1993-11-17 SAN DIEGUITO WATER DISTRICT
BOARD OF DIRECTORS
MINUTES OF A JOINT ADJOURNED REGULAR MEETING/SPECIAL
ENCINITAS PUBLIC FINANCING AUTHORITY MEETING
NOVEMBER 17. 1993
A joint adjourned regular meeting of the Board of Directors of
the San Dieguito Water District and special Encinitas Public
Financing Authority meeting was held Wednesday, November 17, 1993,
at 4:00 p.m., in the Council Chambers of the city of Encinitas, 505
S. Vulcan Avenue, Encinitas, California.
CALL TO ORDER/ROLL CALL
President Wiegand called the meeting to order at 4:05 p.m.
The District Secretary called roll.
Attendance was as follows:
DIRECTORS PRESENT: President Maura Wiegand, Vice-president James
Bond, Gail Hano and John Davis.
DIRECTORS ABSENT: Director DuVivier.
OTHERS PRESENT: District Treasurer James F. Benson, District
Counsel Roger W. Krauel, Public Works Director
Bob Nelson, Operations Manager Joseph V.
Palmer, Engineer & Planning Supervisor Victor
R. Graves, Computer Services Coordinator Judy
Hanson, Accountant Marta D. Lundgren,
Management Analyst Leslie Suelter, District
Secretary Kathleen Pfendler, guests,
Underwriter, Alex. Brown & Sons Joel Strauch
and Richard Clark, and Bond Counsel Jones Hall
Hill & White's William Madison, and others.
PLEDGE OF ALLEGIANCE
Salute to the flag was conducted at the preceding meeting of
the Encinitas Sanitation District.
SPECIAL PRESENTATIONS/PROCLAMaTIONS
Vice-president Davis presented ACWA/JPIA President's Special
Recognition Awards to San Dieguito Water District for achieving a
"Low Ratio" of "Paid Claims and Case Reserves" to "Deposit
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Premiums" in the (1.) Liability Program (2.) Property Program, and
(3.) Workers' Compensation Program. The vice-president also
introduced the ACWA Water Management Gold Star Certification in
water management by demonstrating it has a program to maximize the
conservation and efficient use of water.
Operations Manager Joseph V. Palmer received the awards on
behalf of the San Dieguito Water District.
CLOSING AND ADOPTION OF THE CONSENT CALENDAR
Upon motion by Director Hano, seconded by Director Davis, and
carried, the San Dieguito Water District Board of Directors adopted
the following amended Consent Calendar, Items 1 through 7. Vice-
president Bond removed Item 8 for further discussion.
Ayes: Directors Wiegand, Davis, Hano & Bond.
Noes: None.
Abstain: None.
Absent: Director DuVivier.
1. ADDroval of Minutes: A Reaular Meetinq October 27, 1993.
October 27, 1993 Regular Meeting entered in Book 33, Pages 212
through 223.
2. APProval of October 1993 Warrants List and Revolvinq Fund.
Recommendation: Approve Warrants List and Revolving Fund.
October warrants 10953 through 11024, in the amount of
$485,431.00. October revolving fund 15510 through 15547, in the
amount of $38,609.71.
3. Review R.E. Badger Filtration Plant Audit Year Ended June 30,
1993.
Recommendation: Receive Report.
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Oe 93 Christmas Food Challenge to see which North San Diego
~ounty water.agency can donate on a pounds per director and
mployee basis the most food to a worthy community cause of
each aaenc¥'s choice.
Recommendation: Accept challenge from Vista Irrigation
strict to participate in the 1993 Holiday Food Drive.
Authorization to Enter Into an "Agreement to Improve
Development - Water Facilities" with Daniel T. Shelley, for a
50-unit Condominium Subdivision on Manchester Avenue, APN 261-
010-10 & 261-200-01
Recommendation: Authorize the District Manager to enter into
"Agreement to Improve Development Water Facilities" with
niel T. Shelley, for a 50-unit condominium subdivision on
nchester Avenue, APN 261-010-10 & 261-200-01.
Adoption of Resolution No. 93-17 Approving Grant of water
Easements from Daniel T. Shelley on Manchester Avenue, APN
261-010-10 & 261-200-01.
Recommendation: Adopt Resolution No. 93-17 approving grant of
from Daniel T. Shelley for water pipelines and
purtenances on Manchester Avenue, APN 261-010-10 & 261-200-01.
Adoption of Resolution No. 93-18 Approving Quitclaim of Two
Water Easements to Daniel T. Shelley, Located on Manchester
Avenue, APN 261-010-10 & 261-200-01.
Recommendation: Authorize adoption of Resolution No. 93-18
proving quitclaim of 1925 and 1950 easements to Daniel T.
.elley, owner of APN 261-010-10 and 261-200-01.
ITEMS REMOVED FROM THE CONSENT CALENDAR BY THE PUBLIC
None.
ORAL COMMUNICATIONS
None.
REGULAR AGENDA
Consideration of Request to Rebate the Difference Between the
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Regular Rate and the Excess Use Rate for Agricultural Water
Users for the Period April 1, 1993, to October 1, 1993.
Public Comment
Mr. Wayne Matteson, 750 Plato Place, Encinitas, addressed the
Board.
Mr. Matteson stated that the District charged excess use rates
after the water shortage was over. The District should refund
these monies to all of its customers. Mr. Matteson stated that he
was charged over $2,000 in one year and during a 1 year period of
time has used less than his allotment.
Public Works Director Nelson replied that the purpose of the
excess use rate is to pay penalties if the District should exceed
its allocation.
In 1991, the Board adopted a seven step rate structure which
included an excess use rate which had two purposes. It encourages
conservation and funding of the ongoing financial responsibilities
of the District.
Mr. Nelson reported that the District set the commercial,
agricultural and landscaping customers on allocations and were
flexible in determining allocations in a bi-monthly period. Mr.
Matteson took over this account's allocations from a prior customer
without adjusting the allocation to his needs.
Mr. Nelson added that previously the Board approved refunding
approximately $72,000 in revenues to those customers who met the
20% cutback requirement. Approximately 5,000 customers received
refunds.
Vice-president Bond asked if all agricultural customers are
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given the opportunity to come in and map out their usage on a
month-by-month basis?
Mr. Nelson replied that all agricultural customers are given
the opportunity to discuss their allocation.
President Wiegand reported that she received telephone calls
from other growers who had similar discomfort with allocations.
Vice-president Bond asked Attorney Krauel if the Board makes
an exception in Mr. Matteson's case, does that open up the District
to other customers coming in for rebates?
Attorney Roger Krauel replied that it does expose the District
to that. The next case would be hard to use that standard if they
come in and say they didn't know. It is a very difficult standard
to use to distribute public funds. The Board has an obligation to
only distribute public funds for public purposes. Mr. Matteson
said he didn't look at the allocations until he started paying the
bills. From a business point of view, he should have been aware of
all the issues involved with his property, just like other land use
regulations he might have.
After discussion, it was moved by President Wiegand, seconded
by Vice-president Bond, and carried, that the San Dieguito Water
District reject the Matteson Greenhouse request. Motion carried 4-
0. Director DuVivier absent.
10. Whether to Authorize District Manager to Recruit for Four Open
Positions.
Public Works Director Nelson stated that this item was
presented at the October board meeting, and continued until Board
members DuVivier and Hano could meet with staff. Mr. Nelson
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reported that he has met with each of the board members.
The Public Works Director stated that the District's personnel
system includes a career ladder. In order to save funds, it was
suggested, instead of hiring a Utility Technician position, to hire
a Maintenance Worker I, giving them the opportunity to move up the
ladder to Utility Technician. The Facilities/Equipment Technician
and Engineering Aide positions do not have a career ladder.
District Treasurer Benson asked for clarification from the
Board regarding direction to staff to either return upon those
career ladders, or be left at the discretion of the department and
the manager in terms of when that progression moves through the
steps.
The Board concurred that it would be up to the discretion of
the Manager.
Upon motion by Director Davis, seconded by Director Hano, and
carried~ the San Dieguito Water District Board of Directors
authorized District Manager to recruit and fill the four vacant
positions, and that the Maintenance Worker I position move through
the career ladder at the discretion of the Manager.
11. Second reading of ordinance approving an installment sale
agreement with the Encinitas Public Financing Authority in the
principal amount of not to exceed $9,000,000 for the purpose
of financing the District's share of the costs of upgrading
and imDrovina the Badaer Filtration Plant.
Public Speaker
Mr. Buck Smith, P.O. Box 230255, Encinitas addressed the
Board.
Mr. Smith asked the following questions:
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Why is there a difference in the amount of money refunded, and
do we know how much money we need; does the financing authority
exclude the District from acquiring a less bond interest rate; are
there any funds being used to pay off the debt service other than
a fund for the reserves; and is any of the principal received from
these bonds paid on a regular payment to pay off the debt?
Public Works Director Nelson introduced Joel Strauch from
Alex. Brown & Sons.
Mr. Strauch responded to Mr. Smith's questions as follows:
Mr. Strauch stated that Alex. Brown & Sons were retained to
examine the financing of the District, to develop a program that
would allow the District to make improvements without requiring
large rate increases. This program is designed to allow the
District to obtain that money without placing a new burden on the
ratepayers.
In reference to taxes and borrowing, the Department of
Treasury and the IRS are very interested in how much the District
borrows. They look unfavorably on borrowing more than needed. We
must comply with all federal tax laws in the size of issue.
Mr. Strauch responded to Buck Smith's question regarding size
of issue as stated in the resolution.
The size of issue in the resolutions is a not to exceed
number, not the actual borrowing amount. It is typical to allow
some contingency. For instance, once the bids are evaluated or the
project is found to be more expensive than estimated between the
time the resolution is passed and when the actual issue is sold,
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there is enough money to pay for that.
The installment sale agreement has a not to exceed amount of
$9 million. The project is $6.5 million. The District is
borrowing approximately $700,000 to pay interest on the installment
sale agreement.
In regards to the question of refunding, the exact amount of
money to pay off the bonds is unknown; $8.33 million is the
principal amount to be paid off. There is also a premium recalling
the bonds prior to final maturity. The documents require to pay
the investors a premium to do that. We also pay interest on the
bonds between now and the date we call those bonds, which is three
years. The interest is about 7%. In order to pay off the 1986
bonds, the District needs approximately $9.1 million.
Mr. Strauch responded to Mr. Smith's question regarding the
$10 million exception used for the civic center. Under the federal
tax law, if a borrower does not sell more than $10 million of debt,
then the debt of that borrower is eligible for banks to purchase
for their own portfolios. As a result, there are more people
willing to buy to that type of paper, and usually get a better
rate. If you go over the $10 million, then the bank can't buy
those obligations for their own account. We can't accommodate the
financing structure and in July/August and maintain an amount under
$10 million.
Mr. Strauch responded to the question regarding capitalized
interest stating that the District is borrowing some money to pay
the installment sale to finance the improvements, which is about
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$700,000.
Upon motion by Director Hano, seconded by Director Davis, and
carried, the San Dieguito Water District Board of Directors waive
reading of the ordinance, adopting Ordinance No. 93-01. Motion
passes 4-0.
12. Oral Report on Financial Impact of City Street Rehabilitation
Project.
Operations Manager Palmer reported that in the 1993-94 capital
Improvement Program, the Engineering Department included a payment
rehabilitation program on select streets. It was originally
planned that the streets be slurry sealed. Slurry seal is a very
thin overlay and requires raising water valves in the street. A
change order was issued to do an overlay rather than the slurry
seal. The asphalt overlay requires water valves to be raised
approximately 1". The contractor's price to raise the valves is
$44,400.
Mr. Palmer stated that staff is recommending approval of the
$44,400 from the water districts reserves. At the time the
District's Financial Plan was approved, it was unknown what streets
would be overlaid.
Public Works Director asked that the Board acknowledge that
when staff comes back at mid-year, will be adjusting the budget
$44,400. It will be a deduct from the reserves and a credit to the
expense account.
JOINT SPECIAL MEETING WITH ENCINITAS PUBLIC FINANCING
AUTHORITY
Mayor Davis called the meeting to order at 5:07 p.m.
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13. Adoption of Resolution of the Board of Directors of the San
Dieguito Water District Authorizing Issuance and Sale of Water
Revenue Refunding Bonds of the District in the Maximum
Principal Amount of $9,500,000 to Refinance 1986 Refunding
Revenue Bonds, Authorizing Execution of Installment Sale
Financing of Improvements to Badger Filtration Plant in a
Principal Amount Not to Exceed $9,000,000 and Authorizing
Execution of and Approving Related Agreements and Official
Actions:
After a brief discussion, it was moved by Director Hano,
seconded by Vice-president Bond, and carried, that the San Dieguito
Water District Board of Directors adopt Resolution No. 93-19.
Motion passes 4-0. Director DuVivier absent.
and
Adoption of Resolution of the Encinitas Public Financing
Authority Authorizing the Issuance of Revenue Bonds in the
Aggregate Principal Amount of Not to Exceed $18,500,000 in
Connection with Financing Proceedings Relating to the San
Dieguito Water District Water System Improvements and
Refunding Bonds, Authorizing and Directing Execution of a
Related Indenture of Trust, Installment Sale Agreement, bond
Purchase Agreement, Authorizing Sale of Bonds, Approving
Official Statement, and Authorizing Official Actions and
Execution of Related Documents.
Wiegand moved, Hano seconded, and carried, to adopt
Resolution. No. 93-20. Motion passes 4-0. Director DuVivier
absent.
ITEMS REMOVED FROM THE CONSENT CALENDAR BY T~E BOARD
8. Metropolitan Water District (MWD) Financial Structure Study
Recommendations.
Vice-president Bond, representative to CWA, gave a brief
explanation of various proposed water charges and the future impact
on retail water rates.
Recommendation: Receive and consider.
BOARD/DISTRICT MANAGER'S REPORT
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CLOSED SESSION
14. Closed Session Pursuant to Government Code Section 54957.6
Regarding Employee Compensation; Concerning Employee
Negotiations.
President Wiegand adjourned the meeting to closed session at
5:30 p.m.
The meeting reconvened at 6:19 p.m. The President stated that
there was with nothing to report.
ADJOURNMENT
The President adjourned the meeting at 6:19 p.m. to. December
15, 1993 at 4:00 p.m.
Maura Wiega~d-, Pr~den~
J~m.~ F. Benson, Distr±ct Treasurer