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Minutes - Board - 2020-07-14COSTA MESA SANITARY DISTRICT MINUTES OF BOARD OF DIRECTORS STUDY SESSION JULY 149 2020 NOTE: THIS MEETING WAS CONDUCTED UTILIZING TELECONFERENCING PURSUANT TO GOVERNMENT CODE SECTION 54952.2 AND THE GOVERNOR'S EXECUTIVE ORDERS IN EFFECT WAIVING SOME OF THE REQUIREMENTS OF THAT SECTION. 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 and Public Information Officer), Kaitlin Tran (Finance Manager), Marc Davis (District Treasurer), Dyana Bojarski (Administrative Services Manager), Gina Terraneo (Management Analyst II), Nabila Guzman (Management Analyst 1), Lieu Tran (Accountant) Others present Ryder Smith & Jennifer Nentwig, Tripepi Smith Meeting called to order at 9:30 A.M. A. OPENING ITEMS Procedural: 1. Roll Call - (If absences occur, consider whether to deem those absences excused based on facts presented for the absence — such determination shall be the permission required by law.) President Ferryman called the meeting to order at 9:30 A.M. District Clerk and Public Information Officer, Noelani Middenway, noted that President Ferryman, Vice President Ooten, Secretary Schafer, Director Scheafer, and Director Perry were present at this time. B. PUBLIC COMMENTS Procedural: 1. Public Comments President Ferryman opened public comments. COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JURY 149 2020 Ms. Middenway stated that the District received written public comments from District resident, Jim Mosher. She noted that a copy of his comments was circulated to the Board for review and have been posted to BoardDocs for the record. Hearing no one wishing to address the Board, President Ferryman closed public comments. C. ITEMS OF STUDY Action, Receive and File: 1. May and June 2020 Organics Tonnage Report Recommendation: That the Board of Directors receive and file this report. General Manager, Scott Carroll, introduced the report and stated that District staff is available to answer questions. Vice President Ooten stated that the amount of organics tonnage has increased as more people are staying at home. There was no further discussion, and the report was received. Action: 2. June 2020 Solid Waste Diversion Report Recommendation: That the Board of Directors receives and file this report. Mr. Carroll stated that there is nothing to report regarding solid waste diversion since the reporting has been temporarily delayed until District staff can confirm the accuracy of the data. There was no further discussion. Action, Receive and File: 3. June 2020 Code Enforcement Officer Report Recommendation: That the Board of Directors receives and file this report. Mr. Carroll noted that Code Enforcement Officer, Edward Roberts, is unavailable to present the report. He stated that District staff is available to answer questions. Director Perry shared that Mr. Roberts reported increased scavenging activity on Peppertree Lane. There was no further discussion, and the report was received. Action: 4. Update on Fats, Oils and Grease (FOG) Control Program Recommendation: That the Board of Directors receives and file this report. Mr. Carroll stated that District staff requests to postpone the update on the District's FOG Program to the Regular Board Meeting on Monday, July 27th, 2020. He noted COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JURY 149 2020 that EEC Environmental will be giving the presentation. He reviewed Mr. Mosher's comments regarding the FOG Program and sanitary sewer overflows (SSO). He shared that the District updates their information regarding SSOs every quarter on the District website. Vice President Ooten inquired if the District needs to restart the Water Discharge Requirements (WDR) Committee. Mr. Carroll stated that he will consult the Board about the WDR Committee at a later time. There was no further discussion. Action, Receive and File: 5. Express Communications Assessment Report Recommendation: That the Board of Directors receive and file this report. Vice President Ooten inquired about the title of the report, specifically about the word "express." Management Analyst I, Nabila Guzman, stated that representatives of Tripepi Smith will provide the reasoning for the report's title. Ms. Guzman provided report details. She stated that Tripepi Smith was awarded the Communications Support and Strategy request for proposal (RFP) in February 2020. She shared that over the last two months, Tripepi Smith has completed a communications evaluation of the District. She noted that the total cost of the communications evaluation is $18,550. She stated that the President of Tripepi Smith, Ryder Smith, and the Senior Business Analyst and Project Manager, Jennifer Nentwig, are present to review the findings of the Express Communications Assessment Report. Mr. Smith shared that Tripepi Smith offers two types of communications assessment reports. He noted that the express version of the report takes about half the amount of time required to complete the regular version of a communications assessment report and costs about 40% less. He stated that the express version includes- a limited number of interviews, documentation, and a tightly defined scope of work. He shared that the express version of the report was the best option for the District based on their budget and timeline. Ms. Nentwig presented the findings of Tripepi Smith's Express Communications Assessment. She noted that the purpose of the assessment was to objectively review and monitor the District's existing use of communication channels, including social media, print materials, videos and other communication methods. She reviewed the assessment process. She discussed the importance of communication for the District as a form of local government. She presented the District's audience size on its various social media platforms and noted that the District has the potential to reach 70,000 customers, which equates to 60% of adults within the District's service area population that are on Facebook. She discussed Tripepi Smith's formula regarding content, distribution and impact. She COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JULY 145 2020 reviewed the summarized observations of the report. She discussed Tripepi Smith's recommendations and action steps to improve government relations, analyze available metrics, improve media relations, optimize email distribution, improve social media strategy and website, establish formal policies, provide staff with training, address Spanish language goals, develop a brand/style guide, build a stock photo and video library and increase branding on physical assets. She noted that the recommendations align with the District's 2020-25 Strategic Plan. Secretary Schafer expressed appreciation for Ms. Nentwig's presentation. She inquired about scheduling a meeting between the Board and Tripepi Smith to discuss the Board's input and opinions regarding their recommendations. Mr. Smith stated that, as a partner with the District, Tripepi Smith works with District staff on a day-to-day basis and encourages feedback from the Board on the Express Communications Assessment Report presentation. He commented that District staff has shared the concerns of the Board during the staff interviews. He shared that he and Ms. Nentwig reviewed the District's discussions regarding the 2020-25 Strategic Plan. Secretary Schafer commented on the limitations of teleconferenced meetings. She inquired about the next steps in Tripepi Smith's communications strategy process. Mr. Smith stated that Tripepi Smith has outlined their scope of work according to the Communication Support and Strategy RFP. He noted that the next step involves incorporating the Board's feedback into the ongoing work product for Tripepi Smith and District staff. President Ferryman stated that Tripepi Smith's presentation covered a wide range of topics and requested a hard copy of their report to analyze. Secretary Schafer requested a hard copy of the report as well. Mr. Smith noted that the report and the presentation are available online for review. Director Scheafer commented on Tripepi Smith's recommendations for print media. He recommended decreasing the District's efforts in print media and to increase the District's presence online. Ms. Nentwig highlighted that Tripepi Smith prioritizes curating a strong brand, message and story for the District. Mr. Smith commented on the dramatic decline in readership and subscription to print media and the increase in online community groups that spread local news and updates. He noted that, in today's society, the local newspaper editor has been replaced by page manager of a Facebook group. COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JURY 145 2020 Director Scheafer stated that online neighborhood chat groups discourage activity from political entities. He expressed support for building relationships with online page managers. Vice President Ooten stated that there is a large audience that digitally subscribes to newspapers. He shared that he is interested in increasing the District's amount of email subscriptions. He shared that the District's newsletter generates the largest amount of interest among its channels of communication. Secretary Schafer commented on a community resource guide. Mr. Smith inquired if this is a local newspaper sponsored by local businesses for marketing purposes. Secretary Schafer stated that she is unsure as to how the community resource guide is produced. Mr. Smith discussed the value of email marketing. He noted that the District spends most of its advertising budget on its seasonal newsletter, which correlates to its level of impact. He commented on the cost-effectiveness of transitioning from print media to digital media. Ms. Middenway read aloud Mr. Mosher is comments regarding voting, elections and press release distribution related to the Express Communications Assessment Report. Director Scheafer inquired about the validity of Mr. Mosher's comments regarding voting and elections. Mr. Smith discussed the importance of analyzing voter participation rates in a local election. He noted that voter participation rates help determine the general audience for the District's communication strategy. President Ferryman inquired about the timeline of Tripepi Smith's strategy. Mr. Smith commented that Tripepi Smith and the District have already begun working on their communications strategy. Ms. Guzman stated that Tripepi Smith entered into a 12-month contract with the District, which began in March 2020. She shared that the Express Communications Assessment Report was the first assignment listed in the contract's scope of services. She added that Tripepi Smith will be assisting the District with implementing their 12 recommendations. President Ferryman stated that the Board will receive progress reports regarding Tripepi Smith's engagement efforts. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JULY 14, 2020 Secretary Schafer requested a hard copy of the presentation and an update on Tripepi Smith's engagement process at each Study Session. President Ferryman suggested scheduling a Special Meeting to discuss the entire process. Vice President Ooten suggested that District staff update the Board on the engagement process on a quarterly basis. He recommended for Tripepi Smith to update the Board at the halfway mark of their 12-month contract at a Study Session. Director Perry stated that the Express Communications Assessment Report is available for download. Secretary Schafer expressed support for scheduling a Special Meeting. President Ferryman recommended for the Board to review the report and discuss it further at the July Board meeting. There was no further discussion, and the report was received. Action, Receive and File: 6. Financial Condition of the Costa Mesa Sanitary District Recommendation: That the Board of Directors receive and files this report. Mr. Carroll introduced the report. He stated that the District's Finance Department, which consists of Financial Manager, Kaitlin Tran, Accountant, Lieu Tran, and District Treasurer, Marc Davis, drafted a report regarding the District's current financial condition. Vice President Ooten inquired about the posting date of the presentation on the District's financial condition. Mr. Carroll stated that the PowerPoint presentation was still being prepared while the Study Session agenda was posted. He noted that the presentation was made available yesterday afternoon. Mr. Davis presented the report to the Board. He discussed the fund structure of the District. He reviewed the General Fund, which consists of general property tax revenue and investment earnings. He noted that the General Fund can be applied to expenditures that benefit the entire District and as transfers to the Solid Waste Fund for rate stabilization. He reviewed the Solid Waste Fund, which accounts for all trash charges, the costs of managing the refuse collection, recycling, organics and anything else related to Solid Waste. He reviewed the Wastewater Fund, which accounts for all wastewater charges, construction, sewer line maintenance and capital improvement projects. He reviewed the Facilities Revolving Fund, which is a restricted fund that accounts for fixture fees. He reviewed the Sewer Construction Fund, which has been inactive for a few years. He noted that the fund COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JURY 149 2020 is required for rare instances involving a developer that opts out of performing sewer or wastewater improvements. He discussed how the Sewer Construction Fund operates. He reviewed the Asset Replacement Fund, which accumulates monies for replacement of capital assets excluding infrastructure. He reviewed the Asset Management Fund, which is applied to capital improvement projects and emergency work. He discussed the District's existing reserves and designations. He reviewed the General Fund's standing as of June 30, 2020. He noted that the adopted budget of the General Fund was $320,000 with $270,000 being transferred out to the Solid Waste Fund and $50,000 transferred out to the Wastewater Fund. He stated that the adopted budget for the Solid Waste Fund was $6.555 million with budget adjustments increasing it to $6.582 million. He noted that actual expenditures equaled $6.46 million with revenues being $5.64 million. He stated that the adopted budget of the Wastewater Fund was $6.1 million with budget adjustments increasing it to $9.6 million. He noted that fund has $3.1 million that will be carried over to Fiscal Year 2020-21. He discussed the potential impacts of COVID-19 on the District, property taxes and interest rates. He commented that the District is mostly insulated from financial impacts of COVID- 19. He discussed other local government responses to COVID-19, which include job layoffs and furloughs, deferring Cost of Living Adjustments (COLA) and salary increases, freezing non -essential vacant positions, reducing expenditures and deferring maintenance activities and capital improvement projects. He reviewed the 5-year projections for the General Fund, Solid Waste Fund and Wastewater Fund. He presented graphics displaying revenues and expenses over a 15-year period from 2010-2025 in the Solid Waste Fund and Wastewater Fund. The Board expressed appreciation for Mr. Davis' presentation. Mr. Carroll inquired about the District's financial options if its property tax revenue is not fully collected. Mr. Davis stated that, when expenditures exceed revenues, the District can make internal adjustments which include furloughs, deferring COLAs, freezing non- essential vacant positions and deferring work travel, staff training and maintenance activities. He provided a second option, which involves adjusting service rates to increase revenue. He noted that taxing customers during a catastrophic event does not fare well for an organization. He discussed a third option regarding a tax revenue anticipation note (TRAN), which allows governments to issue debt for a one-year period to balance revenue streams. Mr. Carroll asked Mr. Davis if he is aware of any local governments utilizing TRAN. Mr. Davis stated that local governments have used TRAN as a normal funding mechanism. He noted that mostly school districts take advantage of TRAN. Director Scheafer stated that the District has access to federal and state funding through the Federal Emergency Management Agency (FEMA) for serious natural disasters. COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD JURY 14, 2020 Mr. Carroll confirmed Director Scheafer's statement. There was no further discussion, and the report was received. D. CLOSING ITEMS Procedural: 1. Oral Communications and Director Comments Vice President Ooten requested an update on re-establishing the District's WDR committee at a future meeting. There was no further discussion. Procedural: 2. Adjournment President Ferryman adjourned the meeting at 11:12 A.M. Arlene Sc Secretary Pes Ferryman "sident