minutes

South Bay Irrigation District
Minutes of the Regular Meeting

OCTOBER 18, 2004

The Board of Directors of South Bay Irrigation District held a regular meeting on Monday, October 18, 2004, at the Sweetwater Authority Administrative Office, 505 Garrett Avenue, Chula Vista, California. President Welsh called the meeting to order at 3:30 p.m.

· ROLL CALL

Directors Present: Alkire, Doud, Pocklington, Reynolds, and Welsh.

Directors Absent: None.

Others Present: General Manager Dennis Bostad, Operations Manager Mark Rogers, Legal Counsel Peggy Strand, and Board Secretary Marisa Farpón. Sweetwater Authority staff Hank Gaus, Hector Martinez, Rita Schoonderwoerd, George Silva and Jim Smyth. Also present was Sweetwater Authority Director Mitch Beauchamp.

· PLEDGE OF ALLEGIANCE TO THE FLAG
Director Reynolds conducted the pledge of allegiance to the flag.

· OPPORTUNITY FOR PUBLIC COMMENT (Government Code Section (54954.3)
There was no comment from the public.

· PRESIDENT'S PRESENTATION

ACTION AGENDA

1. PRESENTATION BY CHRIS ZAPATA, CITY MANAGER, CITY OF NATIONAL CITY

General Manager Bostad introduced Chris Zapata who was hired in February as the City Manager of National City. He gave a brief description of Mr. Zapata's professional background and achievements in local government for the last thirty years.

Mr. Zapata thanked the board members for their time. He stated that during his tenure as Utilities Director for the City of Glendale, he had to oversee the water and sewer operations for a community of about 230,000 people. Arizona has similar challenges to those in California in respect to water resources, so he truly understands what this board is about and he appreciates the work it does.
Besides his water background, he has worked for seven different cities. He said that National City is a great opportunity and he calls it the best City Manager position in the country in the last couple of years. He talked about the challenges he had faced as a Deputy City Manager for the city of Glendale. There was sense of excitement, with a football and hockey arena, a $400 million bond issue, a $250 million transportation initiative that the citizens have just passed, and a Super Bowl. When National City called him he was not in any hurry to leave. However, he did some research and not only did he like the community, he liked the setting and the foundation on which it sat. As a City Manager, it is great to work in an urban environment in a city of 60,000 people that feels like 10,000, and which is adjacent to downtown San Diego and the very nice community of Chula Vista.

The second big attraction was the vacancies on staff. There was no Police Chief, no Fire Chief, no Human Resources Director, no Public Works/City Engineer, and no Parks and Recreation Director. The six vacancies gave him a golden opportunity to build a great team, which he is committed to doing for the citizens of National City, the Mayor, and the Council.

Mr. Zapata discussed the foundation of National City and noted that people had told him that it was a rough town. He said that it might have been like that fifty years ago and added that any urban environment has crime, and certainly there are challenges with respect to crime. He said that there is a foundation of redevelopment, and he takes his hat off to his predecessors for that. When he came to the City, he found a commitment to the $17 million library and the $9 million fire station, a partnership with the Sycuan tribe to build a resort, and the marina project with the Port of San Diego to build a 250-slip marina. It is exciting for him as a City Manager to see the housing opportunities and construction that is going on in National City.

Mr. Zapata talked about the vacancies in National City and his commitment to building the best team. With respect to their Police Chief, they did a national search and ended up hiring Adolfo Gonzalez, a South Bay native that was Assistant Police Chief of the City of San Diego. They also did a national recruit for the Fire Chief position. They hired Rod Junael, a retired Fire Chief for the City of Denver, who had been in charge of 997 firefighters in 137 firehouses. Mr. Junael wanted to come to the West Coast and the City of National City wanted him because he was an urban fire chief and National City, in spite of being a small community, is an urban community. These two gentlemen represent the best people they can get in the country at this time. The commitment that they have made to the City is significant because the City has some issues with regard to public safety and emergency response.

They have also hired Leslie Deese as the Community Services Director. Leslie was assistant to the City Manager for 17 years. For the Human Resources Director position they hired Alfredo Lopez, a superstar from Paradise Valley Hospital, and they are getting ready to announce their Public Works Director this coming week

Mr. Zapata talked about the priorities that have been established by the Mayor and the Council. Number one is public safety, number two is dealing with technology, number three dealing with fiscal clarity, number four is image building, and the fifth goal is community engagement.

With regards to public safety, there is a $12 million bond issue that the citizens of National City will vote on in November and is part of the comprehensive approach to public safety. The new approach is a long-term as well as a comprehensive plan. The City needs more officers, but this is only part of the solution. They also need facilities, new technology, and programs that provide upgraded levels of service.

Regarding technology, they will discuss the plan tomorrow evening at the Council meeting. They want to implement some concepts related to public safety, like surveillance cameras and red light cameras, which will help National City not only deal with the crime issues but also with the density issues. He mentioned the Education Village, which will bring in four thousand students to National City downtown, and also the new library building, which will bring more congestion to an already congested downtown. Therefore, they are very aggressively looking at red light camera technology.

Regarding the fiscal clarity, he stated that National City is not a poor city; it sits on $67 million in investments and it has a budget of about $59 million. The enterprise fund, which is the sewer of National City, pays for itself. They will spend $35 million this year in the operating side of the general fund, which means they had to go into their savings account to the tune of $4 million this year to create a balanced budget. He calls this not a good fiscal practice, which they want to change, and they want people to understand the situation.

With regards to image building, Mr. Zapata said that National City has much to do with outreach and the community in order to promote the good things that are going on. For instance, he thinks the City needs to have a newsletter to let the citizens know what is happening in their community. The City is hiring a Public Information Officer and this will be announced next week.

Mr. Zapata referred to community engagement and said that he has probably been to 50-60 groups in six months outside the office. It is very important that people understand what National City is about, and that the City staff understands what are the needs of its stakeholders.

Mr. Zapata said that he is committed to maintaining a dialogue with Sweetwater Authority and that by working together and understanding what the other is doing, we can minimize any problems. He said it is good that Mayor Inzunza and Mr. Beauchamp, as directors of Sweetwater Authority, work close together and understand what is happening, which is a good way to build a solid relationship. He thanked the board for allowing him to speak and restated how excited he is to be in this great place.
2. AUDIT REPORT
Ortega & Konrad, LLP

Mario Ortega presented the financial report that Ortega & Konrad, LLP had prepared for the year ending June 30, 2004. He noted that this report consists of three parts, the Management's Discussion and Analysis, the Financial Statements, and the Supplementary Information.

During the year, the district's net assets decreased by $28,437, and its expenses were also reduced by about $15,000 as compared to the previous year. There has been a trend to move funds out of the Local Agency Investment Fund (LAIF) into other instruments. LAIF only provided about 1.63 percent return this past year. We are now moving some of the funds into Certificates of Deposit and other government agencies and the return went up from 1.63 percent to 2.3 or 3 percent, which is quite an improvement. There are a couple of reasons for the reduction of about $28,000 in net assets during the year. One was that the revenues were down by approximately $8,000 from last year, mostly as a result of the rate increases at June 30, which caused a fair market adjustment to our portfolio at the end of the year by about $9,500. The district keeps its securities to maturity so eventually that loss, which is just a paper loss, will be recovered. By the same token, the district also reduced its expenses this year, mostly the director fees, by about $13,000 as compared to the previous year. There is no debt outstanding and, at the end of the year, the district has $1 million worth of investments at fair market value prices.

Director Doud pointed out some discrepancies on page ten of the report under the paragraph that describes the Nature of Organization. Mr. Ortega will make the appropriate adjustments for next year's report. President Welsh said that the Board is very earnest about making sure that the district is solvent and she appreciates that the members of the Board are taking it very seriously.

Director Pocklington made a motion, seconded by Director Doud, that the Board accept the Audit Report as presented by Ortega & Konrad, LLP. The motion carried.

3. ITEMS TO BE ADDED, WITHDRAWN OR REORDERED TO THE AGENDA
(Government Code Section 54956.5)
There were none.

4. APPROVAL OF MINUTES

Director Alkire made a motion, seconded by Director Doud, that the Board approve the minutes of the regular meeting of September 20, 2004. The motion carried.

5. APPROVAL OF DEMANDS AND WARRANTS

Director Pocklington made a motion, seconded by Director Reynolds, that warrant numbers 10169 through 10178 be approved. The motion carried.

6. NEW BUSINESS

A. California Special Districts Association, San Diego Chapter - Election of President, 1st Vice President, and Secretary. Director Pocklington made a motion, seconded by Director Reynolds, that the Board approve voting for James Doud as President of the California Special Districts, San Diego Chapter. Director Doud made a motion, seconded by Director Pocklington, that the board approve voting for Mark Muir as 1st Vice President and Trish Hannan as Secretary of the California Special Districts Association, San Diego Chapter. The motion carried.

B. Apportionment of LAFCO Net Operating Cost Fiscal Year 2004-05: Director Pocklington said that the Advisory Committee will be meeting on November 12, 2004 to discuss this issue. He plans to attend and see what can be done to facilitate coming up with perhaps another formula or some way of trying to level out the costs for the districts so that there is not such a dramatic difference. Some districts are paying nothing and others are paying a lot. General Manager Bostad commented that part of the problem is that other districts do not understand how Sweetwater Authority operates under a joint powers and how South Bay Irrigation District fits in. The apportionment is based on total revenue, and South Bay Irrigation District makes minimal revenues. As a result, the cost apportionment is very low, and it is difficult for other water agencies to understand it. Director Pocklington said Sweetwater Authority does not pay because it is not a special district, and the city of National City pays a portion under the city role.

Director Pocklington said that the meeting of November 12th would be the first for Director Alkire as a member of the Advisory Committee.

7. APPROVAL OF DIRECTORS' ATTENDANCE AT MEETINGS & FUTURE AGENDA ITEMS

There were none.

8. REPORT OF TREASURER

Ms. Avery said that $50,000 was invested in a two-year CD at three and one-half percent with Mission Federal Credit Union. She thinks we should invest another $50,000 in a two-year Certificate of Deposit with Mission Federal Credit Union.

9. REPORT OF LAFCO SPECIAL DISTRICTS REGULAR MEMBER

Director Pocklington said that the board meeting was one of the most tedious meetings that they have had at LAFCO. They discussed firefighting. There is an initiative on the ballot to consolidate firefighting in the backcountry and LAFCO is looking at that very closely. They want to see that passed because of the problems they had last year during the fires. They are looking at ways to improve and how much money it will cost to do that. The main focus for LAFCO is the improvement for the firefighting.

He referred to the LAFCO Advisory Committee meeting on November 12th and asked for some guidance from the Board regarding a minimum cost that would be reasonable for South Bay Irrigation District. There was a brief discussion on the subject. Director Pocklington said that National City paid $10,675 last year. General Manager Bostad said that he wanted to reinforce the fact that Sweetwater Authority is a Joint Powers between the City of National City and South Bay Irrigation District. National City does participate based upon their total revenue of $31.5 million. The revenue for Sweetwater does not show up anywhere because the South Bay Irrigation District is the special district and the joint partner of the City of National City.

10. REPORT OF SAN DIEGO COUNTY WATER AUTHORITY REPRESENTATIVE

Director Pocklington said that the meeting of the CWA Board is one week from this Thursday and there is no information yet on it. The Board had an interesting meeting on the 14th dealing with the landfill situation. He was one of those who opposed voting yes on Proposition B. The City of San Diego and the South Bay Irrigation District were the only two agencies voting against it. These two votes represented about 44 percent of the total vote and it was sufficient to defeat it. He voted to keep a neutral stance at the CWA. He suggested that we have someone from the appropriate agency come before the Board to talk about landfill and how we are protecting the groundwater in the South Bay.

He reported that at the MWD Board meeting last Tuesday, Wes Bannister from Orange County was elected to be the next chairman with 51 percent of the vote. Orange County has many of the same problems that we have and south Orange County has no groundwater, reservoirs, or seven days of storage. San Diego County, Orange County and parts of Riverside County were able to bring enough votes to elect Wes Bannister as the new chairman as of January 1st, 2005. He thinks this is big step in a right direction. He talked to Wes Friday night and he thinks we can do good things regarding reservoir storage and desalination under Wes' leadership.

11. DIRECTORS' COMMENTS

Director Reynolds said he feels very supportive of Director Pocklington and his efforts and that it is great to have him on the MWD Board. He then presented his letter of resignation to each of the members of the Board. His resignation will be effective tomorrow and is basically driven by health reasons and a desire to spend more time with his family. He wishes all the directors the best and knows that they will find somebody really good to replace him on the board. He has enjoyed very much serving with the board and he wishes them all the best. He added that his eye surgeon told him that his vision is based on his last 15 years experience with his diabetes, which has only been under control for three years. He wants to maximize the quality time he spends with his wife and family.

Director Alkire said he appreciates the encouragement and support that the board gave him in running for the seat on the LAFCO Special Districts Advisory Committee and added that he is sorry to see Director Reynolds go.

Director Welsh said she is happy to have Director Pocklington representing her at MWD and happy to have Director Alkire as the new member on the LAFCO Advisory Committee.

12. CLOSED SESSION

There was none.

13. ADJOURNMENT

With no further business before the Board, President Welsh adjourned the meeting at 4:35 p.m., to the hour of 3:30 p.m., on November 15, 2004.