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Minutes - Board - 2021-04-13COSTA MESA SANITARY DISTRICT MINUTES OF BOARD OF DIRECTORS STUDY SESSION APRIL 13, 2021 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, Bob Ooten, Brett Eckles, Mike Scheafer Members absent Art Perry Staff present Scott Carroll (General Manager), Noelani Middenway (District Clerk and Public Information Officer), Kaitlin Tran (Finance Manager), Dyana Bojarski (Administrative Services Manager), Marc Davis (District Treasurer), Mark Esquer (District Engineer), Gina Terraneo (Management Analyst II), Lieu Tran (Accountant), Edward Roberts (Code Enforcement Officer), Tanisha Tingling (Administrative Assistant), Angela Colunga (Office Specialist) Others present Cindy Brenneman, Citizens Advisory Committee Member Mike Carey, CR&R Senior Sustainability Coordinator Judith Gielow, Citizens Advisory Committee Member Jim Mosher, District resident Sue Lester, Citizens Advisory Committee Member Meeting called to order at 9:30 A.M. A. OPENING ITEMS COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 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 Ooten called the meeting to order at 9:30 A.M. District Clerk and Public Information Officer, Noelani Middenway, noted that President Ooten, Vice President Scheafer, Secretary Schafer, and Director Eckles were present at this time while Director Perry was not present. B. PUBLIC COMMENTS Procedural: 1. Public Comments President Ooten opened public comments. Ms. Middenway stated that the District did not receive any written public comments. She noted that District resident, Jim Mosher, intends to make a public comment. Mr. Mosher stated that the City of Newport Beach's trash services are provided by the same trash hauler as the District's - CR&R Environmental Services. He shared that there is conflicting information regarding the amount trash carts required for the customers of the two agencies. He noted that the District openly discusses its solid waste collection information; however, the City of Newport Beach typically only shares information after a decision has been made. He added that the City does not invite the public into their discussions. He stated that, while CR&R has advised the City that residents will need three types of trash carts to achieve a SO% waste diversion rate, they have also advised the District that they can achieve over 60% waste diversion with only two types of trash carts. He discussed the economics of recycling. He noted that CR&R makes money by selling recyclables. He reported that CR&R's Senior Sustainability Coordinator, Mike Carey, will be discussing the City's solid waste contract with the Newport Beach Chamber of Commerce at a virtual meeting this Thursday, April 15, 2021 at 8:00 a.m. COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 Secretary Schafer shared that she has registered to attend the meeting that Mr. Mosher mentioned. Hearing no other public comments, President Ooten closed public comments. C. ITEMS OF STUDY Action, Receive and File: 1. Receive and File March 2021 Code Enforcement Officer Report Recommendation: That the Board of Directors receives and files this report. Code Enforcement Officer, Edward Roberts, presented the March 2021 Code Enforcement Officer report. He stated that four proactive scavenging investigations were conducted in March 2021 and reviewed their locations. Director Eckles discussed the scavenging case on the 2300 block of Elden Street. He inquired about the best way to report scavenging. Mr. Roberts stated that customers should report scavenging incidents through the District's GoCMSD app. He shared that he usually sends the reporting individual his cell phone number and work schedule to ensure that they receive a quick response. He discussed warning notices that were issued in March 2021. Secretary Schafer asked if he follows up with each warning notice. Mr. Roberts stated that initial contact consists of a verbal warning and notice. He added that he will issue an additional warning if the problem persists. He discussed a residence on Bermuda Drive with a portable restroom onsite. He shared that he contacted the City of Costa Mesa's Code Enforcement department about the property, which currently has an active permit for residential construction. He noted that the portable restroom would be considered a violation if the permit expires. Vice President Scheafer shared background information on the property and expressed appreciation for Mr. Roberts' efforts. There was no further discussion, and the report was received. COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 Action: 2. Discuss Re joining the California Association of Sanitation Agencies Recommendation: That the Board of Directors provides direction to staff. President Ooten stated that the District used to be a member of the California Association of Sanitation Agencies (CASA) but discontinued its membership due to costs. Office Specialist, Angela Colunga, discussed the purpose of CASA and highlighted some of its current members. She shared that CASA hosts annual conferences, issues newsletters, provides legislative advocacy, and educational opportunities for its members. She reviewed the cost of membership and noted that CASA anticipates an increase in dues for Fiscal Year 2022-2023. She discussed the costs of CASA conferences for members and nonmembers. She stated that the District has not been a member since Fiscal Year 2011-2012. Secretary Schafer stated that everything offered by CASA is also offered by the California Special Districts Association (CSDA) of which the District is currently a member. She added that, when the District was a member of CASA, there was little benefit for the District since CASA only focused on water issues. She noted that CASA now addresses wastewater issues, but so does CSDA. She stated that she does not support re -joining CASA and recommended allocating the budgeted money towards other necessities. Director Eckles expressed support for Secretary Schafer's recommendation. He stated that the main benefit provided by CASA is legislative advocacy, but noted that their advocacy will continue regardless of the District being a member. He added that there is no benefit to the District's ratepayers for joining CASA. He commented that the District is a member of a lot of organizations that are duplicates and may be unnecessary. Vice President Scheafer stated that he was hoping for more benefits as a CASA member. He expressed support for Secretary Schafer and Director Eckles' comments. He noted that there are no tangible benefits in joining CASA. He stated that CSDA provides a lot of advocacy, but they represent a myriad of special districts. He added that he was interested in wastewater benefits associated with CASA. He shared that he has attended CASA conferences in the past, which he found to be very technical. He stated that COSTA MESA SANITARY DISTRICT PAGE S MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 the District has received a few wastewater fines over the years and was wondering if CASA could help the District with such matters. He noted that President Ooten and District Engineer, Mark Esquer, provide the District with technical expertise for wastewater issues. He expressed appreciation for the staff report. President Ooten expressed agreement with the other Directors' comments. He stated, after the District discontinued their previous CASA membership, CASA offered him a position on their board. He shared that the Orange County Sanitation District attends CASA meetings regularly. He noted that he will stay informed on CASA matters through his position on OCSD's Board. He stated that CASA is more focused on wastewater issues than CSDA, but he agrees that CASA membership dues are cost prohibitive. He added that he does not support joining both organizations. He noted that the cost of a CASA membership is likely to increase and pointed out that conference costs may add up if multiple Board members attend. He stated that the Board has no interest in joining CASA. He expressed appreciation for Ms. Colunga's report and presentation. There was no further discussion, and the report was received. Action, Receive and File: 3. Preliminary Biennial Budget Review for Fiscal Year 2021-22 and Fiscal Year 2022-23 Recommendation: That the Board of Directors provides feedback to staff regarding the proposed preliminary Biennial Budget for Fiscal Year 2021-22 and 2022-23. General Manager, Scott Carroll, introduced the item and acknowledged Finance Manager, Kaitlin Tran, for her hard work in preparing the preliminary budget. He stated that the final budget will be presented to the Board in June 2021 for adoption. He noted that District Treasurer, Marc Davis, is also available to answer any questions. Ms. Tran thanked Mr. Carroll, Mr. Davis, and the Finance staff for their support with the preparing the budget. She asked the Board to let her know if they need to take a break during her presentation. Discussion followed regarding how to view the staff report attachments and presentation. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 Mr. Carroll noted that the PowerPoint presentation will be added to BoardDocs after the meeting. President Ooten inquired if the preliminary budget review will be presented to the Citizens Advisory Committee (CAC). Mr. Carroll confirmed that this item is on the upcoming CAC meeting agenda. Ms. Tran shared an overview of the budget structure and presentation overview. She discussed the General Fund's revenue, which was created to account for unrestricted financial resources. She stated that the unrestricted resources mainly consist of general property taxes. She noted that District staff is assuming a 2% property tax revenue per year. She added that the proposed preliminary property tax revenue is $333,000 in Fiscal Year 2021- 2022 and $340,000 in Fiscal Year 2022-2023. She recommended recording the property tax revenue in the Solid Waste Fund for rate stabilization, which the District has done in previous years. She discussed the District's Solid Waste revenue accounts including Annual Charge, Charges for Services, Additional Container Charge, Investment Earnings, Contributions from CR&R, and the Other Non -Operating revenue from the Regional Waste Disposal Agreement with OC Waste & Recycling. She provided estimates of each account for Fiscal Years 2021-2022 and 2022-2023. She reviewed the District's Solid Waste expense accounts including Salaries and Benefits, Professional Services, Operations and Maintenance, and Special Programs. She provided estimates of each account for Fiscal Years 2021-2022 and 2022- 2023. She discussed CR&R Environmental Services' hauler, recycling disposal, and organics disposal rates. Director Eckles inquired about the budget process and discussion. He suggested that the District schedule a special meeting to discuss the Board's budget recommendations. Vice President Scheafer expressed support for Director Eckles' suggestion. President Ooten stated that there are two more Study Sessions before the budget needs to be adopted. COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 Mr. Carroll stated that the District has three Board meetings and two Study Sessions before the end of the current Fiscal Year. He noted that, if the Board requests a special meeting, then District staff will schedule it. Director Eckles emphasized the importance of having a special meeting to solely review the Directors' budget recommendations. President Ooten inquired if the Directors have any questions for District staff regarding the Solid Waste fund. Director Eckles thanked Ms. Tran for the report and inquired about the increases in compensated absences. Ms. Tran stated that she will gather the necessary information to discuss that topic. She noted that it is a lengthy process to calculate compensated absences. Director Eckles inquired about the Professional Services account. Mr. Carroll stated that the Community Survey item is extremely important because it examines how the District is engaging with its customers, particularly regarding trash services. He added that the upcoming survey will analyze the community's opinion regarding the two -cart system. He noted that the Community Survey is performed every other year. He reported that the Communication Support Services item was lowered from $80,000 to $64,000 for Fiscal Year 2021-2022. Vice President Scheafer inquired about the District Voting Divisions Awareness Campaign item. Mr. Carroll stated that this item has not been discussed by the Board yet. He noted that the 2020 Census data may affect the District's division boundaries. Vice President Scheafer inquired about the budgets for the Shredding and Cardboard Collection Events. Ms. Tran stated that Management Analyst I, Nabila Guzman, provided the financial information for those events. She added that she will provide a breakdown of the costs at the next meeting. COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 Mr. Carroll shared that Ms. Guzman contacted the City of Newport Beach to determine the details of their shredding event and used their information to provide an estimate for the District's Shredding Event. Vice President Scheafer stated that there seems to be a proliferation of shredding events in the area hosted by real estate agents. He inquired if it is necessary for the District to host this type of event. Mr. Carroll noted that this item was discussed at a previous Study Session and that the Board directed staff to add the Cardboard Collection and Shredding events to the budget. Vice President Scheafer stated that the Board has not received an update regarding how much local real estate agents pay to host shredding events. Secretary Schafer noted that she is having internet connection issues and that she missed most of the budget report so far as a result. President Ooten discussed the tonnage chart, highlighting the increasing trend in collection. He stated that the chart indicates a substantially increased cost for tonnage, while there is a minimal increase in occupancy. He suggested that District staffs estimates for tonnage are too conservative. He noted that the tonnage estimates largely impact future expenses. He discussed the budget for hiring a consultant to assist with Senate Bill (SB) 1383 mandates. He stated that he has advocated for working with the City of Costa Mesa regarding SB 1383, since it is ultimately their responsibility to ensure compliance. He noted that the District spent a lot of money on the Organics Recycling Program, even though the diversion rate has not significantly increased. Mr. Carroll stated that the consulting costs can be reduced, but District staff finds it important to budget for SB 1383 consulting services. He noted that SB 1383 is a landmark piece of legislation with required enforcement measures. He added that District staff has reached out to the City on multiple occasions, but they have been unresponsive. He recommended that the Board contact officials at the City to discuss this issue. COSTA MESA SANITARY DISTRICT PAGE 9 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 President Ooten commented that CR&R has failed the District with the two - cart system. He stated that the City is not very interested in the District's diverted tonnage. He suggested discussing this item at the upcoming Liaison Committee meeting. He inquired about the City's effort to comply with SB 1383. He asked what the District is hoping to learn from hiring a consultant. Mr. Carroll stated that the District needs to amend their ordinances and policies to be consistent with SB 1383 and determine the necessary enforcement procedures. He noted that the District could be fined for noncompliance. President Ooten recommended against spending the budgeted amount for SB 1383 consulting services. He stated that he does not believe that CalReycle will fine agencies for noncompliance. He noted that most agencies will not be able to comply with all SB 1383 requirements. He added that this matter is mainly a City issue. Director Eckles asked Ms. Tran and Mr. Carroll to reassess the District's Membership Dues and Board Development costs. He suggested analyzing the impact if some of those costs were removed from the budget. He asked to review the most important budget items at a future meeting. Mr. Carroll stated that the Board will have to determine which items to keep or remove from Membership Dues and Board Development. He noted that some Board development is important. He shared that CSDA hosts a great leadership academy for elected officials. The Board discussed how many Board members are currently present at the meeting and when to take a five-minute break. Citizens Advisory Committee (CAC) Member, Sue Lester, inquired about CR&R's 5.8% Consumer Price Index (CPI) increase in 2019-2020 and their request for a 5.6% increase in 2021. She noted that it appears that the District is not obligated to approve the request. She stated that some of the Board's comments imply that CR&R has failed in helping the District achieve their waste diversion goal. She encouraged the Board to deny CR&R's request. She noted that this item has not been included in the preliminary budget presentation. She requested for the District to specify the dollar amount equivalent to a 5.6% CPI increase for CR&R. COSTA MESA SANITARY DISTRICT PAGE 10 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 President Ooten stated that CR&R's 5.8% CPI increase was around $300,000. He inquired about the Cost -of -Living Adjustment (COLA) rate for District staff in comparison to the CPI rates provided by CR&R. He asked if each organization is utilizing different indexes. Mr. Carroll confirmed that CR&R has requested for a 5.6% CPI request. He added that, per the District's contract with CR&R, CPI increases must receive Board approval. He noted that District staff will be presenting this item to the Board in May. President Ooten adjourned the meeting for a short break at 10:49 a.m. CAC Member Judith Gielow left the meeting at 10:50 a.m. President Ooten reconvened the meeting at 10:52 a.m. Discussion followed regarding the CPI index used by CR&R. Ms. Tran continued her presentation and discussed Wastewater Fund revenue accounts including the Annual Charge, Investment Earning, Charges for Services, Sewer Permits, Inspection Fees, and the Other Non - Operating accounts. She provided estimates of each account for Fiscal Years 2021-2022 and 2022-2023. She reviewed the Wastewater Fund expense accounts including Salaries and Benefits, Professional Services, Capital Outlay, Operations and Maintenance, and the Capital Improvement Projects. She reviewed certain budget items within each account and provided overall estimates for Fiscal Years 2021-2022 and 2022-2023. She discussed items that were removed from the budget, items that District staff would like to propose for the future, and possible new revenue streams. She reviewed the Solid Waste fund balance and discussed the potential impact of CR&R's 5.6% CPI request on the District's operating reserves for Fiscal Year 2021-2022. She reviewed the Wastewater fund balance, which the District will need to utilize to balance the budget for Fiscal Years 2021-2022 and 2022-2023. She stated that District staff is recommending a Wastewater rate study in Fiscal Year 2021-2022. She shared the budget projections for hiring additional Wastewater staff and purchasing new equipment. COSTA MESA SANITARY DISTRICT PAGE 11 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 President Ooten commented that the District budgets for a 5% merit increase for all staff members. He asked how many District staff members have reached the maximum of their salary range. He inquired about funds for lawsuit liabilities. Mr. Carroll stated that any lawsuit expenditures will be funded by insurance through the Special District Risk Management Authority (SDRMA). He noted that the District only pays for their deductible. Director Eckles requested for a year-to-date review of the current budget compared to the preliminary budget. He inquired if the costs for hiring additional Wastewater staff and equipment are included in the preliminary budget. Ms. Tran confirmed that those items are not included in the preliminary budget. Mr. Carroll stated that he will be presenting those items to the Board at the April Board meeting. He discussed the need for a Wastewater rate study. He noted that District staff is currently conducting a county -wide wastewater rate study. He reported that the average wastewater rate in Orange County is about $18.27 compared to the District's rate of $7.70 per single family unit. Director Eckles inquired about the proposed date of the District's Wastewater rate study. Mr. Carroll stated that it will begin in fall or winter of 2021 and proceed in 2022 if the Board approves a new rate. Director Eckles commented that the District cannot budget for these items right now, but can plan for a mid -year budget amendment based on the Board's decision regarding wastewater rates. Mr. Carroll confirmed that, if the Board increases the wastewater rate, then the District will make a budget adjustment for Fiscal Year 2022-2023. Secretary Schafer expressed support for all Board suggestions. She recommended revisiting this item at a future Study Session. COSTA MESA SANITARY DISTRICT PAGE 12 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 Vice President Scheafer discussed the budget cuts from the preliminary budget. He inquired about Director expenses and noted that the District should have saved a substantial amount of money due to the COVID-19 pandemic. He asked about the costs of the items that the District plans on postponing for future purchase. Ms. Tran noted that Ms. Middenway has more information regarding Director expenses. She stated that she can provide the budget amounts for all future expenses listed in the presentation. President Ooten expressed support for hiring additional Wastewater staff and purchasing new equipment. Vice President Scheafer stated that he is interested in the costs associated with the Boardroom audio visual (AV) upgrades and full-time Code Enforcement Officer. President Ooten suggested for each Board member to send their budget questions to Mr. Carroll. Ms. Middenway discussed Director expenses for Fiscal Year 2019-2020. She noted that the budget was $36,410 and only $7,533 was spent. She added that, for Fiscal Year 2020-2021, the budget is $32,000 and only $668 has been spent. Ms. Tran stated that she will share her revised budget presentation with the Board. The Board tentatively scheduled a special meeting to review the preliminary budget for Tuesday, May 4, 2021. There was no further discussion. Procedural: 1. Oral Communications and Director Comments Vice President Scheafer shared that he received a call from a customer located on Monrovia Avenue whose Organics Recycling Carts were not serviced. He added that this has been an ongoing issue. COSTA MESA SANITARY DISTRICT PAGE 13 MINUTES OF THE BOARD OF DIRECTORS STUDY SESSION HELD APRIL 13, 2021 CR&R Senior Sustainability Coordinator, Mike Carey, stated that he will investigate the issue. Vice President Scheafer inquired about the re -opening of the Orange Coast College (OCC) Recycling Center. Mr. Carey stated that they are planning on re -opening before OCC students return to school in the fall. Secretary Schafer stated that she would like to nominate Mr. Carroll for General Manager of the Year. She shared that she has prepared all the necessary information but needs Board approval. President Ooten stated that he will coordinate with Mr. Carroll to include that item on an upcoming meeting agenda. Director Eckles discussed trash service issues occurring on the east side of the District's service area. He inquired about the District's communication efforts to resolve these issues. He recommended discussing the best practices for addressing service interruptions at a future Study Session. There were no additional comments by the Board. Procedural: 2. Adjournment President Ooten adjourned the meeting at 11:39 A.M. M Secretary Bob Ooten President