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Minutes - CAC - 2021-11-10 COSTA MESA SANITARY DISTRICT MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING NOVEMBER 10, 2021 NOTE: THIS HYBRID IN-PERSON AND TELECONFERENCED MEETING WAS CONDUCTED UTILIZING ELECTRONIC MEANS CONSISTENT WITH STATE OF CALIFORNIA ASSEMBLY BILL 361 (GOV. CODE 54953(B)(3)). CAC Members present Jeff Arbour, Daniel Baume, Rosemarie Chora, Dickie Fernández, Judy Gielow, Seth Greiner, Elodie Katz, Sue Lester, Phil Marsh CAC Members absent Cindy Brenneman, Mike Corcoran Board Members present Bob Ooten Staff present Scott Carroll (General Manager), Noelani Middenway (District Clerk & Public Information Officer), Alan Burns (District Counsel), Mark Esquer (District Engineer), Gina Terraneo (Management Analyst II) Others present Anthony Elowsky, Robert D. Niehaus, Inc. Ichiko Kido, Robert D. Niehaus, Inc. Meeting called to order at 6:00 P.M. A. OPENING ITEMS Procedural: 1. Call to Order COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ Citizens Advisory Committee (CAC) Chair Katz called the meeting to order at 6:00 P.M. Procedural: 2. Roll Call District Clerk & Public Information Officer, Noelani Middenway, conducted roll call. She noted that CAC Members Arbour, Baume, Chora, Fernández, Gielow, Greiner, Katz, Lester, and Marsh were present while CAC Members Corcoran and Brenneman were not present. Procedural: 3. Public Comments - Speakers will be limited to three minutes. The three minutes per speaker time allotted may be extended for good cause by a majority vote of the committee. CAC Chair Katz opened public comments. Hearing none, she closed public comments. B. ITEMS Introduction: 1. Introduction and Welcome Rosemarie Chora to the Citizens Advisory Committee CAC Chair Katz welcomed Rosemarie Chora to the CAC. There was no further discussion. Action: 2. Provide Direction to the Board of Directors Regarding 2021 Wastewater Rate Study Recommendation: Review and Comment on the 2021 Wastewater Rate Study Results. General Manager, Scott Carroll, introduced the item. He stated that wastewater rate studies are periodically performed to determine if the District is generating enough revenue for its expenditures. He shared that the last wastewater rate study was performed about ten years ago and that the last wastewater rate adjustment was in 2017. He added that, in the last five years, District expenditures have been exceeding its revenues, and the District has been using reserve funds to balance its wastewater budget for COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ Fiscal Years 2021-22 and 2022-23. He discussed the bidding process for the 2021 Wastewater Rate Study and noted that the District awarded the contract to Robert D. Niehaus, Inc. (RDN). He stated that RDN presented the 2021 Wastewater Rate Study to the Board of Directors at yesterday’s Study Session. He shared that the Board is interested in knowing how the proposed rates correlate with inflation and the total percentage of wastewater rate increase in comparison with other Orange County agencies. He introduced RDN’s Project Manager, Ichiko Kido. Ms. Kido presented the findings of the 2021 Wastewater Rate Study. She discussed the key assumptions, including account growth projections of 160 to 200 new accounts per year, the City of Costa Mesa’s housing need of 11,760 additional homes by 2029, and large increases in accessory dwelling units (ADUs) in the coming years due to Assembly Bill (AB) 68. She noted that the study attempts to establish an ADU sewer charge based on growth projections. She discussed escalation factors, such as overall inflation, capital improvement projects (CPIs), utilities, equipment, personnel, fuels and automobiles, construction, and insurance expenses. She displayed the current rates, which distinguish between residential (single family and multi-family) and non-residential (commercial and industrial) properties. Ms. Kido compared revenue and expenditure projections from Fiscal Year 2020-21 to Fiscal Year 2026-27. She discussed key operating and capital outlay expenses, such as two additional Wastewater Maintenance Workers, general engineering support and resources, flow meter rental and cloud access, IT security maintenance and monitoring, a combination cleaning unit, a pickup truck, and a forklift. She reviewed the District’s capital improvement projects (CIPs) for the next five to ten years. She explained revenue requirements and the proposed revenue adjustments which require a 9.9% increase to balance the Wastewater budget. She noted that, if the District does not implement a rate adjustment, then their reserves will be depleted by Fiscal Year 2026-27. She added that if a 9.9% rate increase is implemented, then the District will have about $10 million dollars in reserves, which is a healthy reserve level for the District’s size. She discussed the purpose of the District’s operating reserve fund. She reviewed the District’s 2012 Wastewater Rate Study and the flow estimates used for that study. She noted that, according to the District’s 2020 Master Plan, flow estimates have reduced from 11.1 million gallons per day (gpd) to 8.6 million COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ gpd. She discussed the study’s analysis of household size gpd and stated that the weighted average is 2.95 per single family home, 2.52 per multi-family home, 2.39 per trailer home, and 1.25 per ADU. She reviewed the study’s cost of service analysis, which determined the percentage of revenue requirements for which each customer class is responsible. She presented the five-year wastewater rate schedule and noted that each rate is set at its maximum value. She explained current and proposed median billing units for commercial and industrial properties. She discussed the impact of rapid growth projections on rate increases. She presented a rate comparison with other agencies and stated that the District will be maintaining one of the lowest rate structures with the proposed rate increases. CAC Member Chora inquired about the District’s previous wastewater study. Mr. Carroll stated that the last wastewater rate study was performed in 2012. Discussion followed regarding the timelines of wastewater rate studies. CAC Vice Chair Lester asked if the District can decrease the amounts of the proposed rates, and she inquired about the Proposition 218 hearing. Mr. Carroll clarified that the proposed rates are based on the District’s projected expenditures for the next five years. He noted that if the CAC finds the proposed rates to be too high, then they can recommend lowering the amounts of the rate increases. CAC Vice Chair Lester commented that the 2021 Wastewater Rate Study provided an overwhelming amount of information. She inquired about historical data on other agencies’ wastewater rate increases. Mr. Carroll stated that historical data was included in RDN’s presentation. Ms. Kido shared the graphic indicating the percentage increases in rates of other local agencies from Fiscal Years 2016-2017 to 2021-2022. Anthony Elowsky of RDN explained the data and noted that, over the last four years, the District has only had about 4% of rate increases compared to other agencies. He added that most other agencies have performed rate COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ studies within the last four years and that some of the agencies are currently in the process of a scheduled rate increase. He shared that the City of San Juan Capistrano is experiencing a rate increase of about 230%. Mr. Carroll shared that the City of San Juan Capistrano’s water and wastewater utilities have been annexed to the Santa Margarita Water District. CAC Vice Chair Lester thanked RDN for the information. Discussion followed regarding other agencies’ rate increases. CAC Vice Chair Lester stated that the graphic provides a frame of reference for the District’s proposed rate increases. Mr. Carroll stated that, although the percentage increase may appear high, the dollar value is still comparatively low. CAC Vice Chair Lester suggested for the graphic to be shared with the public on the District’s website. Mr. Carroll noted that it will be included in the agenda for the Board’s Special Meeting scheduled for November 16, 2021. CAC Member Greiner inquired about a different chart comparison regarding regional rates. Mr. Carroll recommended reading other agencies’ wastewater rate studies to get a better understanding of their rate increases. He noted that most agencies with higher rates are not members of the Orange County Sanitation District (OCSD). Ms. Kido noted that some of the agencies with higher rates provide collection and treatment services. She added that each agency has their own justification for their rates. She stated that the District has one of the lowest rates that she has ever analyzed. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ CAC Member Greiner stated that it would be helpful to identify the costs affecting other agencies’ rates. He suggested performing a case study on another agency. CAC Member Fernández stated that most other agencies are trying to rectify previous spending habits. He noted that most agencies included in the graph are smaller agencies with smaller pipes that are more susceptible to infiltration. He added that capital improvement projects can largely affect rate adjustments. He discussed the District’s most recent historical expenditures which required the use of reserves. He stated that the District’s budget is insufficient and shows the need for a rate adjustment. He expressed recognition for RDN’s study and presentation. He commented that, as a resident, he is glad that the District’s rates are not as high as the City of Newport Beach’s rates. CAC Member Greiner expressed recognition for RDN’s study and recommended adding more detailed information to the graph reflecting regional rates. CAC Member Fernández stated that some agencies may be experiencing intangible costs because of the COVID-19 pandemic and supply chain issues. He noted that there have been significant increases in construction, labor, and insurance costs and development rates. CAC Member Gielow inquired about evaporation, such as water that dries before reaching the sewer system. Mr. Elowsky stated that the overuse of water is a concern for Mesa Water District. He noted that evaporated water is not considered as a cost in the study. CAC Member Gielow stated that single family homes are labeled as a group even though there are different household sizes. She shared that most of the people in her neighborhood are widows and widowers. She added that homes with single residents are adversely affected by these costs. COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ CAC Vice Chair Lester stated that single residents subsidize homes with more residents. She discussed the effects of population and household sizes on rates. Ms. Kido stated that it is possible to include variable components in the rates. She shared that her primary goal was to develop rates that will recover revenue and be equitable among customer classes. CAC Member Chora stated that it is difficult to understand the information based on how the graphs are labeled. She added that the graph does not clearly state how certain rates are applied, nor does it compare agencies on a similar basis. She noted that the District must ensure that there are sufficient rates available to comply with new regulations and that, even if the District has a low rate, it may receive fines and fees if it is not compliant. She stated that her biggest concern is significant increases in rates for multi- family properties and trailers, which are predominantly occupied by low- income and senior residents. She inquired about the differences between the 2012 and 2021 rate studies. Ms. Kido stated that, in 2012, the District estimated per person usage to be 40 gallons per day for multi-family properties and trailers. She explained that RDN found it hard to justify this estimation. She shared that their resources showed that multi-family properties and trailer usage is the same as all other customers. She noted that RDN would have to argue that multi-family properties and trailers use less than the average person to offer a lower rate. CAC Member Chora asked if the age of the property and fixture flow rates have been considered for each customer class. Ms. Kido stated that newer homes have more efficient appliances and that older homes may use older appliances that take more inflow. She suggested adding more information to the presentation that explains the difference in rates. CAC Member Chora expressed support for Ms. Kido’s suggestion. COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ Mr. Carroll stated that most of the agencies listed in the rate comparison do not have a rate for treatment services. He discussed the differences between agencies that utilize OCSD and agencies located in South Orange County. CAC Member Baume inquired about the projected new accounts that have been factored into the proposed rates. Ms. Kido stated that the District is projected to have 166-172 new accounts annually based on historical trends. Discussion followed regarding account growth and tonight’s meeting agenda. Mr. Carroll inquired about a recommendation from the CAC to the Board. CAC Chair Katz asked if a Proposition 218 hearing meeting requires townhall meetings. Mr. Carroll stated that there will be two more meetings with the Board and a public hearing. He added that District customers will receive a mailed notice regarding the proposed rates and their right to protest them. He noted that if the District does not receive a majority protest, then the rates will go into effect in July 2022. Discussion followed regarding the upcoming Board meetings. CAC Chair Katz requested for comparison data from other agencies to be included in the report. Motion: To recommend that the Board of Directors proceed with the proposed rate increases through the next five years and that Robert D. Niehaus, Inc. provides a rate comparison with data from other agencies. Motion by Sue Lester, second by Phil Marsh. Final Resolution: Motion carries 9-0-0-2 Ayes: Jeff Arbour, Daniel Baume, Rosemarie Chora, Dickie Fernández, Judy Gielow, Seth Greiner, Elodie Katz, Sue Lester, Phil Marsh No: None Abstain: None COSTA MESA SANITARY DISTRICT PAGE 9 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ Not Present: Cindy Brenneman, Mike Corcoran Action: 3. Approve the Citizens Advisory Committee Meeting Minutes of September 8, 2021 Recommendation: That the Citizens Advisory Committee approves the meeting minutes as presented. CAC Chair Katz presented the CAC meeting minutes of September 8, 2021. Motion: To approve the Citizens Advisory Committee Meeting Minutes of September 8, 2021 as presented. Motion by Phil Marsh, second by Judith Gielow. Final Resolution: Motion carries 8-0-1-2 Ayes: Jeff Arbour, Daniel Baume, Rosemarie Chora, Dickie Fernández, Judy Gielow, Seth Greiner, Sue Lester, Phil Marsh No: None Abstain: Elodie Katz Not Present: Cindy Brenneman, Mike Corcoran There was no further discussion. Discussion: 4. Review and Comment on the September 2021 Cart-to-Cart Outreach Results Recommendation: That the Citizens Advisory Committee receive and file this report. The CAC agreed to move this item to the agenda for their next meeting. There was no further discussion. Discussion: 5. Review and Comment on Proposed Senate Bill 1383 – Mandatory Organic Waste Disposal Reduction Recommendation: That the Citizens Advisory Committee review and comment on the proposed ordinance and recommend the Board of Directors consider adopting the ordinance. Mr. Carroll provided report details and discussed Senate Bill (SB) 1383. He stated that the Board reviewed the draft ordinance yesterday. He noted that COSTA MESA SANITARY DISTRICT PAGE 10 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ the public comments provided by District resident, Jim Mosher, were shared with the Board and the CAC. He added that the District is seeking a recommendation and feedback from the CAC to the Board. CAC Member Fernández stated that some residential properties do not have enough storage space for additional carts. He shared that a City of Costa Mesa meeting in October discussed a variance request for residences that cannot fit more trash carts. He asked if the District has discussed this concern. Mr. Carroll stated that the District has discussed that topic, but every residential property must have an Organics Recycling Cart. He shared that CalRecycle has stated that no properties are exempt from this requirement. He noted that the District and the City will be working together to make space for additional trash carts. CAC Vice Chair Lester asked if the City has addressed multi-family properties that are not serviced by the District. Mr. Carroll stated that the City is aware of the constraints with multi-family properties. He shared that they have also adopted an SB 1383 ordinance. He added that the City has to work with the multi-family properties to ensure that they have enough space for organic waste dumpsters. CAC Vice Chair Lester inquired about City and District code enforcement protocols. Mr. Carroll stated that the District has two years until enforcement is required. He added that the District will be focusing on educating the public before enacting enforcement and will be collaborating with the Cities of Newport Beach and Costa Mesa to determine which agency will be leading enforcement. He noted that the District has the right to issue citations, but that they need to discuss their protocols in further detail. CAC Vice Chair Lester stated that the rules regarding enforcement were confusing in the draft ordinance. She expressed support for Mr. Mosher’s comments and stated that a fine of $250 dollars is excessive for the first violation. COSTA MESA SANITARY DISTRICT PAGE 11 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ Mr. Carroll stated that the draft ordinance is consistent with the District’s fines for trash carts in public view. He noted that the fine for a first violation is $75 dollars. CAC Member Chora asked how the District has ensured that the draft ordinance is compliant. Mr. Carroll stated that the District worked with its solid waste consultant, Mike Balliet, who is also the solid waste consultant for the City. He shared that Mr. Balliet drafted the ordinance according to the State’s model. CAC Member Gielow stated that the draft ordinance says that residents will be fined for violations. Discussion followed regarding violations and fines. CAC Chair Katz inquired about the next steps for this ordinance. Mr. Carroll stated that District Counsel, Alan Burns, and CR&R are reviewing the ordinance. He announced that it will be presented to the Board at the November Board meeting. Discussion followed regarding enforcement and trash cart inspections. CAC Member Gielow inquired about warning notices on trash carts. Mr. Carroll discussed the District’s Cart-to-Cart outreach program. Motion: To recommend that the Board of Directors consider adopting the proposed ordinance. Motion by Jeff Arbour, second by Judith Gielow. Final Resolution: Motion carries 9-0-0-2 Ayes: Jeff Arbour, Daniel Baume, Rosemarie Chora, Dickie Fernández, Judy Gielow, Seth Greiner, Elodie Katz, Sue Lester, Phil Marsh No: None Abstain: None Not Present: Cindy Brenneman, Mike Corcoran COSTA MESA SANITARY DISTRICT PAGE 12 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _______________________________________________________________ ______ CAC Chair Katz asked if there will be another opportunity to review the ordinance after legal review. Mr. Carroll stated that the ordinance will be reviewed before being presented at the November Board meeting. Mr. Burns stated that the definitions in the ordinance are listed verbatim from the State regulations. There was no further discussion. C. CLOSING ITEMS Procedural: 1. Committee Member Comments CAC Vice Chair Lester asked why the CAC has not reviewed the CR&R benchmark progress report. Mr. Carroll stated that the report is available on the website. CAC Vice Chair Lester stated that the report focuses on reducing customer complaints, but does not report the actual number of missed pickups that are being submitted by customers. She shared that she submitted missed trash pickup complaints for nine streets, which should equate to hundreds of missed pickups. She proposed that customers may get tired of complaining if missed trash pickups keep occurring. She recommended ensuring that these complaints are being recorded correctly so that the Board considers this issue when determining if CR&R should receive a Consumer Price Index (CPI) increase. Mr. Carroll stated that he will discuss this concern with District staff. There was no further discussion. Procedural: 2. Board/Staff Comments COSTA MESA SANITARY DISTRICT PAGE 13 MINUTES OF THE CITIZENS ADVISORY COMMITTEE MEETING HELD NOVEMBER 10, 2021 _____________________________________________________________________ Ms. Middenway reminded the CAC about the District’s ongoing Household Hazardous Waste (HHW) campaign. She encouraged the CAC members to share information about the District’s HHW program. There was no discussion. Procedural: 3. Adjournment CAC Chair Katz adjourned the meeting at 7:34 P.M and stated that the next CAC meeting is scheduled for January 12, 2022. ____________________________ Elodie Katz Citizens Advisory Committee Chair