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Minutes - Board - 2017-06-13 /- SAN1i y\ iia "\ s. i p1 1 y: %ovat9 COSTA MESA SANITARY DISTRICT MINUTES OF BOARD OF DIRECTORS STUDY SESSION JUNE 13,2017 Members Present Arlene Schafer, Art Perry, Bob Ooten, Jim Ferryman, Mike Scheafer Members Absent None Staff Present Scott Carroll (General Manager), Noelani Middenway (District Clerk), Wendy Davis (Finance Manager), Kaitlin Tran (Senior Accountant), Rob Hamers (District Engineer), Ed Roberts (Code Enforcement Officer), Gina Terraneo (Management Analyst I) Others Present Dean R ffri d e (CR&R), Shelley Heller (CR&R) Meeting called to order at 9:33 A.M. A. OPENING ITEMS Procedural: 1. Call to Order President Scheafer called the meeting to order at 9:33 A.M. Procedural: 2. Roll Call District Clerk, Noelani Middenway, conducted roll call. All Board Members were present. Procedural: 3. Public Comments I COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JUNE 13, 2017 President Scheafer opened public comments. He noted that e-mail correspondence was received from Judith Marquez of Innovare Environmental regarding a request for a Supplemental Environmental Project (SEP). Seeing nobody from the public wishing to speak, President Scheafer closed public comments. B. ITEMS OF STUDY Receive and File: 1. Organics Tonnage Report Recommendation: That the Board of Directors receive and file the report. General Manager, Scott Carroll, presented the report and offered to answer any questions. He noted that the May 2017 organics tonnage surpassed the May 2016 organics tonnage. There were no questions or comments and the report was received. Receive and File: 2. May 2017 Code Enforcement Officer report Recommendation: That the Board of Directors receive and file the report. Code Enforcement Officer, Ed Roberts, provided report details. He noted that there were 7 scavenging investigations conducted in May. President Scheafer commented that there seems to be an increase in the transient population located near the Santa Ana River. Discussion followed regarding the transient population in Costa Mesa and areas of concentration. Mr. Roberts added that there has been a significant increase in resident concerns in regards to trash carts in public view. He noted that there were 114 cases of trash carts in public view reported in May. Discussion followed regarding the transient population located at the end of 19th Street and a prior case of trash carts in public view reported on Alabama Circle in Costa Mesa. There were no further questions or comments and the report was received. Discussion: 3. Pump Station Seismic Study Recommendation: That the Board of Directors receive and file the report. General Manager, Scott Carroll, presented report details. He noted that the District hired a consultant to conduct a Seismic Study in 2011 and that the study COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JUNE 13, 2017 resulted in 5 recommended priorities for the District's pump stations. Mr. Carroll added that Priorities 1 and 2 are complete, while Priorities 3, 4, and 5 have not been fully completed due to their significant cost. Assistant Secretary Ooten noted that the Orange County Sanitation District's Operations Committee created a report detailing their plans to reduce pump station vulnerability and that District staff may want to review the report. Additionally, he suggested pursuing completion of Priority 5. Discussion followed regarding the plausibility of Priority 4. President Scheafer commented that the issue of corrosion was a common theme within the study. Mr. Carroll noted that the installation of stainless steel enclosures has been implemented to prevent corrosion. Director Perry suggested the staff consider completing Priority 3. District Engineer, Rob Hamers, noted that completing Priority 3 would be labor intensive and expensive. There were no further questions or comments and the report was received. Action (Consent): 4. Eco Challenge Program Update Recommendation: That the Board of Directors authorize the General Manager to enter into a new agreement with the Discovery Science Center for one (1) year with an option to extend for an additional year. General Manager, Scott Carroll, shared that the report was prepared by Management Analyst I, Nabila Guzman. He noted that the District has an agreement with the Discovery Science Center to provide an interactive educational program about recycling to students within the District's service area. Mr. Carroll added that staff recommends continuing the program. Secretary Schafer asked which grades the program serves. Mr. Carroll responded that the program serves 6th grade students. Director Perry suggested that the District bring up this program during the upcoming Liaison Meeting. President Scheafer asked why Davis Magnet School is not included in the list of participating schools. ISI COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JUNE 13, 2017 Discussion followed regarding the participating schools and asking Discovery Science Center to invite more schools to participate in the program. The Board of Directors directed the General Manager to enter into a new agreement with the Discovery Science Center for one year with an option to extend for an additional year. There were no further questions or discussion. Discussion: 5. Unfunded Pension Liability Payment Recommendation: The Board of Directors request staff to bring back this item to the June 22, 2017 Board Meeting for approval and appropriation of $335,647 using available funds in the Asset Replacement Fund. Finance Manager, Wendy Davis, provided report details. She explained that the District has 3 tiers of unfunded pension liabilities and noted that tier 1 has about $320,000, tier 2 has about $12,000, and tier 3 has about $3200 in unfunded liabilities. Ms. Davis added that staff is recommending paying off all three of the tiers of unfunded pension liabilities. She presented the 2016-2017 Asset Replacement Fund and suggested that the available balance of the Fund be used to pay off the unfunded pension liabilities. Ms. Davis noted that staff would like to bring the item back to the next Board Meeting to request that the Board of Directors approve a transfer of $300,000 from the Asset Replacement Fund to the Solid Waste Fund for the purpose of paying off the unfunded pension liabilities. Discussion followed regarding the equitable payment of the liability through the Solid Waste and Wastewater Funds and the impact of the recommendation on the District's California Public Employees Retirement System (PERS) costs. Ms. Davis noted that the recommendation does not guarantee that the District would not have unfunded or overfunded pension liabilities in the future. Director Perry, President Scheafer, and Assistant Secretary Ooten indicated agreement with the recommendation to pay off the District's unfunded pension liabilities. Discussion followed regarding the retirement tiers of current District staff and equipment included in the Asset Replacement Fund. The Board of Directors directed staff to bring the item back to the June 22, 2017 Board Meeting for approval and appropriation of $335,647 using available funds in the Asset Replacement Fund. There were no further questions or discussion. COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JUNE 13, 2017 Discussion: 6. Earthquake and Asset Management Reserves Recommendation: The Board of Director ask staff to bring back a written policy on reserves for Board approval based on the discussion at the study session. Finance Manager, Wendy Davis, presented report details and noted that staff is requesting that the Board of Directors direct staff to bring back a written policy for the Earthquake and Asset Management Reserves. She added that staff recommends eliminating the Earthquake Reserve or moving its $1 million contents into the Asset Management Reserve. Ms. Davis explained that the contents of the Earthquake Reserve are included as unrestricted net position on the District's financial statements due to Government Accounting Standards Board (GASB) requirements, and that the District would use Asset Management Reserves in the event of an earthquake. Assistant Secretary Ooten requested that a one-page explanation be included in the budget document and Comprehensive Annual Financial Report (CAFR) explaining the District's reserves for the public's information. Ms. Davis noted that an explanation of the reserves cannot be added into the CAFR because staff applies for the Government Finance Officers Association (GFOA) award which has strict format requirements, but that staff will include it in the budget document. Secretary Schafer indicated agreement with Assistant Secretary Ooten. Director Perry suggested that the Earthquake Reserve be used to address the Priorities of the Seismic Study. Ms. Davis responded that the Earthquake Reserve can be appropriated to the Seismic Study Priorities, the Asset Management Reserve, or the purchase of the property at 2252 Fairview Road, Costa Mesa. Discussion followed regarding the appropriation of the Earthquake Reserve. President Scheafer requested that staff provide the cost estimates for completing the remaining Priorities from the Seismic Study. Ms. Davis noted that staff recommends using the Earthquake Reserve toward the purchase of the property at 2252 Fairview Road, Costa Mesa. Assistant Secretary Ooten indicated agreement and noted that the goal was to have $5 million in the Asset Management Reserve. He added that if the Earthquake Reserve was added to the Asset Management Reserve, there would be over$6 million in the Reserve. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JUNE 13, 2017 Vice President Ferryman suggested purchasing earthquake insurance with a high deductible. Discussion followed regarding earthquake insurance and the role of the Federal Emergency Management Agency (FEMA) in the event of an earthquake. The Board of Directors directed staff to eliminate the Earthquake Reserve and use its contents toward the purchase of the property at 2252 Fairview Road, Costa Mesa. Ms. Davis added that the Asset Management policy, based on the Board of Directors' direction, would maintain a $5 million balance. There were no further questions or discussion. C. CLOSING ITEMS Procedural: 1. Oral Communications & Director Comments President Scheafer asked if the Board of Directors are individually enrolled as Solid Waste Association of North America (SWANA) members. District Clerk, Noelani Middenway, responded that the Board of Directors are individual members. President Scheafer asked if any action is necessary in response to the the correspondence from Judith Marquez. Discussion followed regarding the correspondence and the Regional Water Quality Control Board. Secretary Schafer shared that the Little Hoover Commission will hold a public hearing on June 22 and the California Special Districts Association (CSDA) will attend the hearing. She added that there is an Orange County Council of Governments (OCCOG) luncheon on June 14, that CSDA is currently accepting nominations for awards, and that there is a Chamber Breakfast on June 15. President Scheafer commented that he attended the Mayor's Gala and that the Board of Directors should further analyze the benefits of contributing to the event if the District is asked for a contribution next year. He commented that there were not many opportunities to promote the District at the event. COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JUNE 13, 2017 Director Perry asked when Senator Moorlach would be visiting the District and whether the District needs to post this meeting. Ms. Middenway responded that the meeting will take place on June 23 and that the meeting will be posted. Discussion followed regarding the upcoming Liaison Meeting. There were no further questions, comments, or discussion. Procedural: 2. Adjournment President Scheafer adjourned the meeting at 10:42 A.M. / Arlene Schafer / Mich. Scheafer Secretary President