minutes

Regular Meeting

Governing Board of Sweetwater Authority

February 13, 2008

The Governing Board of Sweetwater Authority held a regular meeting on Wednesday, February 13, 2008, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. Chair Beauchamp called the meeting to order at 6:01 p.m.

• ROLL CALL

Directors Present: Alkire*, Beauchamp, Doud, Pocklington, Thomas, Welsh

Directors Absent: Morrison

Others Present: General Manager/Treasurer Bostad, Operations Manager Rogers, Legal Counsel Cowett, Treasurer Farrow, and Board Secretary Schoonderwoerd. Staff members: Jack Adam, Rick Alexander, Bill Olson, George Silva, Jim Smyth, Don Thomson, and Tom Woodrum.

• PLEDGE OF ALLEGIANCE TO THE FLAG
Chair Beauchamp 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.

• CHAIR’S PRESENTATION
There was none.

ACTION CALENDAR ITEMS

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 ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED IN THE AGENDA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

2. APPROVAL OF MINUTES

Director Thomas made a motion, seconded by Director Doud, that the Governing Board approve the minutes of the January 23, 2008 meeting. The motion carried.

3. APPROVAL OF DEMANDS AND WARRANTS

Director Pocklington made a motion, seconded by Director Doud, that the Governing Board approve Warrants 112996 through 113260 including all voided checks. The motion carried.

4. FINANCE AND PERSONNEL COMMITTEE (Meeting of February 4, 2008)

A. Director Welsh made a motion, seconded by Director Pocklington, that the Governing Board award a sole-source contract in the amount of $12,200 from the Capital Contingency Fund to Southland Technology, Inc., 8053 Vickers Street, San Diego, CA 92111, for the purchase and installation of replacement equipment consisting of mixing system, microphones, and security monitor for the Board room. The motion carried.

B. Continued review of new bill format. Director Welsh stated that the previous issues with the new bill format have been resolved and management will be going forward with the new format. This was an information item and no action was required by the Governing Board.

5. REPORT OF SWEETWATER AUTHORITY DIRECTOR TO THE WATER CONSERVATION GARDEN AUTHORITY

Chair Beauchamp reported that both he and Director Alkire attended today’s meeting. He provided posters for the lobby advertising the March 15th California Friendly Plant Sale and the April 26th Spring Garden Festival sponsored by the Horticulture Department at Cuyamaca College. In order to avoid the perception that it serves only the southern San Diego territory, the Garden is reaching out to other areas with presentations in Carlsbad and Escondido. Educational workshops are also beginning for homeowners associations where a lot of water is used and controlled. Elections were held, and Mark Robak was voted in as Chair for another year, along with Chuck Muse as Vice President.

* Note: Director Alkire entered the meeting at 6:07 p.m.

Cox Cable Channel 4 provided a presentation proposing to advertise the Garden by producing four, 60-second spots to run 600 times in a year on Cox Channel 4 and which would be funded by a corporate sponsor. Cox would provide a $10,000 donation to the Garden. The Cox Cable representative attending today’s meeting also presented the Garden with a check for $5,000. Chair Beauchamp believes this would be great public relations for the Garden. Cox is looking at Coca-Cola as a sponsor. Operations Manager Rogers stated that the Garden’s Ad Hoc Committee originally had a concern with the valuation of the advertising. Cox is stating that the advertising would have an in-kind value of $25-30,000 and the sponsor would obtain name recognition on Garden advertising. This would not affect the Garden’s non-profit status. They are trying to move this forward before Earth Day. Director Alkire added that there is another package of 15-second spots to air on other channels, which is also significant. He clarified that the check amounts from Cox would be $5,000 now and another $10,000, for a total of $15,000. Chair Beauchamp mentioned that the Garden is seeking support from numerous Corporate and Agency Sponsors. The Friends of the Garden are focusing on their annual campaign and are concerned with getting the amphitheatre back in use.

6. NEW BUSINESS

A. Director Pocklington made a motion, seconded by Director Doud, that the Governing Board approve the employment contracts with the incoming General Manager and Operations Manager, the terms and conditions of which were approved by the Board at its meeting of January 9, 2008. The motion carried.

B. Director Pocklington made a motion, seconded by Director Thomas, that the Governing Board approve the request from Keith Lewinger, Fallbrook Public Utilities District, to provide a letter supporting his nomination for the position of Chair of the ACWA Region 10 Board. The motion carried.

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

A. Council of Water Utilities, San Diego County Meeting, StoneRidge Country Club – Tuesday, February 19, 2008, 7:15 a.m. – Program: “U.S.-Mexico Water Issues Affecting the San Diego County,” presented by Carlos Marin, Commissioner, International Boundary and Water Commission. Directors wishing to attend this pre-approved event will contact the secretary. No action was required by the Governing Board.

B. California Special Districts Association San Diego Chapter Quarterly Meeting – Thursday, February 21, 2008, 6:00 p.m., DoubleTree Club Hotel – Program: “Perspectives on Regionalization of Fire/EMS in San Diego County – A Panel Program to Update Special Districts,” with speakers Fire Chief Augie Ghio, San Miguel Consolidated Fire Protection District; Fire Chief William Metcalf, North County Fire Protection District; and Shirley Anderson, San Diego LAFCO. Directors wishing to attend this pre-approved event will contact the secretary. No action was required by the Governing Board.

C. Director Welsh made a motion, seconded by Director Alkire, that the Governing Board approve per diem for directors attending the Colorado River Aqueduct System Tour sponsored by the Metropolitan Water District of Southern California on February 29 to March 2, 2008. The motion carried.

D. Sweetwater Authority Leader Tour, Richard A. Reynolds Desalination Facility – Friday, February 29, 2008, 11:30 a.m. Director Beauchamp will represent the Board at this event. There being no quorum in attendance, a special Board meeting will not be called.

E. California Special Districts Association Staying in Compliance Workshop, Petaluma Sheraton Hotel, Petaluma, CA – March 14, 2008. Directors wishing to attend this pre-approved event will contact the secretary. No action was required by the Governing Board.

F. Association of California Water Agencies 2008 Legislative Symposium, Sheraton Grand Sacramento Hotel, Sacramento, CA – March 26, 2008. Directors wishing to attend this pre-approved event will contact the secretary. No action was required by the Governing Board.
G. Water Education Foundation Executive Briefing, Radisson Hotel, Sacramento, CA – April 3-4, 2008. Director Doud expressed interest in attending this pre-approved event. No action was required by the Governing Board.

8. REPORTS BY DIRECTORS ON EVENTS ATTENDED

Director Doud attended the CSDA Membership Committee meeting in Sacramento on January 25th. He reported that membership was now at 1,006 agencies. The new bylaws continue to be analyzed and completion is expected by the end of the year for new chapters and old chapters that do not currently have bylaws. Three new task forces have been established under this committee: Utility Cost Control Endorsement; Marketing Plan; and Small Districts, on which Director Doud serves. The Board of Directors voted to accept Cal-Trust (similar to LAIF), which has a better yield since inception of the program. More information on this is forthcoming.

Director Pocklington reported on the Chula Vista Interagency Water Task Force Meeting on January 28th. Representing Sweetwater Authority, Rick Alexander gave updates on the Federal Water Resources Development Act and HR 1803, the Intertie Project; Dennis Bostad gave an update on the impact of the court ruling curtailing pumping; and Otay Water District representatives gave an update on reclaimed water.

Director Doud reported on the First Friday meeting on February 1st featuring a presentation by the San Diego Youth & Community Services on the Bridgeman Home for the Deaf, which is located off Hilltop Drive in Chula Vista. Many of these children had been abused physically and mentally. Some had to be taught how to do simple tasks such as brushing teeth, bathing, etc. There are only three of these homes in California and Chula Vista happens to have one. They are doing a fine job and are seeking donations.

Chair Beauchamp reported on the South County Economic Development Council meeting of February 5th. Representative Bob Filner gave a brief report and Supervisor Greg Cox promoted his State of the County address, which is tonight.

Director Doud attended the CSDA San Diego Chapter Board meeting on February 5th. He is the Chairman of the Scholarship Committee, and they have been receiving donations of IPods from vendors, consultants, attorneys, etc. They will be raising annual dues for associate members. Goals for this year include increasing outreach, building relationships, and increasing education.

9. REPORT OF TREASURER

Ms. Farrow reported that the investment portfolio would generally be presented at the first meeting of each month, with the budget report following on the second meeting of the month. In response to an inquiry from Chair Beauchamp regarding recent news about bond insurers, Ms. Farrow explained that there are certain, large insurers that back the municipal bond markets. The credit ratings for the Authority’s revenue bonds are based on history, source of revenues, and the Authority’s financial stability. When going to the bond market, buying insurance raises the ratings on our bonds. Legal Counsel Cowett added that, for agencies whose debt is issued and is not variable debt, there really is not a problem. Insurance is bought if a better interest rate is available factoring in the premium on insurance, which buys the rating to AAA, and the interest rate is on a AAA security. This gives the investors insurance in case of default, and it does nothing as long as the debt is being paid off. He reiterated that, from the Authority’s perspective, its debt should not have any consequences. The Authority’s $37 million bond issue is insured by Ambac.

Ms. Farrow reported that expert financial advisors who invest millions of dollars of public funds believe that the global economy is in the midst of a slow-down that will affect asset prices for the foreseeable future. Real estate, stocks, bonds, commodities, and other assets will suffer; however, it is not the end of the world and at some point there will be a sustained rebound. The question for investors is whether they have the time to ride their assets down the crevasse and back up into positive performance. They suggest that asset allocation into cash or cash equivalent money market funds is a smart way to preserve capital. This is exactly what the Authority has done in its investment portfolio. Ms. Farrow believes the Authority’s portfolio is very solid, and she does not see any foreseeable problems. In response to Director Doud’s concern regarding investing in money market funds, Ms. Farrow stated that the Authority wants to keep a small percentage of its investments in short-term money market funds for liquidity. For this budget year, the projected budget for interest revenues will be reached. The Board then held discussion on various investment options for the next budget year. Ms. Farrow noted that the general message is that things will improve over the long haul.

10. MANAGEMENT REPORT

A. Report of Operations Manager Rogers: Mr. Rogers shared a photo of the recent release from Loveland Reservoir, which began at approximately 1:00 p.m. on January 28, 2008. The release lasted for about 16 days and five hours, and 7,650 acre-feet of water was released. It is expected that about 6,100 acre-feet will go into Sweetwater Reservoir. Originally, Loveland was 58 percent full and is now about 30 percent full. Sweetwater was 30 percent full when the release was started and is now 52 percent full. Mr. Rogers added that attendees at the recent Southwest Membrane Operators Association conference received a tour of the Reynolds Desalination Facility. He also noted that Jim Dickerson, a Water Treatment Plant Operator II who has been with the Authority since 1999, was selected as Operator of the Year from among agencies in Arizona, Nevada, California, and Guam.

B. Report of General Manager Bostad: Mr. Bostad pointed out a news article indicating that researchers see Lake Meade drying up in 15 years. MWD voted on an allocation plan that looks like it will be significantly more beneficial to all members, and Director Pocklington added that no one spoke against the plan. Legal Counsel Cowett stated that yesterday’s newspaper articles implied that MWD’s general counsel, Karen Tachiki, was indicating that MWD had to follow preferential rights in its allocation plan. Clearly, however, the reason this allocation plan is being so well received is because they did not follow the preferential rights formula, but it was done on an equitable basis according to need, history, growth, etc. MWD’s preferential rights formula basically provides for the allocation of water in times of shortage in accordance with the historic, cumulative, ad valorem tax payments made by individual districts, not the purchase of water. The entire MWD infrastructure was financed with ad valorem taxes, not with water rates; and since Proposition 13 in the late 1970s, the infrastructure has been financed with water rates, not ad valorem taxes. As San Diego grew, it had been paying much more for water, dollar for dollar; but, those dollars had been in rates, not in ad valorem taxes. That renders San Diego as not getting its fair share if the allocation of water is based upon the preferential rights formula. CWA has been concerned about this for years and sued MWD unsuccessfully trying to invalidate preferential rights. MWD has been sensitive about this and it is reflected in the program they approved yesterday. He noted that General Counsel Tachiki’s opinion was that, if MWD does not allocate in accordance with preferential rights, MWD or its member agencies do not lose their preferential rights. Mr. Cowett clarified that preferential rights have never been invoked in the history of MWD. Director Alkire stated that a recent report from the San Diego County Grand Jury is recommending mandatory water restrictions. Mr. Cowett noted that the Grand Jury can investigate and make recommendations, but it has no power to implement its recommendations. Director Pocklington added that the Grand Jury has also recommended that the City of San Diego put water rates for business and public services into tiered block structures like residential rates, which is a whole new ballgame. He feels that forcing mandatory restrictions is not the way to go; it would be better to have consumers and agencies work together to meet conservation levels.

11. DIRECTORS’ COMMENTS

Director Doud read a quote from E. Joseph Cossman: “Stopping at third base adds no more to the score than striking out.”

Director Thomas commented that Mayor Cox will present a program at the next Bonita Business and Professional Association meeting on February 26th. She added that the program on March 25th will feature the San Diego County Water Authority. She will be unable to attend this program and recommended that another director or staff member attend to represent the Authority.

12. CLOSED SESSION
There was none.

13. ADJOURNMENT

With no further business before the Board, Chair Beauchamp adjourned the meeting at 6:59 p.m.