Ord 2008-71ORDINANCE NO. 71
AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE
COSTA MESA SANITARY DISTRICT REVISING THE
DISTRICT'S OPERATING RESERVE REQUIREMENTS
WHEREAS, the District's Board has, consistent with sound management practice
and upon advice of its Treasurer, set the District's operating reserves at levels sufficient
to withstand various contingencies that might occur; and
WHEREAS, the Board also desires to not set aside unnecessary surplus as that
money has been paid by the ratepayers who are the Board's constituents; and
WHEREAS, the Board has recently reviewed those reserves and, upon the
advice and recommendation of the District's Treasurer, determined that they should be
reduced as a lesser amount will adequately protect the District; and
WHEREAS, the Treasurer has recommended, and the Board does hereby
approve, those recommendations to lower those reserves as specified in this ordinance;
NOW, THEREFORE, the Board of Directors of the Costa Mesa Sanitary District
does hereby ORDAIN as follows:
Section 1. That Section 4.04.010 of the Costa Mesa Sanitary District Operations Code
is amended to read as follows:
"4.04.010 Summary. A summary of the District's Financial Policies includes the
following principles:
(a) Operating Reserves: The District will maintain a minimum designated
Reserve for Working Capital equal to 15% of its operating budget within its Solid Waste
Fund and- 10% of its operating budget within its Liquid Waste Fund.
(b) Fairness and Equity: All customers of the District will pay their fair,
equitable, and proportionate cost of the services provided by the District.
(c) Recurring Revenue Growth: Recurring expenditure increases should not
be approved which exceed recurring revenue growth. Any new or expanded programs
will be required to identify new funding sources and /or off - setting reductions in
expenditures.
(d) Risk Management/Retention: The District will maintain appropriate
reserves for general liability claims and other programs or self insured risk retention
levels to meet statutory requirements and actuarially projected needs.
(e) Long Range Fiscal Perspective (Capital Expenditure Policy): The District
will maintain a long -range fiscal perspective through the use of an Annual Operating
Budget, Long Range Capital Improvement Program, and multi -year revenue and
expenditure forecasting.
(f) Capital Improvements: Major capital improvement projects will be funded
using the most financially prudent method available. Such methods include: 1)
Traditional long -term financing (bond issues); 2) "Pay As You Go" financing (using
recurring revenues only); 3) Combination of debt financing and "Pay As You Go"
financing; and, 4) Using accumulated cash reserves in excess of policy requirements.
(g) Generally Accepted Accounting Principles: District staff shall comply with
all generally accepted accounting principles promulgated by the state and federal
government, regulatory agencies such as the Government Accounting Standards Board
(GASB) and relevant professional associations such as the Government Finance
Officers' Association (GFOA). Ord. 34, 2000"
Section 2. That Section 4.04.020 of the Costa Mesa Sanitary District Operations Code
is amended to read as follows:
"4.04.020 Operating Reserves. This policy establishes a minimum level of Reserves
for Working Capital within Operating Funds of the District. Operating Funds of the
District consist of the Solid Waste Fund and the Liquid Waste Fund.
(a) Policy: The District will maintain a minimum designated Reserve for
Working Capital equal to 15% of its operating budget within its Solid Waste Fund, and
10% of its operating budget within its Liquid Waste Fund.
(b) Operating Reserves Required: The Reserves for Working Capital for
Operating Funds will be maintained at a level equal to 15% of its operating budget
within its Solid Waste Fund, and 10% of its operating budget within its Liquid Waste
Fund, for the fiscal year. The District has a period of negative cash flow for the first five
months of the fiscal year until such time as the annual charges have been collected and
remitted to the District. This level of operating reserve provides the District with the
necessary liquidity and resources to cover this period of negative cash flow as well as
unanticipated expenses. It is prudent for governmental entities to maintain operating
reserves which constitutes a sound operating practice as determined by oversight
bodies, professional organizations, bond rating agencies and bond insurance
companies. The operating reserve may only be accessed under the following
circumstances, and only with Board approval.
1. Federal /State budget cuts resulting in loss of grant funding;
2. Local revenue shortfalls due to a downturn in the local economy;
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3. Increase in demand for specific services without another source of recovery;
4. Legislative or judicial mandates to provide new or expanded services or
programs without new or fully off - setting revenues;
5. One -time Board approved expenditures;
6. Unexpected increases in inflation (Consumer Price Index); and,
7. Natural disasters (earthquakes, fires, or other general infrastructure failures).
If the operating reserves are required to be used, staff will incorporate a plan to restore
the Reserves for Working Capital to 15% of the Solid Waste operating budget and 10%
of the Liquid Waste operating budget as part of the subsequent year's proposed
budgets. Originally adopted by Ordinance 34, July 13, 2000; amended by Ordinance
71, September 18, 2008."
Section 3. Should any part, clause or section of this Ordinance be declared by any Court
of competent jurisdiction to be invalid, the remaining provisions of this Ordinance shall
nevertheless be and remain in full force and effect and the Board of Directors of the Costa
Mesa Sanitary District of Orange County, California, hereby declares that each and every
section, clause, provision or part of this Ordinance would have been adopted and made a
part of this Ordinance without the adoption of any portion thereof and that the invalidity of
any part or provision hereof shall not in any way affect the validity or enforcement of the
remaining provisions of this Ordinance that may stand on their own.
Section 4. Pursuant to Health and Safety Code Sections 6490 and 6491.3, the Clerk shall
cause this ordinance or a summary thereof to be published in a newspaper of general
circulation printed and published in the District according to law.
PASSED and ADOPTED this r day of 2008.
Secretany —
3
STATE OF CALIFORNIA)
COUNTY OF ORANGE ) SS
CITY OF COSTA MESA )
I, JOAN REVAK, Clerk of the Costa Mesa Sanitary District, hereby certify that the
above and foregoing Ordinance No. 71 was duly and regularly passed and adopted by
said Board of Directors at a regular meeting thereof, held on the 18th day of
September 2008 by the following vote:
AYES: Arthur Perry, Arlene Schafer, Robert Ooten, James Feryman,
Gary Monahan
NOES: None
ABSENT: None
ABSTAIN: None
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
the Costa Mesa Sanitary District, this 18th day of September 2008.
Clerk of -Costa Mesa Sanitary District
0
RESOLUTION NO. 2008 -761
A RESOLUTION OF THE BOARD OF DIRECTORS
OF THE COSTA MESA SANITARY DISTRICT
ORDERING THAT PUBLICATION OF ORDINANCE
NO. 71 REVISING THE DISTRICT'S OPERATING
RESERVE REQUIREMENTS HAS BEEN
PUBLISHED
WHEREAS, the Board of Directors on September 18, 2008 adopted Ordinance
No. 71 Revising the District's Operating Reserve Requirements amending Section 4.04.010
of the Operations Code of the Costa Mesa Sanitary District Operations Code;
WHEREAS, that Ordinance was published in the Newport Beach /Costa Mesa
Daily Pilot on September 30, 2008; and
WHEREAS, Health and Safety Code Section 6490 provides that an order of the
Board that publication has occurred is conclusive evidence that publication has properly
been made;
NOW, THEREFORE, the Board of Directors does hereby resolve:
That it is hereby ordered and decreed that publication of Ordinance No. 71
amending the Operations Code by revising the District's Operating Reserve Requirements
has occurred.
PASSED and ADOPTED on this 19`" day of December 2008.
Secretary, Cos t� Mesa Sanitary District President, Costa Mesa Sfnitary District
Board of Doctors Board of Directors
r
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF COSTA MESA )
I, Joan Revak, Clerk of the Costa Mesa Sanitary District, hereby certify that the
above and foregoing Resolution No. 2008 -761 duly and regularly passed and adopted by
said Board of Directors at a regular meeting thereof held on the 19th day of December
2008.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Costa Mesa Sanitary District, this -tq.t day of 2008.
Clerk of th Costae .Mesa Sanitary District