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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 224 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. 225 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 226 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 227 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 228 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: 229 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, 230 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 231 $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. 232 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 233 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