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Regular  Meeting

Governing Board of Sweetwater Authority

October 10, 2007

The Governing Board of Sweetwater Authority held a regular meeting on Wednesday, October 10, 2007, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. Chair Beauchamp called the meeting to order at 6:00 p.m.

• ROLL CALL

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

Directors Absent: None

Others Present: General Manager/Treasurer Bostad, Operations Manager Rogers, Legal Counsel Cowett, Treasurer Delegatee Farrow, and Board Secretary Schoonderwoerd. Staff members: Rick Alexander, Hector Martinez, Bill Olson, George Silva, Don Thomson, and Tom Woodrum. Also present: Karyn Keese, PBS&J, and Ivar Leetma, Marina Gateway Development Company

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

• OPPORTUNITY FOR PUBLIC COMMENT (Government Code Section (54954.3)
There were no comments from the public.

• 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 ITEMS TO BE ADDED, WITHDRAWN, OR REORDERED IN THE AGENDA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 Doud made a motion, seconded by Director Thomas, that the Governing Board approve the minutes of the September 26, 2007 meeting, as amended by Chair Beauchamp under Item 6.C. Chair Beauchamp did not oppose the motion; therefore, the last sentence should read “The motion carried.” The motion carried.

3. APPROVAL OF DEMANDS AND WARRANTS

Director Pocklington made a motion, seconded by Director Alkire, that the Governing Board approve Warrants 111679 through 111791 including all voided checks. The motion carried.

Director Thomas made a motion, seconded by Director Pocklington, that the Governing Board approve Warrants111618 through 111678 including all voided checks. The motion carried.

4. FINANCE AND PERSONNEL COMMITTEE (Meeting of October 1, 2007)

A. Water Resources Development Act Funding Update. This was an information item and no action was required by the Governing Board.

B. Review of the Draft Notice of Public Hearing to Consider Adoption of a 5.9 Percent Water Rate Increase and Adoption of a Formal Drought Rate Policy on December 12, 2007. Operations Manager Rogers introduced Karyn Keese, a consultant with PBS&J, who was contracted to conduct a rate study because the Authority has not had a substantial change to rate structure since 1979. With drought issues looming, Ms. Keese was asked to redirect her analysis toward development of a drought rate structure, to help recover costs and provide pricing signals to conserve water. Director of Finance Farrow stated that Ms. Keese’s credentials include over 20 years of experience in finance and management in both the public and private sector, with extensive work on developing rates in wastewater and water agencies. She is the National Financial Services Manager of PBS&J. Ms. Keese developed and presented staff with a complex rate model on drought rates. She addressed the Board on drought rate philosophies and options that will benefit the Authority’s ratepayers. She stated that agencies such as Sweetwater Authority are required to provide annual revenue that exceeds 1.2 times the annual debt service coverage, and many agencies are compelled to increase rates to comply with this requirement. A rate model was created and described in four stages, which Ms. Keese will present to the Board at a later date. Director Welsh expressed concern about asking customers to take on the 5.9 percent increase and then have this floating rate. She asked if it would be smart to keep the drought rate ongoing regardless of the drought. Ms. Keese stated that it is important to establish a drought rate ordinance which establishes a philosophy. This gives the Board the ability, at various stages of required cutbacks, to take a look at finances and see if the organization can weather through and maintain the 1.2 debt coverage, or if the drought rates need to change. Those already conserving would not be asked to conserve more or see much of a change in their bill, only those at the upper end of water use. Director Welsh inquired about when customers are asked to conserve due to a drought, how other revenue losses can be covered. Ms. Keese responded that, in the preliminary program, the costs associated with producing less water have been isolated, and that is taken out as a variable cost. The rest is then looked at collectively to come up with a system whereby customers following the requirement of cutbacks would not see a change in their bill even though the rate was a little higher. In response to Director Doud’s question whether adoption of a resolution implementing drought rates would be affected by Proposition 218, Legal Counsel Cowett stated that it would require a Proposition 218 notice. Director Pocklington stated that this is a timely situation, and the Board needs to take a hard look at the entire problem. Ms. Keese noted that many water agencies in Southern California are looking into drought rates, because no one knows if we will have a wet winter or not, and a mechanism needs to be in place for the future. Operations Manager Rogers reiterated that if drought rates are put into effect, it will be only during the period of the drought for the purpose of recouping costs necessary to maintain the system. Right now this is a philosophy, but the Board will be presented with a detailed drought plan in the future to decide if this is something that needs to be implemented. Mr. Rogers concluded by stating that drought rates allow customers to make decisions on their own as to whether they are going to conserve or pay more. This was an information item and no action was required by the Governing Board.

5. OPERATIONS COMMITTEE (Meeting of October 8, 2007)

A. Director Doud made a motion, seconded by Director Welsh, that the Governing Board approve the quitclaim of the subject surplus parcel, in the amount of $26,400 and subject to legal counsel approval, to the Community Development Commission (CDC) of the City of National City for the proposed Marina Gateway Plaza Hotel project; the CDC is responsible for the payment of all processing costs at close of escrow. Discussion followed on negotiations taking place before the end of the 60-day response period. Legal Counsel Cowett stated that the statute requires that negotiations be held with an agency expressing interest in purchasing the property. He added that language was added to the letter sent to local agencies indicating that negotiations would begin with the first agency expressing interest during the 60-day wait period. The motion carried.

B. Director Doud made a motion, seconded by Director Thomas, that the Governing Board adopt Resolution 07-13, a Resolution of Partnership in the Carlsbad Desalination Project and authorize the Board Chair or his designee to jointly execute a copy of the resolution along with representatives of the other San Diego Desal Partners as a demonstration of commitment to this critical water supply project for the greater San Diego region. A signing ceremony will be held at the Sweetwater Authority Administrative Office on October 24, 2007 at 10:00 a.m. The motion carried.

Upon said motion, the following Resolution:

RESOLUTION 07-13

SWEETWATER AUTHORITY GOVERNING BOARD
RESOLUTION OF PARTNERSHIP
IN THE CARLSBAD DESALINATION PROJECT

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. Background Brief on the Proposed Water Supply Reliability Bonds. General Manager Bostad stated that the Perata bond measure failed on the Senate floor and the Cogdill Bill did not make it out of committee. They are continuing to negotiate, and the major issues between the two bond issues are money and surface storage. The Perata bond could be more beneficial to the Authority because there are $2 billion that will be designated for local supply projects. Neither proposed initiative addresses a physical fix for Delta conveyance. If they cannot come together, both bonds could end up on the next election for public vote. Director Morrison added that the Perata bond is going straight to the initiative process, which ACWA is unhappy with because he was not willing to add amendments. General Manger Bostad added that ACWA continues to support the Cogdill bill, as is the Governor. This was an information item and no action was required by the Governing Board.

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

Chair Beauchamp reported on today’s Garden Authority Board meeting. A Rancho San Diego Rotary fundraising event in which many restaurants and local wineries participated was covered, and a Rotary representative was there to thank the Garden Authority. Also, the audit was presented. The Garden is picking up revenue from wedding events, and new rate and cleaning fees were set so that it does not require as many of the Garden resources or staff. Today was the last day for Marisa Farpón, the Board Secretary, and there was discussion on how to pick the next Board Secretary. They are looking at CWA to assist with this process. Attendance at the Garden overall is up 35 percent, and on weekends it is up 65 percent from last year at this time. Director Beauchamp distributed a flyer on the Friendly Gardening Festival on the 27th of October from 9:00 a.m. until 3:00 p.m.. Several thousand people are expected to attend this event.

7. NEW BUSINESS
There was none.

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

A. Director Welsh made a motion, seconded by Director Doud, that the Governing Board approve per diem for Director Beauchamp’s attendance at the South County Economic Development Council’s 17th Annual Economic Summit on September 28, 2007. The motion carried.

B. Director Welsh made a motion, seconded by Director Thomas, that the Governing Board approve per diem for Director Pocklington’s attendance on the Los Angeles Aqueduct/Owens Valley Tour sponsored by the Los Angeles Department of Water and Power on October 11-12, 2007. The motion carried.

C. Council of Water Utilities, San Diego County Meeting, StoneRidge Country Club – Tuesday, October 16, 2007, 7:15 a.m. – Speaker: Senator Christine Kehoe, Chair of the Energy, Utilities, and Communications Committee. Directors wishing to attend this pre-approved event will contact the Secretary. No action was required by the Governing Board.

D. Public Scoping Meeting on Sweetwater Authority Brackish Groundwater Desalination Project – October 16, 2007, 5:00 to 7:00 p.m. Legal Counsel Cowett stated that in order to avoid a Brown Act issue, if a quorum of the Board wishes to attend, this should be treated like a special meeting. Chair Beauchamp directed the Secretary to post this event as a special meeting. No action was required by the Governing Board.

E. California Special Districts Association Staying in Compliance Workshop – Otay Water District Headquarters, October 19, 2007, 8:00 a.m. to 3:30 p.m. Directors wishing to attend this pre-approved event will contact the Secretary. No action was required by the Governing Board.

F. Sweetwater Authority Leader Tour, Richard A. Reynolds Desalination Facility – Friday, October 26, 2007, 11:30 a.m. Chair Beauchamp directed the Secretary to post this event as a special meeting. No action was required by the Governing Board.

G. Urban Water Institute Annual Clean Water Conference – Torrance Marriott, November 5-6, 2007. Directors wishing to attend this pre-approved event will contact the Secretary. No action was required by the Governing Board.

H. National Water Resources Association 76th Annual Conference – Hyatt Regency, Albuquerque, New Mexico, November, 7-9, 2007. Directors wishing to attend this pre-approved event will contact the Secretary. No action was required by the Governing Board.

9. REPORTS BY DIRECTORS ON EVENTS ATTENDED

Director Thomas reported on the Sweetwater Authority Leader Tour on September 28th. She stated that she met Gary Eaton from the San Diego County Water Authority, in whom she has a lot of confidence as part of the Operations Department of CWA. Director Pocklington agreed that the tour was well-attended, and he was glad to see directors from northern agencies in attendance. Director Morrison agreed that, amazingly, many directors from other agencies do not realize that a brackish water desal plant already exists in San Diego County.

Director Pocklington reported on the Bonitafest on September 29th. He stated that people are becoming more and more aware of the problems facing the water world and the 20-Gallon Challenge, and they are asking some very interesting questions. Director Welsh believes that the ACWA ads are doing a lot in terms of public awareness. Director Alkire added that the BBPA should be notified that people are breaking down their booths and bringing vehicles in there at 4:00 p.m., which is dangerous because there are still little children around. Vehicles should not be allowed in the booth area until the event is over. Director Thomas asked that a future agenda address the issue of artificial turf. She stated that she received several questions at the booth regarding turf, and she has grave concerns about the promotion of artificial turf for general home uses. She also believes that the Water Conservation Garden, among others, should address this issue. Chair Beauchamp agreed that there should be precautions to promoting artificial turf due to the microbiological dangers. He added that he received a comment from a woman about a “rotten egg” odor problem with her water. Authority employee Miguel Alvarez assisted, inquiring whether the odor occurred just in the morning and concluded that it was not the water; rather in the sewer in the trap, and that adding chlorine would resolve the problem.

Director Doud distributed a fact sheet on SB 619 that he picked up at the CSDA Annual Conference on October 1-4. He also passed out a sample template press release on the conference. He participated in drawing up this template at a CSDA chapter roundtable, and they suggested that it be sent to the press to let constituents know what CSDA is doing. He asked that it be brought through committee to the Board for consideration. He reported that over 500 people attended the conference. The Moss Landing Tour – Harbor District and Monterey Bay Unified Air Pollution District were very informative on seals, sea otters, and birds in the bay. The keynote speaker was a motivational speaker, Devon Harris, a three-time Olympian. New CSDA bylaws will be released in 2008, and the San Diego Chapter’s bylaws were the template for these new bylaws. Director Doud provided a written report containing additional information on the conference to be kept on file with the Secretary. Director Thomas added that one of the excellent presentations was given by Lynne Lancaster and David Stillman on generation gaps in special districts. They presented on the intergenerational differences between the traditionals of World War II, the baby boomers, and the millenials in the workplace. She has heard that the CSDA will be offering a special program dealing with this issue and she encourages staff and the Board to attend. Director Morrison stated that the presentation on the Elkhorn Slough was quite eye opening as to how water resources are working well together with nature. He particularly found interesting the presentation by BB&K dealing with the potential impacts on water agencies of the two provisions of eminent domain on the June ballot.

Chair Beauchamp reported that the South County Economic Development Council meeting on October 2nd featured a presentation on education by Jesus Gandara from Sweetwater Union High School District, Dennis Doyle of National School District, and Lowell Billings of Chula Vista Elementary School District. They provided incredible presentations on the problems faced in each of their districts in trying to move forward to provide an educated workforce. Population and teacher retention are among the issues they face. Rohr is having difficulty getting qualified people to work in a high school work study program. Lowell Billings brought up Junior Achievement as another approach. The South County Economic Development Council’s 17th Annual Economic Summit on September 28th was very well attended, fast moving, and had a lot of information on the Charger stadium in Chula Vista. Mayor Cox attended as a part of the audience. The outgoing mayor from Tijuana and the new mayor from Rosarito were there to comment. The Lieutenant Governor was in attendance, and he focused on education as well. Director Beauchamp also spoke to him about his support on desal. He suggested that the Authority might want to consider a sponsorship of this event next time to increase exposure.

10. MANAGEMENT REPORT

A. Report of Operations Manager Rogers: Mr. Rogers displayed photos of the new Quagga Mussel capture device used to collect samples in the lake. Veligers, the larval stage, were found at Lake Morena. (Subsequent to this Board meeting, on October 11th, Mr. Rogers learned from Director of Water Quality Thomson that the veligers were in fact found at Lake Murray, not Lake Morena.) Mr. Rogers noted that the Authority is joining a number of CWA member water agencies in sending out a letter cosigned by the Board chairs to the top water users in each agency using a minimum of 50 acre-feet a year. This is a combined effort to urge these large users to think about water conservation. In addition, CWA has asked for a list of the large public agency users, such as cities and counties, which will be forwarded to MWD. MWD will offer special incentives to these agencies for conserving water. The Navy is currently the Authority’s largest user, and generally that is when large ships are in port. Others in the top twenty include the Chula Vista Elementary and Sweetwater Union High School Districts, the San Diego Country Club, and CalTrans.

B. Report of General Manager Bostad: Mr. Bostad distributed a flyer noticing meetings of the California State Lands Commission on October 30th at 10:00 a.m., and the California Coastal Commission on November 15th, at 9:00 a.m. to consider the Carlsbad Desalination Plant. He also directed the Board’s attention to the Water Education Foundation’s Western Water publication of September/October 2007, which focused on an expanded role for groundwater storage and featured the Reynolds Desalination Facility.

11. DIRECTORS’ COMMENTS

Director Doud related a humorous story about a couple shopping in a grocery store and questioning who would buy such expensive water as Evian. The woman noted that Evian spelled backwards is naïve.

On the August Monthly Report of Activities, Director Thomas inquired if the report that 113 accounts were turned off for delinquencies is normal or indicative of difficult times. Operations Manager Rogers stated that this is slightly higher than normal.

Director Morrison informed the Board that the National City State of the City Address has been scheduled for November 1st from 6:00 to 8:00 p.m. and restaurants in National City will be providing food from 6:00 to 7:00 p.m., with the address to follow. Invitations will be going out to the Board next week.

12. CLOSED SESSION
There was none.

13. ADJOURNMENT

With no further business before the Board, Chair Beauchamp adjourned the meeting at 7:17 p.m.