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Minutes - Board - 2021-05-06COSTA MESA SANITARY DISTRICT MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING MAY 061,2021 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, Art Perry, Bob Ooten, Brett Eckles, Mike Scheafer Members absent None Staff present Scott Carroll (General Manager), Noelani Middenway (District Clerk & Public Information Officer), Marc Davis (District Treasurer), Kaitlin Tran (Finance Manager) Others present Seth Greiner, Citizens Advisory Committee and District resident Meeting called to order at 5:31 P.M. A. OPENING ITEMS Procedural: 1. Call to Order - President Ooten President Ooten called the meeting to order at 5:31 P.M. Procedural: 2. 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.) COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 06, 2021 District Clerk and Public Information Officer, Noelani Middenway, conducted roll call and noted that President Ooten, Vice President Scheafer, Secretary Schafer, Director Perry, and Director Eckles were present at this time. B. PUBLIC COMMENTS Procedural: 1. Public Comments President Ooten opened public comments. Hearing none, he closed public comments. C. DISCUSSION ITEMS Discussion: 1. 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 the Fiscal Years 2021-22 and 2022- 23. General Manager, Scott Carroll, introduced the item. He noted that it is a follow-up item to the Board's preliminary budget discussion from the April Study Session. He added that the preliminary budget will be reviewed by the Citizens Advisory Committee (CAC) at their May 12, 2021 meeting. He stated that all comments and suggestions provided by the CAC and the Board will be presented and discussed at the May 24, 2021 Board meeting. He noted that the District's intent is to adopt the budget at the June 28, 2021 Board meeting. Finance Manager, Kaitlin Tran, provided report details. She reviewed the Professional Services expense account. She discussed the process for calculating compensated absences. President Ooten asked if compensated absences are a regulatory requirement for the District's budget. Ms. Tran confirmed that compensated absences are considered a regulatory requirement. She reviewed the salary ranges for current staff members. She COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 06, 2021 discussed the District's actual expenditures for the past three fiscal years. She provided an analysis of the District's Consumer Price Index (CPI) calculations compared to the District's solid waste hauler's (CR&R Environmental Services') calculations. She noted that CR&R uses a 24-month average CPI to compute their calculations. She discussed CR&R's 5.8% CPI increase for Fiscal Years 2019-20 and 2020-21. She presented the estimated total costs for CR&R's 5.6% CPI increase for Fiscal Years 2021-22 and 2022-23. She reviewed the costs for the District's proposed Cardboard Recycling and Shredding events. She noted that the City of Costa Mesa has agreed to assist the District with both events by providing an event site and additional staffing. Vice President Scheafer noted that, in Exhibit 1.7 of the staff report, there is a discrepancy in the cost for refreshments for both events. Ms. Tran stated that she is aware of the discrepancy and will have the costs updated for the next budget review. Director Eckles inquired if the estimated total cost for the Shredding event will be reduced in the proposed budget since the City has agreed to help. Mr. Carroll stated that he directed Ms. Tran not to adjust the estimated total cost until the District receives a firm commitment from the City. Ms. Tran discussed the Board Membership Dues and Development account. She reviewed the costs associated with all five Board members attending the California Special District Association's (CSDA's) annual conference. Vice President Scheafer commented that the Special District Risk Management Authority (SDRMA) will cover the costs for him to attend CSDA's conference since he is a member of their board. Mr. Carroll added that the costs for Secretary Schafer to attend CSDA's conference should be covered by CSDA since she is a member of their board. Ms. Tran inquired if SDRMA will be reimbursing the District or directly paying for his attendance and travel expenses. COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 065 2021 Vice President Scheafer stated that SDRMA will directly manage all expenses for him to attend CSDA's conference. Ms. Tran continued discussing the Board Membership Dues and Development account. She presented the costs associated with each "future item" that was removed from the proposed preliminary biennial budget for Fiscal Years 2021-22 and 2022-23. Vice President Scheafer inquired about how District staff would like to discuss Item 10 of the staff report. Mr. Carroll stated that Item 10 provides the Board with additional information about certain items that are not included in the District's proposed budget. He noted that the Board can revisit these items after the District conducts a Wastewater Rate Study and approves a wastewater rate increase. He clarified that the District is seeking feedback and direction on the proposed budget. Director Eckles inquired about deferred vacation days and compensated absences. Ms. Tran stated that the proposed costs for compensated absences is based on the amount of vacation days projected by the end of the current fiscal year. She noted that the COVID-19 pandemic decreased District staff members' interest in using their vacation hours. She added that the rate of vacation hours will increase over the next two years for some staff members. She stated that the liability for compensated absences will decrease as more staff members utilize their vacation hours. Director Eckles inquired about CR&R's CPI increase request. He noted that the Board must review that item before approving the budget. Mr. Carroll shared that District staff plans on presenting CR&R's request for a rate adjustment at the May Study Session. President Ooten inquired if District staff approves of CR&R's process for calculating CPI increases. COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 06, 2021 Mr. Carroll stated that the District approved of CR&R's methodology for rate adjustments during their contract negotiations. He confirmed that CR&R's rate adjustment requests occur every two years to coincide with the District's budget process. Director Eckles inquired about alternatives to BoardDocs, the District's meeting/agenda management software. Ms. Middenway stated that the District has analyzed other software and selected BoardDocs based on its efficiency, user-friendly features, and inexpensive cost compared to the alternatives. She noted that BoardDocs provides the most cost-effective services for the District's needs. Director Eckles inquired if their services have been consistent. Ms. Middenway confirmed that BoardDocs' services have been consistent. President Ooten inquired about the District transitioning its Code Enforcement Officer's position from part-time to full-time. Mr. Carroll confirmed that the Board has not discussed that item and stated that District staff will seek Board approval to alter that position. President Ooten inquired about the significant increases in the Professional Services account. Ms. Tran stated that the line items for that account are presented on page 4 of Attachment A. She noted that the budget for Solid Waste Consulting Services was reduced from $45,000 to $30,000. President Ooten inquired about the line item for public relations. Ms. Tran clarified that "public relations" refers to District's contract with Roger Faubel Public Affairs, Inc. and that "communication support services" refers to the District's contract with Tripepi Smith. President Ooten suggested that the District perform another Solid Waste Rate Study that considers the solid waste reserves. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 060 2021 Mr. Carroll recommended discussing a Solid Waste Rate Study after the Board provides a decision on CR&R's request for a CPI increase. Ms. Tran expressed agreement with Mr. Carroll's recommendation. She discussed the Solid Waste Rate Study that was performed two years ago. President Ooten stated that the District might experience a significant solid waste rate increase in the upcoming years. He discussed Mesa Water District's process of increasing their rates by S% every year to stabilize their reserves. He encouraged the District to perform a Solid Waste Rate Study to avoid increasing rates by 7-8% in the next few years. Mr. Carroll noted that the District's previous Solid Waste Rate Study was conducted prior to the COVID-19 pandemic. He stated that the pandemic has drastically affected the District's tonnages. President Ooten stated that the pandemic is almost over and that District staffs projections for disposal costs are based on the first three months of the pandemic. Ms. Tran reviewed Attachment F of the staff report. She noted that the actual total tonnage costs for Fiscal Year 2019-20 was $32,000 over the District's projection. Director Perry expressed support for President Ooten's suggestion regarding another Solid Waste Rate Study. President Ooten inquired if District staff has the resources to conduct a Solid Waste Rate Study. Mr. Carroll recommended hiring a consultant to perform a Solid Waste Rate Study to ensure validity and objectivity. Director Perry inquired about the increase in liability insurance. Ms. Tran confirmed that the budget for liability insurance increased from $121,000 to $147,000. COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 06, 2021 Vice President Scheafer shared that insurance rates were recently discussed at the SDRMA Board meeting. He noted that SDRMA will be receiving their insurance rates next week. He added that special districts will be notified of their rate increases by June 1, 2021. He stated that SDRMA has committed to raising the base liability rate by about 30-35%. He shared that insurance rates for vehicles will be decreasing. He noted that SDRMA is in the process of reclassifying how vehicles are used. Ms. Tran provided an analysis of how the total amount of liability insurance is distributed between the District's Solid Waste fund and Wastewater fund. Vice President Scheafer asked if the District's premium for liability insurance is $147,000. Ms. Tran shared that she received a letter stating that the District's premium will be about $196,000. Vice President Scheafer stated that he will work with SDRMA to receive the accurate amounts for insurance premiums. Director Eckles inquired about Liebert, Cassidy & Whitmore. Mr. Carroll stated that the District contracts with the law firm of Liebert, Cassidy & Whitmore to manage employment law issues. He added that the law firm helps the District revise their policies, issues advice on disciplinary and personnel issues, and provides trainings regarding employment law. Director Eckles inquired about line -item costs for staff development and conferences. Mr. Carroll stated that several conferences have been cut from the budget. He discussed the importance of professional development. He noted that District staff can remove a few more conferences from the budget, but he recommended against depleting the budget entirely. Director Eckles expressed support for Mr. Carroll's recommendations. He suggested reassessing the number of budgeted conferences and COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 06, 2021 memberships in the Professional Development account and Board Development account. He noted that, due to the COVID-19 pandemic, travel will be limited. Secretary Schafer shared that CSDA reimburses the District for her food and travel expenses. She added that CSDA Board members are required to participate on two additional committees. Director Eckles clarified that he is not referring to reimbursement items in the budget. President Ooten discussed the estimated budget increases in the Solid Waste fund for organic waste and recycling tonnage costs. Additionally, he discussed the City of Costa Mesa's rate of occupancy and its effect on multi- family properties. Vice President Scheafer expressed appreciation for Director Eckles' input. He discussed the budget for the Membership/Dues account and noted that the District is required to be a member of the State Water Resource Control Board and the Local Agency Formation Commission of Orange County (LAFCO), which consume over 50% of the budget for the account. President Ooten noted that his previous comments regarding organic waste and recycling tonnage are based on the estimates provided in Attachment 4 of the staff report. Mr. Carroll reviewed the feedback provided by the Board and noted that District staff will present an updated version of the budget at the May Board meeting. There was no further discussion. D. CLOSING ITEMS Procedural: 1. Oral Communications & Director Comments Vice President Scheafer shared that he has been unanimously re-elected to the SDRMA Board of Directors. He thanked the Board for their support. COSTA MESA SANITARY DISTRICT PAGE 9 MINUTES OF THE BOARD OF DIRECTORS SPECIAL MEETING HELD MAY 06, 2021 President Ooten shared that he attended an Orange County Sanitation District (OCSD) meeting yesterday and stated that they will be rehabilitating the Fairview trunk sewer. He noted that OCSD will provide signage to alert residents of the construction. Director Perry discussed the District's Organics Recycling Program article in CSDA's magazine. He suggested that the article be reprinted in the District's newsletter. Mr. Carroll shared that the article is also featured on CSDA's website. There was no further discussion. Procedural: 2. Adjourn President Ooten adjourned the meeting at 6:33 P.M. Arlene Schafer Secretary 4 Bob Ooten President