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COSTA MESA SANITARY DISTRICT
MINUTES OF BOARD OF DIRECTORS REGULAR MEETING
JANUARY28, 2016
CALL TO ORDER The Board of Directors of the Costa Mesa
Sanitary District met in regular session on
January 28, 2016 at 5:30 P.M. at 628 W. 19'h
Street, Costa Mesa.
PLEDGE OF President Scheafer led the Pledge of
ALLEGIANCE Allegiance.
INVOCATION Vice President Perry led the Invocation.
ROLL CALL DIRECTORS PRESENT: Michael Scheafer, Arthur Perry, Robert
Ooten, Arlene Schafer, James Ferryman
DIRECTORS ABSENT: None
STAFF PRESENT: Colin Burns, District Counsel; Robin Hamers,
District Engineer; Wendy Davis, Finance
Manager; Marc Davis, District Treasurer; and
Noelani Middenway, District Clerk.
OTHERS PRESENT: Jim Mosher, resident; Karen Barloon, Costa
Mesa Community Run President; Dean
Ruffridge, CR&R; Lawrence Jones, CR&R;
Nathan Statham, Rogers, Anderson, Malody,
and Scott; and Scott Manno, Rogers,
Anderson, Malody, and Scott.
CEREMONIAL MATTERS AND PRESENTATIONS- None
ANNOUNCEMENT OF LATE COMMUNICATIONS- None
PUBLIC COMMENTS
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MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING
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President Scheafer invited members of the public who wished to provide comments to
do so at this time.
Jim Mosher, a member of the public, provided comments regarding the reported
diversion rate on the District's website. He noted that a link for additional information
leads the public to the Organics Recycling Program page, and he expressed confusion
regarding how the diversion rate is determined. Mr. Mosher also noted that there was
an emergency item added to the December 17, 2015 Board Meeting and expressed
concern that the item was not an emergency matter, as defined by the Brown Act.
Lastly, Mr. Mosher suggested that the District send a notice to subscribers when there
is a possibility of alteration to an upcoming agenda.
Vice President Perry requested confirmation that the handout from the December 17,
2015 Board Meeting was added to the archived agenda packet.
District Clerk, Noelani Middenway, confirmed that it was added to the agenda packet.
CONSENT CALENDAR
1. Board of Directors Study Session The Board of Directors Study Session
Meeting Minutes of December 8, Meeting Minutes of December 8, 2015 was
2015 approved as presented.
2. Board of Directors Special Meeting The Board of Directors Special Meeting
Minutes of December 14, 2015 Minutes of December 14, 2015 was
approved as presented.
3. Board of Directors Regular Meeting The Board of Directors Regular Meeting
Minutes of December 17, 2015 Minutes of December 17, 2015 was
approved as presented.
4. Board of Directors Special Meeting The Board of Directors Special Meeting
Minutes of December 22, 2015 Minutes of December 22, 2015 was
approved as presented.
5. Occupancy Report and Payment to The Board of Directors accepted the
CR&R Environmental Services occupancy count as presented using
22,109 as the correct number of active
units and directed staff to prepare a
warrant to CR&R Environmental Services
in the amount of $223,453.32 to be ratified
in the January 2016 warrant list, for
December 2015 collection.
6. Contract Payment to CR&R The Board of Directors approved payment
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Environmental Services for to CR&R Environmental Services for
Recycling & Disposal Services recycling and disposal services for the
month of December 2015.
7. Adoption of Warrant Resolution No. The Board of Directors adopted Warrant
CMSD 2016-07 Approving District Resolution No. CMSD 2016-07 approving
Warrant Registers District warrants for the month of
December 2015 in the amount of
$655,589.68.
8. Payroll Transparency Disclosure for The Board of Directors approved the
December 2015 Payroll Transparency Disclosure for
December2015.
9. Directors' Compensation and The Board of Directors approved Directors'
Reimbursement of Expenses compensation and reimbursement of
expenses for the month of December
2015.
10.Sewer Lateral Assistance Program The Board of Directors approved the SLAP
(SLAP) Update report as presented.
Assistant Secretary Schafer made a motion to approve the Consent Calendar. Vice
President Perry seconded the motion, which passed unanimously with a 5-0 vote.
END OF CONSENT CALENDAR
PUBLIC HEARINGS—None
GENERAL MANAGER'S REPORTS
President Scheafer requested that Item 14 be discussed as the first Item under General
Manager's Reports. He noted that Karen Barloon, President of the Costa Mesa
Community Run, was present at the meeting.
Vice President Perry, Secretary Ooten, Assistant Secretary Schafer, and Director
Ferryman indicated that Item 14 should be discussed first.
14. CMSD Contribution Program — Costa Mesa Community Run —April 23, 2016
Recommendation: That the Board of Directors consider sponsoring this event.
Scott Carroll, General Manager, presented an application to contribute to the upcoming
Costa Mesa Community Run. He noted that the District contributed $500 last year, and
that the Costa Mesa Community Run requested $1000 this year. Mr. Carroll indicated
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that the Board of Directors may select the District's contribution level.
Finance Manager, Wendy Davis, added that the District contributed $500 for the last
two years of the event, and contributed $250 per year before that.
Karen Barloon, President of the Costa Mesa Community Run, provided a brief overview
of the event, its history, and the Costa Mesa schools that receive proceeds from the
event.
Dean Ruffridge of CR&R shared that CR&R will match the District's chosen contribution.
Discussion followed regarding the benefits of District visibility at the event.
Director Ferryman made a motion to approve the contribution of $500 to the Costa
Mesa Community Run.
Secretary Ooten made a substitute motion to approve the contribution of $750 to the
Costa Mesa Community Run, which died for lack of a second.
Vice President Perry seconded the motion to approve the contribution of $500 to the
Costa Mesa Community Run, which passed unanimously with a 5-0 vote.
11. Financial Statements for Fiscal Year Ended June 30, 2015
Recommendation: That the Board of Directors receive and file the
Comprehensive Annual Financial Report, auditors' report in accordance with
Government Auditing Standards, and the auditors' required communication
for the fiscal year ended June 30, 2015.
Finance Manager, Wendy Davis, presented the financial statements for the fiscal year
ending June 30, 2015. She introduced auditor Scott Manno of Rogers, Anderson,
Malody, and Scott (RAMS), who presented RAMS opinion and reasonable assurance
regarding the District's financial statements in accordance with Generally Accepted
Accounting Principles (GAAP). Mr. Manno explained that the auditors conduct an
interim and year-end evaluation of controls over transactions, financial documents,
analytical procedures, balances, meeting minutes, and any other pertinent information.
He noted that it is now required that government agencies report their unfunded debt
pension liability and pointed out that the District's is $270,000, as reported on pages 12
and 13 of the Comprehensive Annual Financial Report (CAFR). Mr. Manno also noted
that pages 14 and 15 of the CAFR indicate income changes in net position from
$500,000 to $1,089,000. He concluded his presentation and welcomed questions from
the Board of Directors.
Vice President Perry asked if Mr. Manno had a recommendation regarding the District
paying off its unfunded liabilities.
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Mr. Manno indicated that the District has sufficient cash to do so, but that it would be a
decision by management to pay off the unfunded liability.
Discussion followed regarding another Government Accounting Standards Board
(GASB) requirement that will be released in fiscal year 2016-2017 for agencies to report
their unfunded health benefit liabilities within their financial statements.
There were no further questions or discussion and the report was received.
12. FY 2015-16 Budget Review— Mid Year
Recommendation: That the Board of Directors receive and file the report.
Finance Manager, Wendy Davis, presented the Mid-Year Budget Review. She noted
her projection that the District is currently on track with its budget, but expenses
pertaining to the acquisition of the property at 290 Paularino may affect the budget. Ms.
Davis also noted that District Treasurer, Marc Davis, would discuss the District's
finances as they pertain to the building acquisition late in the meeting. Lastly, Ms. Davis
shared the quarterly tonnages for the organics recycling program.
Discussion followed regarding the variance in monthly tonnage and its relationship with
the seasons.
Ms. Davis noted that the organics recycling program has an estimated budget of
$600,000 and she indicated that she anticipates the program to be under budget.
Vice President Perry noted Mr. Mosher's commentary regarding the 61% diversion rate,
as it is reported on the Districts website. He asked if there is another figure that the
District should be using instead.
Mr. Carroll explained that the 61% diversion rate represents many of the District's
programs, including curbside collection, battery recycling, and large item collection. He
noted that he will coordinate with staff to simplify the statistic.
Director Ferryman requested clarification regarding the expenses related to the new
building acquisition.
Ms. Davis shared that Mr. Davis would provide further detail regarding the new building
acquisition and its associated costs during the discussion of Item 21.
Discussion followed regarding staff's progress toward calculating expenses related to
the new building acquisition.
There were no further questions or discussion and the report was received.
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13. Project No. 02-15 Closed Circuit Televising (CCTV) Services Award Contract
Recommendation: That the Board of Directors award the contract to
Professional Pipe Services, in the amount of$625,553.28.
Secretary Ooten noted that the details regarding the CCTV contract were discussed
during the January 9, 2016 Study Session.
Secretary Ooten made a motion to award the contract to Professional Pipe Services in
the amount of $625,553.28. Assistant Secretary Schafer seconded the motion, which
passed unanimously with a 5-0 vote.
15. 290 Paularino Update and Budget Transfer — Capital Outlay for New
Headquarters
Recommendation: That the Board of Directors:
1. Receive and file the Phase I Environmental Site Assessment Report and
give staff direction if the Board wants to proceed conducting an asbestos-
containing materials and lead based paint surveys.
2. Receive presentation of proposed tenant improvements to new
headquarters
3. Approves transferring funds as follows:
Account Account Number Increase Decrease
Capital Outlay 20-200000-4795 $62,000
Contingency 20-200000-4990 $62,000
Scott Carroll, General Manager, provided report details. He noted that the Phase I
Environmental Site Assessment Report indicates that a site assessment should be
conducted to survey the building at 290 Paularino for asbestos-containing materials and
lead based paint. Mr. Carroll reported that he has received a proposal for $4,250 to
conduct the survey, and that the costs of any necessary remediation can be added into
the counter offer to the property seller.
Director Ferryman asked if this portion of the discussion required action or direction
from the Board of Directors.
Mr. Carroll noted that it did not require action, but that he would like to know if the Board
of Directors had any objections to conducting the site assessment.
Director Ferryman provided commentary regarding the property acquisition being
contingent upon approval from the City of Costa Mesa and the District receiving credit
from the seller for necessary improvements.
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Mr. Carroll explained that Jack Faris of Voit Real Estate will put these contingencies into
writing. He then presented and discussed a preliminary layout of the property at 290
Paularino, showing the addition of a community room.
Director Ferryman asked if Mr. Carroll coordinated with a space planner or architect to
design the layout.
Mr. Carroll replied that he worked with a space planner, but has not yet consulted an
architect.
Discussion followed regarding public access to bathrooms within the building, the
possibility of adding bathrooms to the building, and the building's size.
Mr. Carroll noted that architect Robert Thornton can provide a preliminary design for the
building for under $5000. Once this is complete, Mr. Carroll explained that he can obtain
the estimated costs of construction from a contractor.
Discussion followed regarding plumbing fixtures and ADA compliant doors.
Mr. Carroll introduced the action item of transferring funds of $62,000 from the
Contingency Fund to the Capital Outlay Fund in order to cover the cost of the $50,000
deposit, the building inspection, and any other acquisition-related expenses.
Vice President Perry made a motion to approve the transfer of $62,000 from the
Contingency Fund to the Capital Outlay Fund. Assistant Secretary Schafer seconded
the motion, which passed unanimously with a 5-0 vote.
16. General Manager's Performance for 2015 Calendar Year
Recommendation: That the Board of Directors:
1. Receive and file General Manager's 2015 performance goals and District
accomplishments; and
2. Direct President Scheafer to meet with General Manager to negotiate his
2016 performance goals.
Scott Carroll, General Manager, presented the General Manager's 2015 performance
goals and District accomplishments. He noted that the recommendation is to direct
President Scheafer to meet with Mr. Carroll to discuss the 2016 performance goals.
President Scheafer requested that his fellow Board Members each provide him with a
list of 3-5 suggestions for the General Manager's 2016 goals by February 15, 2016. He
also requested that District Clerk, Noelani Middenway, send a reminder of this task to
the Board of Directors.
Jim Mosher, a member of the public, commented regarding the District's transparency
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in providing the public with a list of the General Manager's goals and achievements.
Vice President Perry made a motion to direct President Scheafer to meet with the
General Manager to negotiate his 2016 performance goals. Director Ferryman
seconded the motion, which passed unanimously with a 5-0 vote.
Discussion followed regarding the date of the meeting between President Scheafer and
Mr. Carroll.
ENGINEER'S REPORTS
17. Proiect Status Report
Recommendation: That the Board of Directors receive and file the report.
District Engineer, Robin Hamers, provided report details regarding the commencement
of construction on the Aviemore Pump Station Rehabilitation and the City Manhole
Adjustment Program. He also noted that there are 3 projects going out to bid during the
week of February 1-5, 2016. Mr. Hamers added that he and the Board of Directors have
been invited to meet with the Orange County Sanitation District (OCSD) to discuss their
study of the Fairview Road trunk on February 10, 2016.
Discussion followed regarding attendance of the meeting with OCSD and the Westside
Abandonment Project.
There were no additional questions or comments and the report was received.
18. Conflict of Interest Report
Recommendation: That the Board of Directors receive and file District Engineer's
Declaration of Conflict of Interest report for the property at 20452 Santa Ana
Avenue, Newport Beach.
Robin Hamers, District Engineer, provided report details. He noted that he will be the
Engineer on record for the project at 20452 Santa Ana Avenue in Newport Beach.
Discussion followed regarding the number of homes in the project.
19. Project 196-D, Installation of Generator for Irvine Pump Station — Acceptance of
Improvements
Recommendation: That the Board of Directors approve the following:
1. Accept improvements as completed and file a Notice of Completion.
2. Authorize payment of 5% retention 35 days after Notice of Completion is
recorded.
3. Exonerate Labor and Material Bond after Notice of Completion is recorded
and exonerate Faithful Performance Bond one year after Notice of
Completion is recorded.
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Robin Hamers, District Engineer, presented the acceptance of improvements for Project
196-D, Installation of Generator for Irvine Pump Station.
Assistant Secretary Schafer made a motion to approve the acceptance of improvements
as completed and file a Notice of Completion, authorize payment of 5% retention 35
days after the Notice of Completion is recorded, and exonerate the Labor and Material
Bond after the Notice of Completion is recorded and exonerate the Faithful Performance
Bond one year after the Notice of Completion is recorded. Secretary Ooten seconded
the motion, which passed unanimously with a 5-0 vote.
TREASURER'S REPORTS
20. Investment Report for the Month of December 2015
Recommendation: That the Board of Directors approves the Investment Report
for the month of December 2015.
District Treasurer, Marc Davis, presented the quarterly review of the Investment Report,
which included an overview of the portfolio earnings, 2 investment purchases in the
month of December, and 1 investment that matured on December 8, 2015.
There were no additional questions or comments and the report was received.
21. Finance Update for Building Acquisition at 290 Paularino Avenue, Costa Mesa
Recommendation: That the Board of Directors receive and file the report.
District Treasurer, Marc Davis, provided a financing option of a lease purchase through
the California Special Districts Association (CSDA) Finance Corporation for the
acquisition of the building at 290 Paularino Avenue, Costa Mesa. He noted that the
acquisition price of the property was $3.75 million and additional improvements would
be needed.
Discussion followed regarding the process of paying down the lease and lease options.
Mr. Davis indicated that he sought direction to move forward with initiating the lease
purchase process with CSDA Finance Corporation.
Discussion followed regarding the timeline of the lease purchase process and how the
lease purchase would appear in the District's financial statements.
Ms. Davis explained that the District also has the option of financing the majority of the
acquisition and using the District's reserves temporarily to pay off the remaining costs.
She noted that the reserves would be replenished once the District's current building is
sold.
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Discussion followed regarding the current lease of the occupants at 290 Paularino and
the analysis of credit worthiness conducted by CSDA Finance Corporation.
Mr. Davis presented the option of the District paying for the acquisition in cash and
noted that the District has the necessary funds available in its reserves. He noted that
grant funding may be available for this option.
President Scheafer noted that Secretary Ooten exited the meeting at 7:00 p.m.
Jim Mosher, a member of the public, provided commentary regarding a discrepancy
between the recommendation for Item 21 as presented in the agenda and the staff
report.
Mr. Davis indicated that he sought direction as to whether the Board of Directors would
like to initiate a discussion regarding a lease purchase with CSDA Finance Corporation.
District Counsel, Colin Burns, explained that the Board of Directors may discuss the
item and provide direction or hold a special meeting, but they cannot take a vote. He
indicated that his recommendation would be to provide Mr. Davis with direction and put
the item on the next Board Meeting agenda for a vote.
There were no additional questions or comments and the report was received.
ATTORNEYS REPORTS
22. Ordinance No. 112 — Revising CMSD Operations Code Section 6.04.060
(Insurance, Bonding, and License Status)
Recommendation: That the Board of Directors adopt Ordinance No. 112 making
changes to the sewer permit process and the District's requirements.
District Counsel, Colin Burns, presented Ordinance No. 112 to revise the District's
Operations Code Section 6.04.060.
President Scheafer provided commentary regarding the liability policy of $1,000,000
required of the homeowner.
Discussion followed regarding the language within the revised Ordinance No. 112, the
scenarios in which a liability policy would be necessary, and the necessity of the District
to be listed as additionally insured.
Vice President Perry made a motion to table the item for the Board Meeting on February
25, 2016. Director Ferryman seconded the motion, which passed with a 4-0 vote with
Secretary Ooten absent.
Jim Mosher, a member of the public, provided a suggestion to document the proposed
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changes to the ordinance within the staff report attachments.
23. Ordinance No. 113 — Curbside Definition
Recommendation: That the Board of Directors adopt Ordinance No. 113 defining
"curbside" to buttress the District's position with respect to technical challenges.
District Counsel, Colin Burns, presented the proposed adoption of Ordinance No. 113,
which defines the word "curbside."
Jim Mosher, a member of the public, provided commentary regarding a grammatical
instance within the ordinance, the definition of the word "curb" as well as "curbside"
within the operations code, and clarifying the boundaries of District jurisdiction for solid
waste and sewer services.
Assistant Secretary Schafer made a motion to approve the adoption of Ordinance No.
113. Vice President Perry seconded the motion, which passed with a 4-0 vote with
Secretary Ooten absent.
24. Resolution No. 2016-876 — Authorizing the Purchase of Property at 290
Paularino Avenue, Costa Mesa
Recommendation: That the Board of Directors adopt Resolution No. 2016-876.
District Counsel, Colin Burns, presented the proposed adoption of Resolution No. 2016-
876 to authorize the purchase of the property at 290 Paularino Avenue, Costa Mesa.
He noted that the resolution gives signatory authority to the General Manager, District
Treasurer, and District Counsel in regards to initiating the purchase of the property.
Discussion followed regarding the extent of the signatory authority.
Assistant Secretary Schafer made a motion to approve Resolution No. 2016-876. Vice
President Perry seconded the motion, which passed with a 4-0 vote with Secretary
Ooten absent.
25. Costa Mesa Sanitary District's Petition for Review and Points and Authorities in
Support of Petition for Review by the State Water Resources Control Board
Recommendation: That the Board of Directors file the Petition for Review and
Points and Authorities in Support of Petition for Review.
District Counsel, Colin Burns, presented a copy of the petition for review by the State
Water Resources Control Board and noted that the State Regional Board has 30 days
to file an opposition if they choose to do so.
There were no additional questions or comments and the report was received.
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LOCAL MEETINGS
A. Orange County Sanitation District (OCSD) — (Secretary Ooten)
Recommendation: That the Board of Directors accepts oral report.
Director Ferryman provided an oral report regarding the discussion of Irvine Ranch
Water District's winning bid for Tustin area sewer service and Metropolitan Water
District's development of a groundwater replenishment system in Carson.
B. Santa Ana River Flood Protection Agency (SARFPA)—(Vice President Perry)
Recommendation: That the Board of Directors accepts oral report.
Vice President Perry provided an oral report regarding the Grand Jury's agency audit,
the increase of SARFPA fees from $1100 to $1300, and the Feasibility Study for the
Westminster Wintersburg Channel.
Director Ferryman added that there will be a Santa Ana Watershed Project Authority
(SAWPA) tour at OCSD on February 2, 2016.
C. Independent Special Districts of Orange County (ISDOC) — (President
Scheafer)
Recommendation: That the Board of Directors accepts oral report.
President Scheafer provided an oral report regarding the Executive Committee Meeting,
the creation of an Ad Hoc Committee to address the programs and speakers for
quarterly meetings, and the presentation by Orange County CEO, Frank Kim.
D. California Special Districts Association (CSDA) - (Assistant Secretary
Schafer)
Recommendation: That the Board of Directors accepts oral report.
Assistant Secretary Schafer provided an oral report regarding CSDA's total
memberships, workshops, webinars, and upcoming Special Districts Legislative Days
from May 16-18, 2016.
Discussion followed regarding the possibility of the Board of Directors meeting with its
representatives during the Legislative Days and the District's harassment policy as it
pertains to the recently completed Sexual Harassment Training.
President Scheafer provided commentary regarding Board liability as it pertains to
Government Code 6104.5, the District's social media policies, a discussion about the
possibility of the Board of Directors having District-issued cell phones, and the due
dates of the Form 700.
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E. Special District Risk Management Authority (SDRMA)— (President Scheafer)
Recommendation: That the Board of Directors accepts oral report.
Nothing to report at this time.
F. Other Meetings Qualifying for Reimbursement under CMSD Ordinance No. 55
Operations Code Section 3.01.030
Recommendation: That the Board of Directors accepts oral report.
Nothing to report at this time.
OLD BUSINESS—None
NEW BUSINESS—None
ORAL COMMUNICATIONS AND DIRECTOR COMMENTS
President Scheafer provided commentary regarding the CSDA Special District
Leadership Foundation Conference from January 25-27, 2016 in La Quinta.
ADJOURNMENT
There being no further business to come before the Board, President Scheafer
adjourned the meeting at 8:10 P.M.
Robert Ooten M7( 4/cheaf
Secretary President