent the Authority from investing in other capital projects including the Reynolds Brackish Groundwater Plant.

Staff’s advice is to put a hold on the membrane treatment improvements at the Perdue Plant and to authorize adequate funding to evaluate the existing facilities to ensure plant reliability. Director Morrison inquired if putting these planned expenditures on hold meant that there was an overall likelihood that the funds would still be expended, but that they would be reevaluated to determine the best way to expend the funds. General Manager Bostad agreed with that assessment, but reiterated that funding direction and control was provided by the Board via the budget process. Director Morrison wanted to ensure that the plant improvement expenditures still justified the need for a rate increase. Mr. Bostad indicated that staff was initiating next year’s planning for budget and that capital expenditures still justified the need for the most recent rate increase.

Director Alkire inquired whether excess bond money would be used if the Perdue upgrade is not completed right now. Mr. Bostad stated that the last budget set aside $28 million in a reserve for the project, that upwards of three to four million dollars was spent in the first year, and that the remaining funds will be reevaluated in next year’s budget. He foresees having adequate funds to maintain a high quality, reliable treatment plant at Perdue that meets safe drinking water regulations. Based on the budget analysis, adequate reserves will be kept to handle the variances between imported water purchases, local run-off, and potentially improving the Reynolds Plant. The bond account was set up related to water quality and other capital improvements, the Director of Finance has evaluated and ensured that we are in compliance with the bond issuance, and those bond funds will be spent. Director Welsh inquired about Proposition 50 funding for the Reynolds Plant expansion. Mr. Bostad explained that those funds will be matched when they are expended, that we are currently in the conceptual planning stage, and that it will be eight to ten months before we make a final commitment on that funding. Mr. Bostad stated that we are maintaining compliance at the Perdue Plant. If enough funds are available to ensure that we can make use of the grant funding and make improvements at the groundwater plant, not only will compliance be maintained, but our local drought resistance supply will be expanded. Without taking this action, we cannot move forward with the groundwater plant improvements and will not have matching funds available to make use of the Proposition 50 grant.

Mr. Bostad stated that improvements to the Perdue Plant are being considered and evaluated on an ongoing basis, and we need additional financial capability to deal with the next wave of drinking water laws being proposed. Mr. Bostad stated that he is comfortable with this recommendation, and the Board’s approval is requested to place a hold on the membrane treatment portion of the project. It was noted that staff reviewed existing contracts associated with the membrane treatment portion of the project and that putting it on hold would not create a contractual problem with vendors and consultants. The $200,000 in funds is requested for a complete plant inspection, evaluation of the conventional plant improvement plan, completion of the chemical system and the Supervisory Control and Data Acquisition (SCADA) improvements, and completion of the plant sewer design. Chair Beauchamp stated that he realizes staff has put a great deal of effort into this project and he is certain that putting it on hold is a disappointment. The motion carried.

5. FINANCE AND PERSONNEL COMMITTEE (Meeting of January 22, 2007)

A. Director Welsh was designated Finance and Personnel Committee Chair for 2007. This was an information item and no action was required by the Governing Board.

B. Director Welsh made a motion, seconded by Director Doud, that the Governing Board approve changes to Board Policies 507 – Committees of the Governing Board, and 511 – Training, Education, and Community Outreach, as presented, and to change the language “during the next regular meeting of the Board” in paragraph five of Policy 511 to read “within 30 days of the event.” It was further moved that the Governing Board adopt Resolution 07-01 amending Resolution 05-15 and revising authorization procedures for compensation paid to members of the Governing Board. Director Doud explained that he recommended the language modification in Policy 511 with regard to the requirement for written or verbal reports to the Board following attendance at events. His recommendation was based on the AB 1234 stipulation that reports must be given within 30 days of the event. To avoid being in violation of the policy, the policy language modification to change the reporting time is necessary. On another issue, and in response to Director Doud’s suggestion to add the Authority’s Environmental Tours to the list of approved community outreach events, General Manager Bostad clarified that the environmental tour is a form of Leader Tour. The motion carried.

NOTE: Director Morrison left the room at 4:23 p.m. and returned at 4:24 p.m. At this time, the Board continued with Information Item C. on the Finance and Personnel Committee report, which is reported in the minutes following Resolution 07-01.

Upon said motion by Director Welsh, seconded by Director Doud, the following resolution:

RESOLUTION 07-01

RESOLUTION OF THE GOVERNING BOARD OF SWEETWATER AUTHORITY AMENDING RESOLUTION 05-15 AND REVISING
AUTHORIZATION PROCEDURES FOR COMPENSATION PAID
TO MEMBERS OF THE GOVERNING BOARD

was passed and adopted by the following vote to wit:

Ayes: Directors Alkire, Beauchamp, Doud, Morrison, Pocklington, Thomas, and Welsh
Noes: None
Absent: None
Abstain: None

C. Monthly budget presentation.

General Manager Bostad explained that Director of Finance Farrow has been in the process of developing a new graphic format to add to the monthly budget presentations. In order to familiarize the Board with the new reporting format, Mr. Bostad introduced
Ms. Farrow to give the budget report as of December 31, 2006. Ms. Farrow explained the layout of the new charts and the differences between the previous and the new graphic formats. In response to questions and comments from the Board, the graphs will be refined for future reports. Ms. Farrow reported that as of the end of December 2006, Water Revenue was $107,000, or 1.5 percent, under budget. Operating Expenses are at $667,000, or 4.5 percent, over budget, primarily due to additional Seasonal Storage Operating Agreement (SSOA) water taken in October. The SSOA is a program in which excess water is purchased in the winter, stored, and pumped out in the summer months.

NOTE: Director Alkire left the room at 4:36 p.m. and returned at 4:37 p.m.

6. NEW BUSINESS

ACWA/JPIA Executive Committee elections – Call for candidate nominations for the office of Vice President and three member positions (Deadline: March 23, 2007). Director Alkire, the Board’s representative to ACWA/JPIA did not wish to have his name placed in nomination at this time. No action was taken by the Board.

7. REPORT OF THE SOUTH BAY IRRIGATION DISTRICT REPRESENTATIVE AND THE CITY OF NATIONAL CITY REPRESENTATIVE TO THE SAN DIEGO COUNTY WATER AUTHORITY

Director Pocklington briefed the Board on items to be considered at the CWA meeting of January 25th and announced the new committee assignments as appointed by Fern Steiner, the new CWA Board Chair. The Board will consider four change orders to CH2M Hills’s Twin Oaks Valley Water Treatment Plant service contract and the award of a professional services contract to Dudek & Associates to provide as-needed right-of-way plan review and engineering services. The 2011 Business Plan progress report for 2006 will be presented as an information item. Resolutions will be presented concerning the Pipeline 4 relining project from Paint Mountain to Del Dios Highway; conditional approval of the proposed Citrus Heights annexation; acceptance of a Proposition 50, Chapter 6(a) grant award; and the final supplemental environmental impact report on the Emergency Storage Project Lake Hodges Pump Station. Of particular interest to Sweetwater Authority and other local agencies is the Board’s consideration of establishing a new grant funding program to facilitate studies and investigations of new local supply opportunities. CWA will place a good deal of emphasis on attempts to reduce the 6.9 percent increase recommended by Metropolitan Water District for its FY 2007-08 water revenue requirement. MWD delayed its decision last month, but will consider it in February.

Note: Director Pocklington left the room at 4:53 p.m. and returned at 4:54 p.m.

Director Pocklington commented that he is on the MWD Education Foundation Committee. In 2002, MWD allocated $16 million to build the water education foundation building and program near Diamond Valley Lake, and it was turned into a 501 program. The foundation’s program costs have run $3.7 million over budget. On February 13th, the MWD Board will consider whether or not to take the program over, which the CWA is opposed to doing at this point, or to reevaluate the program, put it back into a 501 program, and perhaps bring in additional funds through the California education system or other corporate sponsorships. This is a very controversial issue. The program takes about $1.5 to $2 million a year to run. Director Pocklington added that the program is viewed as a local versus regional museum, and there is not enough money or support for it locally.

8. APPROVAL OF DIRECTORS’ ATTENDANCE AT MEETINGS AND FUTURE AGENDA ITEMS

A. Director Pocklington made a motion, seconded by Director Welsh, that the Governing Board approve per diem for Directors who wish to attend the Chula Vista Bayfront Master Plan Citizens Advisory Committee Meeting, Tuesday, January 30, 2007, 6:00 – 8:00 p.m. at the Just Java Café, Chula Vista. As a matter of record, Director Thomas removed her per diem eligibility for this meeting due to the fact that she sits on this Citizens Advisory Committee representing the General Plan Update Steering Committee. Director Morrison expressed concerns, as he has in the past, regarding attendance at general master plan meetings held within the Authority’s jurisdiction and encouraged caution and more specificity in identifying such meetings for eligibility. The motion carried.

B. California Special Districts Association, San Diego Chapter Meeting, February 15, 2007, 6:00 to 9:00 p.m. at the DoubleTree Club Hotel – Program: “Proposition 218: What does the Supreme Court’s decision in Bighorn-Desert View Water Agency v. Verjil really mean for California’s special districts?,” with Speaker Daniel Hentschke, General Counsel, San Diego County Water Authority. Directors wishing to attend this pre-approved meeting will contact the Secretary. No action was required by the Governing Board.

C. WESTCAS Winter Conference, February 21-23, 2007, at the Holiday Inn Riverwalk, San Antonio, TX. Director Doud will attend this pre-approved conference. No action was required by the Governing Board.

D. WateReuse Association 2007 California Section Annual Conference, March 4-6, 2007, at the Wyndham Palm Springs Hotel, Palm Springs, CA. Director Doud will attend this pre-approved conference. No action was required by the Governing Board.

E. Water Education Foundation Mexican Delta Tour, March 7-9, 2007; departure location – Holiday Inn, Yuma, AZ. Director Thomas will attend this pre-approved event. No action was required by the Governing Board.

9. REPORTS BY DIRECTORS ON EVENTS ATTENDED

Chair Beauchamp and Director Pocklington reported on their attendance at the Council of Water Utilities Meeting on January 16, 2007. Director Pocklington stated that Mr. Grindstaff gave an interesting presentation on the challenges in the Bay-Delta. Chair Beauchamp stated that the PowerPoint presentation graphically illustrated many of the complex issues facing the Delta including fish, levees, global warming, and the rise in sea level.

Director Morrison reported on his attendance at the National City Chamber of Commerce meeting of January 17, 2007. The meeting dealt primarily with the Paradise Valley Hospital issue, including a presentation from Dr. Fred Harder, who was previously CEO of the hospital for years. Adventist Health has a bid from Primes and does not want to take on any other bids. This is a very controversial issue, and the community is not in favor of privatizing the hospital. Director Morrison spoke with the Attorney General’s consultant, who reported that due to concerns within the community, there should be conditions stipulating that the services currently in place are to be kept in place for five years. The concern exists that if another proposal comes in, the regulatory procedures will postpone things for another six months. Director Morrison stated that concerned community members interested in saving the hospital should not approach the City of National City, but rather Adventist Health and/or the Attorney General. This issue will have definite short and long-range impacts on the health provisions for the South Bay community.

Director Thomas reported on her attendance at the Bonita Business and Professional Association meeting on January 23, 2007. New officers were introduced, and Mr. Nevada Smith, Vice President, announced that there will be a business expo in March. Director Thomas suggested that it might be beneficial to have Sweetwater Authority materials available at the expo. A presentation was provided by the City of Chula Vista on a grant it received for outreach to the local business communities to provide energy efficiency food service rebates and other incentives. The Taste of Bonita is scheduled for February 26th at the Bonita Golf Course and will benefit the Bonita Historical Society.

10. BUDGET REPORT – DIRECTOR OF FINANCE FARROW

Report as of December 31, 2006. Director of Finance Farrow presented this report under Item C. on the Finance and Personnel Committee report.

11. MANAGEMENT REPORT

A. Report of Operations Manager Rogers: Mr. Rogers related a story involving Sweetwater Authority meter reader Danny Gutierrez. While recently on field duty in southern Chula Vista, he noticed smoke and flames coming from the backyard of a residence. After approaching the resident, who was not aware of the problem, Mr. Gutierrez retrieved a fire extinguisher from his truck. As he approached the backyard, he found that a fire had been ignited in a pile of wood and was already moving up the side of a wall and beginning to burn the roof. He there upon extinguished the fire. The resident phoned the Authority later to express her appreciation for Mr. Gutierrez’s actions. Mr. Rogers also reported that during the recent cold snap between December 12th and January 22nd, the Authority had twelve different main breaks. In the twelve months prior to that, there were only 33 main breaks. He presented a video news clip on how the cold weather was causing pipe damage all over the county. A recent main break on H Street in Chula Vista affected the backyards of three homes, filled up two pools, and flooded and ruined the hardwood floors in two rooms of one of the homes. Damages could reach $20,000. Mr. Rogers added that the Authority was presented a check for $92,000 from ACWA/JPIA as a result of low liability claims for the previous twelve months.

B. Report of General Manager Bostad: Mr. Bostad had nothing additional to report.

12. DIRECTORS’ COMMENTS

Director Thomas commented that a CWA water education school program titled “H2O, Where Do You Go?” will be presented at Cook Elementary School on March 23rd. She understood that attendance to this program will be offered to Board members at the next Board meeting.

Director Doud read a quote from W.C. Fields, “I never drink water. I’m afraid it may become habit forming.”

Director Pocklington shared a newspaper ad appearing in the Wall Street Journal announcing a virtually non-polluting Honda which emits only clear water vapor. The vehicle is targeted for availability in 2008.

Chair Beauchamp commented on railroad lines that were accidentally cut by Sweetwater crews and that the electric railway people are anxious to have them repaired. He also extended his condolences to Information Systems Director George Silva for the recent loss of his sister.

13. CLOSED SESSION
There was none.

14. ADJOURNMENT

With no further business before the Board, Chair Beauchamp adjourned the meeting at 5:36 p.m., to the hour of 6:00 p.m. on February 14, 2007.