minutes

Regular Meeting

Governing Board of Sweetwater Authority

June 22, 2005

The Governing Board of Sweetwater Authority held a regular meeting on Wednesday, June 22, 2005, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. Chair Pocklington called the meeting to order at 3:30 p.m.

ROLL CALL

Directors Present: Alkire, Beauchamp, Doud, Pocklington, Salas and Welsh.

Directors Absent: Inzunza.

Others Present: General Manager Bostad, Operations Manager Rogers, Legal Counsel Cowett, Treasurer Avery, and Board Secretary Farpón. Staff members Hank Gaus, Sue King, Sandra Lozano, Hector Martinez, Sue Mosburg, Bill Olson, George Silva, Don Thomson and Tom Woodrum.

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

General Manager Bostad asked Training Coordinator Sue Mosburg to provide background information regarding the Second Annual California-Friendly Landscape Contest sponsored by Sweetwater Authority, Helix, Padre Dam and Otay water districts. Ms. Mosburg talked about the conservation program and the contest. She said that Sweetwater Authority provides incentives to customers, such as toilet and washing machine rebates, and grants for efficient watering systems in the yards. In 2005 the incentive programs put an emphasis on landscaping in order to get more efficient use of water. This contest was a celebration of water conserving landscapes, and the winners were chosen by a team of landscape professionals who looked at overall attractiveness, appropriate land selection, methods of irrigation, appropriate maintenance and increased water efficiency. Chair Pocklington congratulated Ms. de Vaney and presented her with a gift certificate in recognition for her water conservation efforts. Ms. de Vaney thanked everybody involved and said that, in addition to her yard saving water, the upkeep is easy. Director Salas offered a word of appreciation to Ms. de Vaney, not only for her foresight in planning her garden, but also for her involvement in the community and historic preservation in Chula Vista.

ACTION CALENDAR ITEMS

ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED IN THE AGENDA

Director Doud made a motion, seconded by Director Welsh, that the Governing Board add to the agenda the invitation from the Alpine Chamber of Commerce to the 7th Annual “An Evening with Your Elected Representative” on July 8 at 6 p.m., as item 7.b. The motion carried.

General Manager Bostad introduced Tom Walters and Don Gilcrest of Thomas Walters and Associates, who have lobbied on behalf of Sweetwater Authority in Washington since early 2000. Walters and Associates specialize in consulting services for California counties and other public entities doing business in Washington, DC. They watch out for Sweetwater Authority’s interests and maintain a constant liaison with Federal policy makers. Their firm has also advocated for funding resources for a variety of Sweetwater Authority projects, including recreation enhancement, monitoring of cross-media pollution, impacts on water quality and watershed, eco system restoration, and water supply infrastructure.

APPROVAL OF MINUTES

Director Welsh made a motion, seconded by Director Doud, that the Governing Board approve the minutes of the regular meeting of June 8, 2005 and the adjourned meeting of June 10, 2005. The motion carried.

APPROVAL OF DEMANDS AND WARRANTS

Director Doud made a motion, seconded by Director Alkire, that the Governing Board approve Warrants 100461 through 100683 including all voided checks. The motion carried.

OPERATIONS COMMITTEE (Meeting of June 15, 2005)

Director Doud made a motion, seconded by Director Beauchamp, that the Governing Board award a contract in the amount of $349,240 to Koch-Armstrong General Engineers, Inc., 9709 Airport Vista Road, Santee, CA, 92071, for the 2005-2006 Metallic Main Replacement Program trench pavement and for pavement maintenance. The motion carried.

Director Doud made a motion, seconded by Director Alkire, that the Governing Board directs staff to continue the groundwater studies with USGS in order to complete the technical research of the San Diego Formation. The motion carried.

Update of the American Society of Civil Engineers historical nomination of Sweetwater Dam. This was an information item and no action was required by the Governing Board.

Upon a motion made by Director Doud, seconded by Director Welsh, the following resolution:
RESOLUTION 05-09

RESOLUTION OF THE GOVERNING BOARD OF SWEETWATER AUTHORITY, SAN DIEGO COUNTY, CALIFORNIA, DESIGNATING AN AUTHORIZED REPRESENTATIVE TO FILE AN APPLICATION FOR THE SAN DIEGO INTEGRATED REGIONAL WATER MANAGEMENT (IRWM) GRANT

was passed and adopted by the following vote to wit:

Ayes: Directors Alkire, Beauchamp, Doud, Pocklington, Salas, and Welsh
Noes: None
Absent: Inzunza
Abstain: None

FINANCE AND PERSONNEL COMMITTEE (Meeting of June 20, 2005)

Director Alkire made a motion, seconded by Director Doud, that the Governing Board approve a high water bill adjustment to SOS Management & Property Services in the amount of $913.27. The motion carried.

Director Alkire made a motion, seconded by Director Doud, that the Governing Board approve the 2005-06 membership renewal in the California Special Districts Association, San Diego Chapter, and the payment of dues in the amount of $100. The motion carried.

Director Alkire made a motion, seconded by Director Doud, that the Governing Board award a time-and-materials contract to Carollo Engineers for as-needed engineering for recycled water in an amount not to exceed $20,000, and that the funds be drawn from the Unallocated Reserve Fund. The motion carried.

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

Chair Pocklington provided an extensive report covering some of the action items included in the agenda for the CWA Board Meeting tomorrow. One issue was the budget increase of approximately $30.1 million for the construction of the San Vicente Pipeline and Aqueduct Interconnect. He noted that some of the reasons for the budget increase are the increase of tunneling work in North America, because it saves money from the environmental area, and the rising construction costs, which went from 2.5 percent for 2000-2004 to just under 9 percent in 2005.

He also said that there would be a public hearing to adopt an increase of 0.63 percent in water rates and charges consistent with the budget for Fiscal year 2005/2006 and 2006/2007 and a closed session on the seawater desalination project at the Encina Power Plant. He said that things are moving smoothly on the desalination issue and he thinks they will soon get an agreement with Poseidon.

Another item was the increase of the CWA’s share in the Water Conservation Garden to $100,000 annually for Fiscal Years 2006 and 2007. He noted that Otay contributes $85,000, Helix $85,000, Padre Dam $60,000 and the City of San Diego $60,000, for a total of $379,000.

APPROVAL OF DIRECTOR’S ATTENDANCE AT MEETINGS AND FUTURE AGENDA ITEMS.

ACWA Regions 8, 9 & 10 Membership Meeting, Laguna Cliffs Marriott Resort and Spa, Dana Point, California – Thursday, September 15, 2005, 9:00 a.m. – 3:00 p.m. Director Pocklington expressed interest in attending this event and asked the Secretary to remind the members of the Board at a future date closer to September 15th. No action was required by the Governing Board.

Director Welsh made a motion, seconded by Director Beauchamp, that the Governing Board approve per diem for any directors who wish to attend the Alpine Chamber of Commerce’s 7th Annual “An Evening with your Elected Representatives” on Friday, July 8, 2005 – 6:00 p.m. at the Alpine Community Center. The motion carried.

REPORT OF TREASURER – WANDA AVERY

Treasurer Avery was not present.

BUDGET REPORT – DIRECTOR OF FINANCE GAUS
Report as of May 31, 2005

Director of Finance Gaus said that water sales are $2.1 million under budget due to the recent rain resulting in people using less water. The Other Income is $357,328 over budget and the Interest Income is also over budget by about $82,000. The Operating Expenses are about $3.2 million over budget, and this will offset the $2 million deficit in water sales. Collectively, we estimated having about $5.6 million cash flow and we have $7.1 million, which gives us $1.5 million to filtrate back to the loss in water sales.

Mr. Gaus reported that the bond issue had been completed. He said that on June 15th bonds were sold in the amount of $29 million, and the remainder of the 2002 bonds was sold on the 16th, when the market dropped from 4.14 to 4.09 percent. The net present value savings on the refinance is $584,480 over the 20-year period.

He reviewed a graph that showed the Authority’s debt service including interest. The chart included 1994 debt of $15,396,175 that expires in 2010; the refinanced 2002 debt of $47,641,160 that expires in 2022; and the new money debt of $10,734,288 expiring in 2025.The aggregate debt service averages around $4,000,000 from 2006 through 2022 and then drops off to $619,000 in 2003, 2004, and 2005.

He added that this bond issue was a challenge because of the limits set in Resolution 05-08. The maximum amount to be issued was set at $40,000,000, and we issued $37,775,000; the maximum underwriter costs were set at $6.50 per thousand, and the actual cost was $5.32. We did not want net interest costs greater than 4.25 percent. Due to the market situation at that time, we exceeded that mark but Sutter Securities reduced their fees in order to attain the 4.25 percent mark. This was a major reason for the underwriter’s fees being only $5.32. The funds will be transferred on June 29th and we are looking at how to invest the money until it is needed. When we did the new money, we sold some at a premium and obtained $345,000 of cash.

General Manager Bostad said that completing the bond issue on such a short timeline and with such a positive outcome was an example of outstanding support and coordination from Director of Finance Gaus and the Sutter Securities team. Chair Pocklington also expressed the Board’s appreciation.

MANAGEMENT REPORT

Report of Operations Manager Rogers: Operations Manager Rogers said that at about 9:15 a.m., this morning the Skinner Plant reported having a blockage at a 108-inch pipeline leading from the treatment facility Number Two into the clearwell. About eleven million gallons of treated water were lost and half of the treated water coming into San Diego County was stopped at that time. The last bulletin received at 2:00 p.m., said that divers had been sent down in the pipeline to find out what the blockage is. We are not affected by this shutdown at Skinner since we are not importing any water at this time. He said that General Manager Bostad contacted the Director of Water Utilities in the City of San Diego and the General Manager at Otay to offer our assistance if needed.

Report of General Manager Bostad: General Manager Bostad said this is an example of how our customers are not impacted by a problem such as this because of the Authority’s investments in local reliability.

He presented a bumper sticker developed by Communications staff with the message “Water Fresh from the Tap is Fresh and Reliable,” which will be put in the Authority’s vehicles to convey our message to consumers.

Manager Bostad then reported having received a call from the assistant City Manager at National City indicating that Mayor Inzunza had brought two off-agenda items at Tuesday’s Council meeting. One was to name Director Pocklington as his proxy at the CWA; South Bay Irrigation District passed a similar proxy resolution so that if Director Pocklington is absent, Director Inzunza can vote for him. The other off-agenda item was for Director Inzunza to resign from the Sweetwater Authority Board and appoint Ron Morrison as the National City Representative. Later on, the City Attorney indicated that there has to be a minimum period of ten days to notice the vacancy before a new representative can be appointed. The next council meeting is on July 19th, at which time the resignation and new appointment should be made official.

Manager Bostad referred to a joint letter from the City of San Diego, CWA, MWD, and Sweetwater Authority to the Chairman of the House Resources Subcommittee on Water and Power in support of HR 1190 (Hunter) regarding the feasibility study to design and construct a four-reservoir inter-tie system. He thanked Chairman Pocklington for his support at MWD. He also mentioned another joint letter in support of HR 1190 from Congress Members Hunter, Cunningham, Filner, Davis, and Issa.

DIRECTOR’S COMMENTS

Director Welsh said she would like to give some more information about the Bay Delta trip. Tonight she is going to Long Beach for a Desalination conference and hopefully she will put the two reports together. She was very impressed with the Water Education Foundation organization and the information gathered at the forum from more than one point of view.

Director Beauchamp said the National City Fire Station had a nice dedication ceremony, which he had attended. It was a really good event, with many citizens, law enforcement, emergency, fire, and police members from around the area. They had a fire fighters bagpipe group and instead of ribbon cutting they burned the ribbon. He is leaving tomorrow morning with a group from the Church to go to Yosemite to see all the excess water flowing down the Merced River.

Director Salas said that she had intended to attend the NWRA conference in June 8th at Big Sky, Montana. When she started making arrangements with the Board Secretary, she found out how much the plane, shuttle, and the hotel room were and, because of the logistics of the place and infrequent flights, one would have to stay one extra night to attend the whole program. She feels that, even though there is no better substitute for learning first hand, as long as one or two directors go they can bring back information to share with the rest of the Board members. She thinks that we should be very cognizant about the way that we spend the public’s money because in today’s political climate people are very suspicious about what we do. There has been legislation trying to restrict what gets done in Special Districts and she thinks that we should be cautious in the way that we attend these conferences and make sure, when we decide to go, that there is enough valuable material that we can utilize and bring back to justify the cost of it. She will base her decision on whether she goes or not to any conference on whether it will provide information that she can get only at the conference and if other board members will attend that can represent the agency just as well as she can. She has been going to many of these conferences because she is new and needs to learn, but there becomes a time that some of these conferences become repetitive. Those are her reason for withdrawing from that conference.

Director Pocklington said he had attended his 50th College reunion at Whitworth, Spokane, Washington. No water problems there -- everything was lush and green; it was raining and the water sprinklers were on. He presented a trophy that Manager Bostad and he received this morning at the WESTCAS conference, which he gave to the Secretary to be placed in the lobby display case.

CLOSED SESSION

At 4:48 p.m., in compliance with Government Code Section 54956.9(c), the Board recessed to convene in Closed Session to conference with Legal Counsel Cowett regarding a pending litigation with Dynegy, Inc. There were no minutes taken, and the session was not tape-recorded.

At 5:05 p.m., Chair Pocklington declared the meeting to be in open session and there was no reportable action.

ADJOURNMENT

With no further business before the Board, Chair Pocklington adjourned the meeting at 5:05 p.m., to the hour of 6:00 p.m. on July 13, 2005.