minutes

Regular Meeting

Governing Board of Sweetwater Authority

February 27, 2008

The Governing Board of Sweetwater Authority held a regular meeting on Wednesday, February 27, 2008, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. Chair Beauchamp called the meeting to order at 3:31 p.m.

• ROLL CALL

Directors Present:

Directors Absent:

Others Present:
Alkire, Beauchamp, Doud, Morrison, Pocklington, Thomas, Welsh

None

General Manager Bostad, Operations Manager Rogers, Legal Counsel Cowett, Treasurer Farrow, and Board Secretary Schoonderwoerd. Staff members, Rick Alexander, Michael Garrod, Bill Olson, George Silva, Jim Smyth, Don Thomson, and Tom Woodrum. Also present was Lin Wurbs.

• PLEDGE OF ALLEGIANCE TO THE FLAG
Director Doud 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 ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED IN THE AGENDA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 Pocklington made a motion, seconded by Director Doud, that the Governing Board approve the minutes of the February 13, 2008 meeting as amended by Director Thomas under Item 11, paragraph 2. This paragraph should read, “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.” The motion carried.

3. APPROVAL OF DEMANDS AND WARRANTS

Director Doud made a motion, seconded by Director Alkire, that the Governing Board approve Warrants 113261 through 113426 including all voided checks. The motion carried.

4. FINANCE AND PERSONNEL COMMITTEE (Meeting of February 18, 2008)

A. Chair Beauchamp made a motion, seconded by Director Pocklington, that the Governing Board concur in Orange County Water District’s nomination of Wes Bannister to the Office of President of the ACWA/JPIA Board of Directors. The motion carried.

B. Chair Beauchamp made a motion, seconded by Director Thomas, that the Governing Board concur in Valley Center Municipal Water District’s nomination of Merle J. Aleshire to the Office of President of the ACWA/JPIA Board of Directors. The motion carried.

C. Chair Beauchamp made a motion, seconded by Director Pocklington, that the Governing Board concur in Yuima Municipal Water District’s nomination of W.D. “Bill” Knutson to the ACWA/JPIA Executive Committee. The motion carried.

D. Chair Beauchamp made a motion, seconded by Director Doud, that the Governing Board concur in Mission Springs Water District’s nomination of Mary M. Gibson to the ACWA/JPIA Executive Committee. The motion carried.

E. Chair Beauchamp made a motion, seconded by Director Thomas, that the Governing Board concur in Vista Irrigation District’s nomination of Paul E. Dorey to the ACWA/JPIA Executive Committee. The motion carried.

Note: Resolutions concurring in the preceding nominations will be brought to the March 12, 2008 Board meeting for adoption.

F. Director Welsh made a motion, seconded by Director Thomas, that the Governing Board award a four-year extension of the agreement for audit services to Bartlett, Pringle and Wolf, LLP, subject to review by Legal Counsel, in the amounts of $35,000 for the fiscal year ending June 30, 2008; $36,000 for the fiscal year ending June 30, 2009; $37,000 for the fiscal year ending June 30, 2010; and $38,000 for the fiscal year ending June 30, 2011. As background, Director of Finance Farrow noted that, prior to two years ago, the Authority retained the same primary auditor for many years. In 2006, requests for proposals (RFPs) were sent out to solicit new auditors. At that time, the Board agreed that periodic rotation of auditors was in the Authority’s best interest. A two-year contract was awarded to Bartlett, Pringle and Wolf, LLP, with the option of a four-year extension, subject to Board approval. Ms. Farrow noted that Bartlett, Pringle and Wolf, LLP has done a superior job as far as the audit is concerned for the past two years. Regarding the extension, Director Doud expressed his concerns about additional single audit requirements related to federal funds received through grants, the higher costs to conduct the audits over the next four years, and questions regarding language contained in various parts of the engagement letter. He stated he would like to see RFPs sent out before approving the extension. Chair Beauchamp asked about the possibility of a one-year extension, but Director Doud stated that he still felt the cost was too high. Board discussion ensued regarding the contract extension with Bartlett, Pringle, and Wolf. Ms. Farrow addressed Director Doud’s concerns and explained that Bartlett, Pringle and Wolf offers a discount to the Authority, basically charging $35,000 for a $75,000 audit, and that an RFP would likely bring in higher costs. In 2006, RFPs were sent out to ten auditing firms and only four responded, one of which was the Authority’s former auditing firm. Ms. Farrow added that the four-year contract extension locks in the annual fees, and that any considerable changes in the scope of work that could impact the fees would have to be brought to the Board for consideration. Director Doud requested a review of the contract by Legal Counsel, and Legal Counsel Cowett stated that this is typical procedure before contracts are executed. The motion carried, with Director Doud opposing.

5. OPERATIONS COMMITTEE (Meeting of February 20, 2008)

A. Discussion of The Pointe Development. Director Doud summarized the update on The Pointe Development relating to the overall development of the residential, commercial, resort and golf course. Residential development continues, but sales are slow. The County requirements of The Pointe include the widening of Jamacha Boulevard and the relocation and upgrade of an Otay Water District 42-inch pipeline under the road. The Pointe has approached the Authority regarding a proposed memorandum of agreement (MOA) to address various issues involving Sweetwater Authority; however, The Pointe has not expressed any urgent need for resolution due to the slowdown of the development. Staff will bring this item back for Board review as the MOA progresses. Director Welsh expressed concern regarding an MOA with The Pointe, and General Manager Bostad assured the Board that staff would not bring an MOA to the Board that benefits The Pointe at the detriment of Sweetwater Authority. This was an information item and no action was required by the Governing Board.

B. Director Doud made a motion, seconded by Director Thomas, that the Governing Board approve funding in the amount of $32,000 from the Capital Contingency Fund for City of Chula Vista pedestrian ramps and sidewalk improvements, with the understanding that the City of Chula Vista will reimburse the Authority one-half of the final cost. The motion carried.

C. CLOSED SESSION
In accordance with Government Code Section 54956.8, the Committee met in closed session to confer with the Deputy Operations Manager/Director of Engineering concerning real property matters regarding the acquisition of various properties for proposed wells for the Richard A. Reynolds Desalination Facility Expansion Project. There was no reportable action.

6. COMMUNICATIONS COMMITTEE (Meeting of February 25, 2008)

A. Director Pocklington made a motion, seconded by Director Alkire, that the Governing Board authorize funding in the amount of $1,600 to print coupon inserts to promote the Water Conservation Garden at Cuyamaca College. Director Doud expressed concern that this billing insert would eliminate thousands of customers who do not receive a bill from Sweetwater Authority. Director Pocklington suggested that, depending on the success of this program, alternate methods could be used to reach out to those customers who do not receive a bill. The motion carried.

B. Review of 2007 Water Quality Report and calendar. This was an information item and no action was required by the Governing Board.

C. Conservation messages for use in 2008 advertising. This was an information item and no action was required by the Governing Board.

D. “Do Your Part: Be Water Smart” mural project. This was an information item and no action was required by the Governing Board.

E. Updated calendar of scheduled events. This was an information item and no action was required by the Governing Board.

7. NEW BUSINESS

Director Pocklington made a motion, seconded by Director Thomas, that the Governing Board approve per diem for Director Doud’s participation in the CSDA Membership Committee Task Force teleconference meeting on February 19, 2008. Director Welsh expressed concern about the Board’s policy regarding teleconference meetings. Board Policy 510 – Per Diem and Reimbursement states: “Directors who attend meetings of other organizations by the use of teleconferencing shall not receive per diem unless the director is unable to attend in person because of health or personal emergency, or chooses not to attend in order to save the Authority the expense of travel to the meeting, and it is approved by the Chair of the Board.” The motion carried.

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

Director Pocklington reported on items of interest on the February 28th CWA Board agenda. The Board will consider a resolution making a declaration of official intent to reimburse certain expenditures from proceeds of future Water Authority debt obligations and a resolution approving a negotiated method of sale for issuance of Series 2008 Water Revenue Certificates of Participation. There will be an update on MWD issues and activities, as well as a final report on MWD’s Integrated Area Studies, which began in 1996. The four areas of concern were the central pool area in Orange County, the Riverside and San Diego area, the West Valley area and the San Bernardino area. Director Morrison reported that the Board will consider adopting the following positions: “oppose” on AB 983 (Ma), which would shift liability on contracts from the contractor to the water agency; “oppose” on Proposition 98, which shuts down government in eminent domain; and “support” on Proposition 99, which protects homeowners from eminent domain for economic purposes. Of particular interest will be an amendment to the professional services agreement with Mentus, Inc. to begin implementation of a regional advertising and marketing plan to support the Drought Management Plan communications strategy. Director Pocklington added that CWA staff is proposing MWD’s rate Option 2 for calendar year 2009, which is 9.8 percent plus a $25/acre-foot supply surcharge. The Board will also consider authorizing the general manager to enter into an agreement with MWD to provide funding through its Public Sector Recycled Water Retrofit Program, which would pass through incentive funding to public agency customers that are currently using potable water for irrigation purposes and will be retrofitted to use recycled water. Also noted were the reappointments of both Otay Water District directors, Gary Croucher and Mark Watton, for six-year terms ending in 2014.

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

A. Water Education Foundation Delta Vision Workshop – March 7, 2008, Suisun City, CA. Directors wishing to attend this pre-approved event will contact the secretary. No action was required by the Governing Board.

B. Water Education Foundation Central Valley Tour – April 16-18, 2008. Directors wishing to attend this pre-approved event will contact the secretary. No action was required by the Governing Board.

C. California Special Districts Association Leadership Academy – Setting Direction/Community Leadership – April 18, 2008, Sacramento, CA. Director Thomas will attend this pre-approved event. No action was required by the Governing Board.

10. REPORTS BY DIRECTORS ON EVENTS ATTENDED

Director Thomas reported on the Council of Water Utilities Meeting of February 19th, where Carlos Marin, head commissioner of the International Boundary and Water Commission (IBWC) gave a presentation on the history of the IBWC, its goals, and some of the current issues along the Texas and California borders with Mexico. He spoke on potential desalination plants for the New River, one further east, and one in our area for mainly brackish water, as well as the IBWC’s waste treatment plant at the San Ysidro border. Director Thomas recommended visiting the IBWC website, which contains information on these and other projects and issues. Chair Beauchamp added that he gave Mr. Marin a book on the border and how it was created.

Director Doud reported on his participation in the CSDA Membership Committee Task Force on Small Districts teleconference meeting on February 19th. CSDA is assembling a new strategic plan to help guide the association. Goals are to develop a fee structure with incentives for small districts to become members and retain them; to show the benefits of CSDA with modest costs; to analyze who, what, and where small districts are; and to focus on new legislation to help small districts.

Director Pocklington attended the WESTCAS 2008 Winter Conference on February 20-22 and found it to be an excellent meeting. Beginning in 2009, the WESTCAS meeting in June will be a three-day event with more speakers; the two-day meetings held in February and October will be strictly workshops. Director Pocklington believed that California is so far ahead of any other states on all water issues. Senator Pete Domenici was also there and spoke on nuclear energy. It has been 27 years since we have had a new license on nuclear energy and right now they have over 33 licenses waiting to be signed up. It takes 8-10 years to build one of these plants. Chair Beauchamp added that WESTCAS is an unusual group in that it keeps track of what goes on at the federal level more than an individual organization can. If something happens in Missouri from EPA, they shine the light on that issue and make it an even playing field for all of us who do not have the resources available individually. They fight for us on our behalf by having individuals in the organizations with expertise come in and participate in workshops and draft responses to legislation. Sweetwater Authority is a main cog in this organization, and they are trying to get a larger participation. WESTCAS is going to have a booth at the ACWA conference. Desalination is a big deal, and Nevada and Colorado are interested in supporting our desalination. He sees that, as time goes on, WESTCAS will facilitate the communications. The next meeting on June 26-28 will be in San Diego and it is important for us to talk it up to other agencies and get the support.

Director Morrison attended the National City Chamber of Commerce meeting on February 21st and reported that the city engineer for National City gave a well-received presentation on engineering projects going on within the city including projects being conducted in conjunction with Sweetwater Authority.

Director Doud reported on the CSDA San Diego Chapter Quarterly Meeting on February 21st. Two fire chiefs and a representative from LAFCO spoke about the fire district consolidations. Director Alkire noted that this will be the last meeting at the DoubleTree Club location. Director Thomas stated that the LAFCO representative spoke to economic studies they conducted and calculations on what income could be used to fund the fire districts if they go regional. LAFCO’s recommended proposal was that they have a one percent increase in property taxes. However, it was still an open-ended solution to assume that approved tax increases would resolve the dilemma we have with our fire protection. On the regional property tax, Director Morrison posed the question whether it is within the incorporated areas that already have and pay for fire protection or is it in the unincorporated area. Will the incorporated areas be asked to pay for fire protection in the unincorporated area even though they are already providing a half-cent sales tax that goes to the Board of Supervisors and is not being used for fire protection? He expressed concern over how the money would be used. Director Pocklington stated that all the other counties have a separate tax for fire districts.

Director Doud reported on the ACWA Communications Committee meeting on February 22nd. He noted that the committee consists of 40 members and is chaired by Gary Arant of Valley Center MWD. The committee heard updates on the water bond; the state budget, which now has a deficit of $16 billion; and Huell Howser’s California Water series. Director Doud provided staff with DVDs of Volumes 1 and 2 for use at future board meetings. Tim Quinn provided an update on a meeting he had in the Governor’s office with other water leaders. The State Chamber of Commerce is pushing an initiative for four different versions of a water bond. He shared a sample letter issued in an ACWA state legislative outreach alert urging legislators to oppose a recent proposal from the Legislative Analyst’s Office for a new ERAF-like (Educational Revenue Augmentation Fund) shift to fund parole realignment. This does not directly affect Sweetwater Authority, but he and staff are reviewing the letter. He stated that some agencies up north reported on their solar power, adding that the rise in the price of oil had reduced the payback from 12 years to 8 years. Director Doud submitted his written report to be kept on file with the secretary.

Director Thomas reported on the Bonita Business and Professional Association meeting of February 26th. Nancy Mulcahy, President of the Bonita Museum and former President and Board member of Southwestern College, was presented with checks for $500 and $100 for the museum and historical society. The main speaker was Cheryl Cox, who spoke to the Gaylord Project and the report this month that’s going to be the response to the EIR and it includes Gaylord. Goodyear holds a conference every year in different Gaylord locations and their occupancy was over 80 percent, and that would be the kind of thing that we could expect when they build their high rise and accommodations on the bayfront. Mayor Cox also commented on the trail system near Sweetwater Reservoir and the Otay Valley Regional Park trail. She referred to accolades for the South Bay Expressway and that they are getting 20,000 cars per day. Next month’s meeting will feature a CWA presentation.

11. REPORT OF TREASURER

Ms. Farrow gave the budget report as of January 31, 2008. Water Revenues were $1,403,000, or 6.0 percent, under budget. Operating Expenses were $1,851,000, or 9.4 percent, under budget. She pointed out that, in January, $565,000 was budgeted for imported water purchases. We were able to use our local water sources, so our water purchase was only $26,000 dollars. In addition, $300,000 was originally budgeted for capacity fees, and as of January, we had collected $565,000. Ms. Farrow also noted that interest income will actually come in higher than budget. In response to previous inquiries from the Board regarding delinquencies, she stated that $90,000 had been budgeted for the year for delinquent write-offs, and as of January they were at $83,000. It is an indication that we are seeing an increase in delinquent accounts being written off in the service area.

12. MANAGEMENT REPORT

A. Report of Operations Manager Rogers: Mr. Rogers displayed a copy of the SR 125 settlement check in the amount of $5,249,551.73, which was received from CalTrans. He then reported that the fiscal year total rainfall to date at Sweetwater Reservoir is 8.79 inches, with 11.31 inches expected through June 2008, which is little above average. Totals to date at Loveland Reservoir are 12.62 inches, when we are usually just above 10 inches. If this trend continues, we will have an average year. Runoff into both reservoirs from the rainfall is approximately 1,500 acre-feet. During the Loveland release, we ended up with a loss of about 18 percent. He added that the U.S. Geological Survey began drilling last week on the Department of Water Resources’ Otay Valley Desalination Project. This is the $400,000 Prop 50 project for which the Authority and Otay Water District put up $100,000 each.

B. Report of General Manager Bostad: Mr. Bostad thanked the Board for the support it has provided to a number of Authority employees over the years to further their education through the accelerated tuition program. Mr. Bostad himself has benefited from that program in obtaining his master’s degree, as well as Director of Finance Farrow. He introduced the most recent master’s degree recipient, Leslie Filippi, Communications Specialist, to address the Board. Ms. Filippi thanked the Board for the opportunity to go back to school. She completed her master’s degree in Organizational Leadership last month at Chapman University. The tuition reimbursement program made it possible for her to achieve her advanced degree, and she had the opportunity to make many personal and professional connections. On behalf of everyone currently in the program, she expressed her gratitude to the Board.

13. DIRECTORS’ COMMENTS

Director Thomas announced that Thursday, Friday, and Saturday of this week is the last time for the Sweetwater historical exhibit at the Bonita Museum.

Director Morrison commented that Manager Bostad made a presentation on water conservation at Sweetwater Authority at National City’s last Council meeting, and it was very well received. Regarding capacity fees, he said they are anticipating groundbreakings for about a half billion dollars worth of construction in National City.

Chair Beauchamp said that he flew up to Sacramento yesterday to his Office of Spill Prevention and Response meeting, and there is a lot of snow in the Sierra Nevada. On Friday he will attend the Authority’s leadership tour. In response to a request from Chair Beachamp, Manager Bostad stated that he had asked Jennifer Persicke at ACWA to see if they could post the Huell Howser videos on their website and provide a link for people to view them.

14. CLOSED SESSION

At 5:05 p.m., in compliance with Government Code Section 54956.8, the Governing Board recessed to convene in closed session to confer with the Deputy Operations Manager/Director of Engineering concerning the acquisition of various properties for proposed wells for the Richard A. Reynolds Desalination Facility Expansion Project; and, in compliance with Government Code Section 54956.9 (a), to confer with Legal Counsel concerning existing litigation in the case of Surfrider Foundation v. California Coastal Commission.

All persons left the room with the exception of the Governing Board, Management Team, Legal Counsel, Deputy Operations Manager/Director of Engineering, Director of Environmental/Governmental Services, Director Finance, Engineering Manager, and Board Secretary. There were no minutes taken, and the session was not tape-recorded.

At 5:40 p.m., Chair Beauchamp declared the meeting to be in open session. There was no reportable action taken by the Governing Board concerning the acquisition of various properties for proposed wells for the Richard A. Reynolds Desalination Facility Expansion Project.

Legal Counsel Cowett reported that the Governing Board voted unanimously to approve the proposal of Best Best and Krieger to act on behalf of the Desal Partners in the case of Surfrider Foundation v. California Coastal Commission.

15. ADJOURNMENT

With no further business before the Board, Chair Beauchamp adjourned the meeting at 5:40 p.m.