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Minutes - Board - 2026-01-26-� COSTA MESA SANITARY DISTRICT a COSTA MESA SANITARY DISTRICT MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING January 26, 2026 Members present: Michael Scheafer, President Robert Ooten, Vice President Arth u r Perry, Secretary Nicole Wiltshire, Director Shayanne Wright, Director Staff present: Scott Carroll, General Manager Noelan i Middenway, District Clerk/Public Information Officer Gina Terraneo, Senior ManagementAnalyst Marissa Pereyda, Solid Waste Manager Mark Esquer, District Engineer Kaitlin Tran, Finance Manager Dyana Wick, Administrative Services Manager Alan Bums, District Counsel Others present: Sue Lester, District resident and Citizens Advisory Committee (CAC) Chair Rosemarie Chora, District resident and CAC Member Cindy Brenneman, District resident and CAC Member Flo Martin, District resident Craig Holmes, District residentand CAC Member Erik Roberts, District resident and CAC Member Al Morelli, District resident A. OPENING ITEMS 1. Call to Order President Scheafer called the meeting to order at 4:30 p.m. He noted that Director Wiltshire is ill and requested to participate in the meeting remotely, and he noted that 1of15 Board approval is required. Moved By Secretary Arth u r Perry Seconded By Director Shayanne Wright Motion: To allow Director Wiltshire to participate in today's meeting remotely, as a result of her illness. Ayes: (5): President Michael Scheafer, Vice President Robert Ooten, Secretary Arthur Perry, Director Nicole Wiltshire, and Director Shayanne Wright Carried (5 to 0) 2. Pledge of Allegiance President Scheafer led the Pledge of Allegiance. 3. Invocation Vice President Ooten led the Invocation. 4. Roll Call District Clerk and Public Information Officer, Noelani Middenway, conducted roll call and noted that all Board Members were present with Director Wiltshire participating remotely. 5. Announcement of Late Communications President Scheafer noted that tonight's meeting would be adjourned in memory of Paul Mesmer. District Counsel, Alan Burns, noted that Director Wiltshire's remote participation is allowable per Government Code Section 54953.8.3 subsection C for illness. Ms. Middenway noted that Director Wright submitted an executive memo, which was made available to the Board and the public. President Scheafer noted that he distributed a worksheet to the Board for the upcoming General Manager's evaluation. 6. Ceremonial Matters and Presentations None. B. PUBLIC COMMENTS 2 of 15 President Scheafer opened public comments. Sue Lester, District residentand ratepayer, noted that she is the CAC Chair, however, her comments tonight do not represent the CAC. She commented regarding the compensability of meetings between Board Members and the General Manager, other staff, and other Board Members. She commented that she reviewed the Operations Code and the related Ordinance No. 55 and requested the most up-to-date copy. Ms. Lester noted that after reviewing Board compensation forms dating back to July of 2021, she found inconsistency in the compensability of certain meeting types and added up the instances of potentially ineligible meetings. She commented that she does not believe the meetings were submitted for payment with malice, but recommended that the forms be reviewed for instances of overpayment. Lastly, she asked that the Board take action to recoup funds if there were overpayments for ineligible meetings. Seeing no other members of the public wishing to speak, President Scheafer closed public comments. C. CONSENT CALENDAR 1. Approve the Board of Directors Study Session Minutes of December 9, 2025 The Board of Directors approved the meeting minutes as presented. President Scheafer pulled item C4 for discussion. Moved By Secretary Arthur Perry Seconded By Vice President Robert Ooten Motion: That the Board of Directors approve the Consent Calendar as presented, except for Item C4. Ayes: (5): President Michael Scheafer, Vice President Robert Ooten, Secretary Arthur Perry, Director Nicole Wiltshire, and Director Shayanne Wright Carried (5 to 0) 2. Approve the Board of Directors Regular Meeting Minutes of December 15, 2025 The Board of Directors approved the meeting minutes as presented. 3. Adopt Warrant Resolution No. CMSD 2026-07 Approving District Warrant Registers 3 of 15 The Board of Directors adopted Warrant Resolution No. CMSD 2026-07 approving District warrants for the month of December in the amount of $1,149,299.54. 4. Consider Approval of the Board of Directors Compensation and Reimbursement of Expenses The Board of Directors approved the compensation and reimbursement of expenses as presented. Moved By Director Shayanne Wright Seconded By Secretary Arth u r Perry Motion: That the Board of Directors approve the compensation and reimbursement of expenses as presented. Ayes: (5): President Michael Scheafer, Vice President Robert Ooten, Secretary Arthur Perry, Director Nicole Wiltshire, and Director Shayanne Wright Carried (5 to 0) President Scheafer opened public comments. Ms. Lester asked that the Board hold off on approving this item until after they discuss the compensability of meeting types. Vice President Ooten requested copies of the materials referenced by Ms. Lester and commented that overpayment is a serious accusation. Director Wright commented that she feels comfortable approving the compensation forms because she believes they are eligible for payment under the existing ordinance. 5. Approve Payroll Transparency Disclosure for December 2025 The Board of Directors approved and fried the report. 6. Approve the Occupancy Count of 23,269 and Direct Staff to Prepare a Warrant to CRR Environmental Services for $409,069.02 in the January 2026 Warrant Register for December 2025 Solid Waste Collection Services The Board of Directors: 1. Approved the Occupancy Count of 23,269; and 2. Directed staff to prepare a warrant to CR&R Environmental Services for $409,069.02 in the January 2026 warrant register for December 2025 solid waste collection services. 7. Approve the Preparation of a Warrant to CR Transfer for $204,056.10 and to CR&R, Inc. for $8,395.40 in the January 2026 Warrant Register for 4 of 15 December 2025 Recycling and Disposal Services The Board of Directors approved the preparation of a warrant to CR Transfer for $204,056.10 and to CR&R, Inc. for $8,395.40 in the January 2026 warrant register for December 2025 recycling and disposal services. 8. Receive and File December 2025 Tonnage and Diversion Report The Board of Directors received and filed this report. 9. Receive and File December 2025 Contracts Signed by the General Manager The Board of Directors received and filed this report. 10411111 :ZII --IN lot `1 41-11�TrC �iL•� E. GENERAL MANAGER'S REPORTS 1. Follow -Up Information on Board Member Health Benefits The Board of Directors received this follow-up information and provided direction to staff regarding whether and how to continue evaluating the potential reinstatement of CaIPERS health benefits for Board members, recognizing that the information remains under legal review. Admi n istrative Services Man ager, Dyan a Wick, sh ared th at at th a December Study Session, the Board reviewed the fiscal implications of reinstating California Public Employees' Retirement System (CalPERS)administered Board health benefits and had several questions about policy compliance and administrative viability. She noted that this report is informational and has not yet been reviewed by the District's labor and employment counsel. Ms. Wick addressed each of the following discussion points from the prior meeting: the current structure of the Section 125 Cafeteria Plan, CalPERS premiums and federal impacts, Board compensation and temporary shortfalls, contributions outside of CalPERS, and health accounts. She shared cost projections for Board participation in CalPERS administered benefits. Lastly, she requested direction from the Board as to whether they want staff to provide any further information. President Scheafer inquired about the definition of "employee" as it relates to this discussion. Discussion followed regarding how employees are defined in various contexts. President Scheafer noted thatthere was a previous Board Member who received health benefits, butthey paid the entire premium. He inquired aboutwhetherthe Board is eligible for a health savings account (HSA). 5 of 15 Ms. Wick requested to wait forth e District's labor and employment counsel to provide the answer to that question. Director Wright commented that components of the prior staff report may have been helpful to provide to the public for additional context. She noted that every other elected body in the city of Costa Mesa provides theirelected officials with benefits and 11 of the 13 special districts that staff looked at also provide their boards with benefits. Director Wright commented that her proposed benefit range of $680-$850 is the minimum amountto coverthe lowest plan forone person. Regarding the Section 125 Cafeteria Plan, she explained that she thought the Board would be treated as a separate entity from the employee plan. She discussed the need to provide clear administrative direction to staff. Discussion followed regarding whether other agencies treat the Board as a separate entity within their cafeteria plans. Director Wright suggested creating a separate cafeteria plan for the Board. She acknowledged that CalPERS premiums can fluctuate, but commented that there are no concerns specific to the Board's participation. Regarding temporary shortfalls, she commented that this can be addressed in the policy language and she asked that staff provide a suggestion on how to best address this so that it does not delay approval of this item. Director Wright discussed the benefits of a health reimbursement option and requested that staff continue looking into the steps required to create a Health Retirement Account (HRA) if creating an HSA creates issues. She asked if the HRA and HSA can be phased alongside the establishment of CalPERS health benefits, or if can be implemented later. She proposed implementing CalPERS benefits as a first step. Lastly, Director Wright proposed implementing the $680-$850 health benefit range and welcomed feedback from the rest of the Board, adding that this proposal is consistent with regional norms, legal, fiscally responsible, appropriate, and deserved. Discussion followed regarding the projection that premiums increase about 2.54% annually. President Scheafer asked if CalPERS can tell us whether the Board have a separate cafeteria plan from employees. Ms. Wick noted that the Board would need to approve a resolution confirming reinstatement of Board health benefits before CalPERS would administer a plan. Mr. Burns noted that the District could submit public records requests to find out if other agencies have a separate plan for their Boards. Director Wiltshire commented that she supports making this transparent, fair, and in alignmentwith what other agencies are doing. She indicated support for making the role attractive to working people. 6 of 15 Vice President Ooten commented that this discussion runs parallel with the idea of keeping employee benefits attractive to potential applicants and competitive with other agencies. President Scheafer verified that Ms. Wick's recommendation is to get a legal review from the District's labor and employment counsel prior to moving forward. Ms. Wick added that staff is seeking direction as to what the Board wants staff to continue researching. Mr. Carroll also sought direction regarding the benefit amount that the Board wishes to pu rsu e. Director Wright commented that she is saddened that this topic has created hostility and assumed malicious intent. She noted that she ran for the Mesa Water District Board on the idea of fiscal responsibility and discussed their benefits policies as a comparison with her proposal. She praised her fellow Board members for their restraint and commitment to good governance. President Scheafer opened public comments. Rosemarie Chora, District resident and CAC Member, commented that she does not support this proposal and does not believe it is fiscally responsible. She explained that employees are often trained in their industry, compete for their positions against other applicants, and typically work a 40-hourweek in order to receive benefits. Lastly, she commented that she does not agree that Board benefits are justified because other agencies have them, and she noted that the District is small and has a limited scope of work in comparison with other agencies. Ms. Lester indicated agreement with Director Wright's comment about providing the prior staff report for context and agreement with Ms. Chora's comments. She commented that it is irresponsible to compare the District to other agencies due to their varying sizes and inquired about how the cost of the benefits would be covered. She noted that the City provides solid waste services to some wastewater customers, which would make it unfair for rates paid by wastewater customers to go toward Board benefits. Ms. Lester noted that advanced payment of medical expenses does not occur in the private sector and noted that solid waste disposal rates are increasing substantially. Ms. Lester commented that the current Board compensation rate is fair and recommended not approving anything without legal review. Lastly, she commented that this is bad timing and an unnecessary expense. Erik Roberts, District resident and CAC Member, commented that this is a topic worth discussing but should not be decided tonight. He asked whetherthe cost per person served is similar between the District and the other agencies used for comparison. He 7 of 15 discussed the definition of an employee, the use of compensation to attract talent, and the idea that benefits might allow lower income people an opportunity to run for office. Cindy Brenneman, District resident and CAC Member, indicated opposition forth proposal and commented that it is bad timing due to all costs going up. She noted her agreement with Ms. Chora and Ms. Lester and commented that the Board role does not need to be made more attractive because it is fairly compensated as -is. Lastly, she commented that the discussion has become adversarial because what is being asked for is unreasonable. President Scheafer closed public comments. Director Wright directed staff to find out if it is viable for the Board to be treated as a separate entity with regard to the Section 125 Cafeteria Plan, or whether it is possible for the Board to be defined as employees in that context. She requested that staff provide a final draft policy outlining the administrative process for payments of Board compensation and health premiums to avoid shortfalls. Lastly, she requested that staff develop a policy on HRAs that is separate from the policy on CalPERS health benefits. President Scheafer indicated agreement that he would like to see two separate policies. Discussion followed regarding which health benefit amount staff should proceed with. President Scheafer commented that it can be adjusted later, so staff can proceed with $680. Mr. Carroll commented that staff would prefer to know the Board's preferred amount to avoid having to recalculate projections later. Director Wright proposed proceeding with $850 so that the highest possible amount is illustrated in the next report. President Scheafer requested that staff obtain a definition of " employee" from CalPERS. He directed staff to bring this item back to the soonest possible meeting once the requested information is obtained, whether it is a Study Session or Regular Meeting. 2. Receive and File FY Strategic Plan Mid -Year Progress Report The Board of Directors received and filed this report. Mr. Carroll presented the report and noted that this will be presented twice per year instead of quarterly. Vice President Ooten clarified that he wanted to see the strategic goals from each year listed along with a few sentences about the progress toward each goal if it has not yet been met. 8 of 15 3. Receive and File General Manager's 2025 Performance Goals and Consider Approving his 2026 Performance Goals The Board of Directors: 1. Received and filed the General Manager's 2025 Performance Goals; and 2. Approved the General Manager's 2026 Performance Goals; and 3. Authorized the President to conduct a performance review of the General Manager, in collaboration with the Board of Directors, and to negotiate any compensation adjustment, if applicable; and 4. Report back to the Board on any tentatively agreed -upon adjustment, if warranted, for Board consideration and approval. Mr. Carroll presented his performance goals and noted that his progress toward each 2025 goal was not included in the staff report, but it is printed and made available to the Board and the public. He noted that his 2026 goals were shared with President Scheafer and he agreed to bring them to the rest of the Board for consideration. Vice President Ooten suggested that Mr. Carroll review Orange County Sanitation District's (OC San's) General Manager's work plan. President Scheafer requested approval of the recommended action. Moved By Secretary Arth u r Perry Seconded By Director Shayanne Wright Motion: That the Board of Directors: 1. Receive and file the General Manager's 2025 Performance Goals; and 2. Approve the General Manager's 2026 Performance Goals; and 3. Authorize the Presidentto conducta performance review of the General Manager, in collaboration with the Board of Directors, and to negotiate any compensation adjustment, if applicable; and 4. Report back to the Board on anytentatively agreed -upon adjustment, if warranted, for Board consideration and approval. Ayes: (5): President Michael Scheafer, Vice President Robert Ooten, Secretary Arthur Perry, Director Nicole Wiltshire, and Director Shayanne Wright Mr. Burns clarified the process for completing the evaluation form. President Scheafer adjourned to a break at 5:42 p.m. F. ENGINEER'S REPORTS Carried (5 to 0) 9 of 15 1. Receive and File the District Engineer's Monthly Report and Capital Improvement Projects Status The Board of Directors received and filed the report. President Scheafer reconvened the meeting at 5:50 p.m. District Engineer, Mark Esquer, presented Capital Improvement Project (CIP) updates. He discussed upcoming items th at wi ll be presented to the Board at th a next Study Session, including the top 5 or 6 important CIP projects and the online public portal for permitting. G. TREASURER'S REPORTS H. ATTORNEY'S REPORTS 1. Consider Adopting Administrative Regulation No. 140 Accessory Dwelling Unit (ADU) The Board of Directors adopted Administrative Regulation No. 140 Accessory Dwelling Unit (ADU). Mr. Burns presented the proposed Administrative Regulation No. 140. He shared the definition of an ADU and described the limitations on local agencies' ability to regulate them. He noted that the District's primary concerns are the limited ability to charge for capacity fees, wastewater connections through a shared or separate lateral, and ability to charge for wastewater and trash collection. He noted that the policy will be a living document and that it has been reviewed and recommended by the CAC. Discussion followed regarding how ADUs can connect to the sewer main and how fixture fees are charged. Director Wright commented that there is mixed messaging regarding whether ADUs can be sold separately from a primary residence and recommended that the District expressly state the it does not have jurisdiction over this. Moved By Secretary Arth u r Perry Seconded By Vice President Robert Ooten Motion: That the Board of Directors adopt Administrative Regulation No. 140 Accessory Dwel I i n g U n it (AD U ). 10 of 15 Ayes: (5): President Michael Scheafer, Vice President Robert Ooten, Secretary Arthur Perry, Director Nicole Wiltshire, and Director Shayanne Wright Carried (5 to 0) 2. Consider Amending the Director Compensation Provisions of CMSD's Operations Code The Board of Directors considered the following: 1. Clarify 3.01.030 further and adopt revised request for compensation forms that further describe the justification for the per diem 2. Direct that meetings with the General Manager qualifies for the per diem 3. Specify that remote meeting attendance qualifies 4. Brief reports be required at Board meetings on non -specified meetings 5. Direct staff to prepare a revised ordinance for adoption and revised forms for implementation. Mr. Burns presented the current per diem policy and shared the list of current compensable meetings within the Operations Code. He noted that staff is recommending adding meetings between Board Members and the General Manager. He discussed the gray area present in the language of subsections 28 and 29 and shared that staff is suggesting revising theform that is used to justifythe compensability of meetings not included in the eligible list and requiring Members to report on such meetings during the subsequent Board Meeting. Lastly, he recommended adding language to clarify whether or not remote meetings are compensable and reviewed staff's recommendations. President Scheafer noted that some of the listed eligible meeting types are broad, including City of Costa Mesa and County of Orange meetings. He suggested specifying which meetings are compensable, since not all City and County meetings related to the District. Vice President Ooten requested clarification on whetherthe Board can approve whether meetings are compensable under subsection 28. He commented that the District's Eco Expo event should be compensable and he requested that staff create a list of compensable events. Lastly, he indicated support for adding meetings with the General Manager to the list. President Scheafer indicated agreement with Vice President Ooten and discussed the impact of the recommendations on the Local Meetings portion of future Board Meetings. Mr. Burns noted thatthe Local Meetings section can remain, butthe Board would report on any meetings not explicitly listed as compensable in the policy using eitherthe form or a verbal report during the meeting. He noted thatthe verbal report would need to 11of15 occur before the compensation payment is approved. President Scheafer suggested adding the Southern California Waste Management Forum to the list of compensable meetings. He asked if the required Ethics and Sexual Harassment Prevention trainings are compensable if they are attended virtually. Mr. Burns noted that the Board would need to fill out the per diem form and include a justification. Director Wright commented that she brings the most value to participating in one-on- one meetings as opposed to attending broader meetings in an observational capacity. She presented a memo to the Board expressing how her time would be most effectively spent and indicated support for the compensability of events for educational events those forwhich the District spend funds. Director Wright indicated support for the compensability of collaborative one-on-one meetings with District staff, vendors, other Board Members, CAC Members, and other elected officials in order to get a better return on investment for her time. She noted that she does not support additional reporting and suggested either adding more specific meetings to the list or making the broader meetings more specific. She noted that she has no intention to increase the Board's compensation, but noted that the Board can do so by law. President Scheafer noted that District hosted events should be included on the list. He expressed concern about including meetings with staff. Director Wright suggested including language that limits the type of meeting with staff, but noted that she does not support putting a time restriction on meetings because length does not necessarily equate to effectiveness. President Scheafer indicated supportfor meeting with department heads, but expressed concern about meeting directly with staff and the optics of compensable meetings between two Board Members. Director Wright commented that she is fine with excluding meetings between Members, but noted that meetings with staff are more important to her. Secretary Perry indicated disagreement about making meetings with staff compensable, but supported the idea of adding District hosted and funded events to the list. Vice President Ooten indicated disagreement with making meetings with staff compensable, but expressed appreciation for Director Wright's enthusiasm and need to understand the policy. Director Wiltshire echoed Director Wright's comments and commented that it is not necessary to revise the form if the list itself is made more specific and comprehensive. 12 of 15 She indicated support for making meetings with department heads compensable and noted that it would be helpful to have staff walk her through complex documents. Discussion followed regarding the timeline for staff to revise the policy. Director Wright recapped the Board's direction to add District hosted events and meetings with department heads to the list, and requested to know under which subsection meetings with City Council Members were approved in the past and which City meetings are compensable. President Scheafer clarified that all meetings with department heads must first be approved by the General Manager rather than going directly to staff. Secretary Perry clarified that meetings with City Council Members must be related to District business in order to be compensable. Additional discussion followed regarding conferences thatshe Board is eligible to attend. Vice President Ooten requested a list of all the compensable meetings discussed tonight. President Scheafer opened public comments. Flo Martin, District resident, commented that she has attended many meetings, events, and conferences on her own dime as an educator and community volunteer without seeking compensation. She added that City Council Members do not get reimbursed for being liaisons. Ms. Lester commented that the reason to be specific about meeting compensability is to keep the Board accountable for doing the public's business in public. She added that she thinks the Board should be required to attend meetings in person if they are available in person, since there are rules in place limiting when they can attend Board Meetings virtually. She discussed the value of providing notes to justify how meeting attendance qualifies compensability and she commented that meeting directly with staff is overstepping the General Manager's role of managing staff. Ms. Lester indicated support for fu rth er specifying compensable City and County meetings. She commented that events should not be compensable and indicated supportfor the revised per diem justification form. Ms. Brenneman indicated agreementwith Ms. Lester. She commented thatshe has donated her time without asking for compensation and noted that there are ways for Board Members to educate themselves without it being a cost to ratepayers. She indicated support for the per diem justification form. President Scheafer summarized the direction to staff as incorporating the items 13 of 15 supported by the majority of the Board into the policy and bringing the revised policy back to the Board for review. I. LOCAL MEETINGS 1. Orange County Sanitation District (OCSD) -(Vice President Ooten) Vice President Ooten shared that OC San discussed the budget calendar. 2. Santa Ana River Flood Protection Agency (SARFPA) - (Secretary Perry) Secretary Perry provided updates regarding various Santa Ana River projects, including the spillway upgrade and its cost. 3. Independent Special Districts of Orange County (ISDOC) - (President Scheafer) No report. 4. California Special Districts Association (CSDA) - (President Scheafer) President Scheafer noted an influx of legislative updates coming from CSDA and a reminderto sign up forthe upcoming Legislative Days conference. 5. Special District Risk Management Authority (SDRMA) - (President Scheafer) President Scheafer noted that SDRMA selected a new CEO and is working on a contract for compensation and they completed Board elections. 6. Other Meetings Qualifying for Reimbursement under CMSD Ordinance No. 55, Operations Code Section 3.01.030 President Scheafer and Secretary Perry shared that he attended the Water Advisory Committee of Orange County (WACO) meeting. J. OLD BUSINESS None. K. NEW BUSINESS None. L. CLOSING ITEMS 1. Oral Communications and Director Comments 14 of 15 President Scheafer requested that staff look into budget cuts to account forth e rising solid waste disposal costs. Discussion followed regarding items that staff can look at potentially cutting. President Scheafer noted that the District was not approved for a Federal Emergency Management Agency (FEMA) grant, which will result in having to find funding for the Elden Project. 2. Adjournment President Scheafer adjourned the meeting at 7:05 p.m. Arth u r Perry, Secretary Mich a Scheafer, Pr sident 15of 15