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Minutes - Board - 2012-03-21 (2)0 Item VII. A. 5. COSTA MESA SANITARY DISTRICT MINUTES OF BOARD OF DIRECTORS REGULAR MEETING MARCH 22, 2012 CALL TO ORDER The Board of Directors of the Costa Mesa Sanitary District met in regular session on March 22, 2012 at 5:30 p.m. at 628 W. 19th Street, Costa Mesa. PLEDGE OF President Ooten led the Pledge of ALLEGIANCE Allegiance. INVOCATION Director Scheafer led the Invocation. • ROLL CALL DIRECTORS PRESENT: Robert Ooten, James Ferryman, Mike Scheafer, Jim Fitzpatrick, Art Perry DIRECTORS ABSENT: None STAFF PRESENT: Scott Carroll, General Manager; Anna Sanchez, Administrative Manager; Robin B. Hamers, District Engineer; Alan Burns, District Counsel; Jacque Rogers, Assistant to the Treasurer; Teresa Gonzalez, Accounting Manager; AJ Cully, Management Analyst OTHERS PRESENT Dean Ruffridge, CR &R; Paul Relis, CR &R; Laurence Jones, CR &R; David Ronnenberg, CR &R; Al Morelli, Resident; Bill Taromina, Clean City; Britney Barnes, Daily Pilot; Joy Williams, Resident, CEREMONIAL MATTERS AND PRESENTATIONS AWARDS FOR ENVIRONMENTAL EXCELLENCE: CR &R COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 • Director Fitzpatrick reported CR &R has partnered with CMSD in executing zero waste strategies and programs that help divert waste to landfills and listed accomplishments of CR &R deserving of the award. President Ooten reported on expansion of large item pickup, the ease of negotiating with CR &R and noted additional information is available in the agenda report. Members of the Board presented the Environmental Excellence Award to Dean Ruffridge of CR &R for their environmental excellence. Dean Ruffridge expressed his appreciation and accepted the Certificate on behalf of CR &R. He listed accomplishments and noted he looks forward to continue working as a partner with CMSD as well as presenting later in the meeting regarding zero waste and rate stabilization. President Ooten commended Director Fitzpatrick for creating the criteria and finding many good candidates for this award. CITATION OF MERIT: Costa Mesa Police Department, Corporal Julian Trevino • CMSD Code Enforcement Officer, Isidro Gallardo It was noted that Corporal Julian Trevino was not able to attend the meeting therefore, the aforementioned item was deferred to the next regular meeting of the Board. Director Fitzpatrick noted the award would be in recognition and celebration of the achievements between two departments, CMSD and the Costa Mesa Police Department regarding prevention of scavenging. ANNOUNCEMENT OF LATE COMMUNICATIONS President Ooten reported receiving a letter from Stacy de Boom — Howard, Principal at Paularino Elementary School expressing appreciation for the telephone book recycling program. General Manager Carroll requested the addition of an emergency item on the agenda regarding an addendum to the National Plant Services (NPS) agreement to conduct root cutting and sewer cleaning, which cannot wait until the next Board meeting. He added that originally, the task was going to be completed by staff, but there have been a number of complications with the District's vactor truck. District Counsel Burns reported the need arose after the agenda was posted and there is a • need to take immediate action and cannot wait until the next Board meeting. District Engineer Hamers noted this is a budgeted item in the amount of $209,000 and is year two of a three -year contract that has two one -year extensions allowable. The addition • • COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 of root - cutting and sewer- cleaning services is needed so it is requested that the Board approve an additional $235,000 for availability of contingency in the event that the City's equipment continues to malfunction and the need to expand NPS's work. He reported he has signed the addendum which has been reviewed by District Counsel and staff. Director Fitzpatrick moved to accept the item and place at the end of the agenda. President Ooten seconded the motion. Motion carried (4 -0 -1) with Director Ferryman, abstaining. Ensuing discussion pertained to the need to typically state reasons for abstaining. Director Ferryman stated he does not agree with the motion. District Counsel Burns reported it only matters for purposes of voting and counting the quorum. He added that if one abstains and the reason is a conflict of interest, it is important to state so in the record. Director Fitzpatrick felt that according to Robert's Rules of Order, if an abstention is made, the reason must be declared. District Counsel Burns reported the Board adopted an ordinance indicated that Robert's Rules of Order is merely a guide, but not binding. RESOLUTION NO. 2012 -810 APPOINTING THE GENERAL MANAGER AS DISTRICT CLERK AND SPECIFYING CERTAIN OTHER DUTIES FOR THE EXECUTIVE ASSISTANT /DEPUTY DISTRICT CLERK General Manager Carroll reported the aforementioned item is necessary because of the recent retirement of the District Clerk and the need for signatures to warrant resolutions and future assessments. Director Perry moved to adopt Resolution No. 2012 -810 appointing the General Manager as District Clerk. Director Scheafer seconded the motion. The motion carried 5 -0. CONSENT CALENDAR REPORTS MINUTE APPROVAL Sewer System Committee Meeting — This item was pulled from the Consent February 14, 2012 Calendar for a separate vote. Recycling Committee Meeting — February 20, 2012 This item was pulled from the Consent Calendar for a separate vote. Regular Board of Directors Meeting — This item was pulled from the Consent February 23, 2012 Calendar for a separate vote. COSTA MESA SANITARY DISTRICT MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 FINANCIAL REPORTS Occupancy Report and payment to Costa Mesa Disposal — March 2012 Contract Payment to CR Transfer for Recycling Services & Disposal for February 2012 PAGE 4 This item was pulled from the Consent Calendar for a separate vote. This item was pulled from the Consent Calendar for a separate vote. Adoption of Warrant Resolution NO. This item was pulled from the Consent CMSD 2012 -9 Ratifying Payment for the Calendar for separate vote. Month of February 2012 in the amount of $692, 461.96 Directors' Compensation and Reimbursement of Expenses for the Month of February 2012 RESOLUTIONS Directors' Compensation and Reimbursement of Expenses for the Month of February 2012, as listed in the Agenda Report dated March 22, 2012, were approved and ratified. Resolution No. 2012 -811 Ordering that Resolution No. 2012 -811 Ordering that Ordinance No. 89 has been published Ordinance No. 89 has been published providing providing authority for the recovery of authority for the recovery of abatement costs abatement costs made necessary by made necessary by violations of the District's violations of the District's ordinances. ordinances was approved. END OF CONSENT CALENDAR Director Fitzpatrick moved for approval of the Consent Calendar except for items pulled for a separate vote VI I I. A. 1 -3 and B. 4 -6. President Ooten seconded the motion. The motion carried 5 -0. Director Fitzpatrick moved for approval of Resolution No. 2012 -811 (item C). President Ooten seconded the motion. The motion carried 5 -0. Director Fitzpatrick expressed concerns that audio records for previous minutes are usually destroyed after the minutes are approved. He felt audio records are important in understanding how the Board reaches decisions. He requested that CMSD immediately suspend the policy of destroying any audio records of Board, Committee or Special Meetings of the CMSD by not removing these from the public record and that the topic be properly noticed and agendized to the Special Board Meeting of April 11, 2012. President Ooten moved to approve items VIII. A. 1 -3 and B. 4 -6 of the Consent Calendar. The motion died for lack of a second. Director Fitzpatrick moved that approval of the minutes under items VIII. A. 1 -3 be • COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 postponed until the Board meeting of April 11, 2012. District Counsel Burns noted the State law mandates that recorded minutes cannot be destroyed for 30 days, once approved. Motion died for lack of a second. Director Scheafer moved to approve the minutes under items VIII. A. 1 -3 of the Consent Calendar. Director Perry seconded the motion. The motion carried 4 -1 with Director Fitzpatrick, opposed. Director Fitzpatrick questioned payment to Costa Mesa Disposal as proposed in item B. 4, noting that CMSD does not have a contract with the entity. President Ooten reported that CR &R purchased Costa Mesa Disposal and therefore, the latter is a subsidiary of CR &R. District Counsel Burns affirmed the purchase of Costa Mesa Disposal by CR &R. Director Fitzpatrick indicated he could find no documentation affirming a contract with Costa Mesa Disposal or its purchase by CR &R and that therefore, CMSD should not be cutting checks to Costa Mesa Disposal (CMD). David Ronnenberg, CR &R, affirmed that CR &R purchased Costa Mesa Disposal. Dean Ruffridge, CR &R, read from the contract, the applicable section detailing the ownership of CMD by CR &R. Discussion followed regarding the possibility of deferring the item to the April 11, 2012 meeting of the Board. District Counsel Burns indicated there is an existing contract with CR &R, that it recognizes CMD as a 100 % subsidiary, who has done the work. He added he would be happy to prepare a memorandum in response to questions submitted in advance. President Ooten moved to approve item VIII. B. 4. Director Perry seconded the motion. The motion carried 4 -1, with Director Fitzpatrick, opposed. Regarding item VIII. B. 5, Director Fitzpatrick indicated he could not find supporting documentation or legal documents of CMSD specifically doing business with CR Transfer. President Ooten moved to approve item VIII. B. 5. Director Perry seconded the motion. The motion carried 5 -0. . Regarding item VIII. B. 6, Director Fitzpatrick expressed concerns with increased legal fees inquired regarding legal services from Alan Burns in the Warrant Resolution and whether any of the charges were in relation to incompatibility of office. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 District Counsel Burns reported the charges are itemized in the bill, but that he does not presently have a copy of the bill to reference. He added the bill is available for the Board to review. Director Fitzpatrick asked that all legal expenditures associated with incompatibility of office be highlighted so that the Board and rate payers of the City know exactly how much money is being spent on the action. He requested that staff aggregate the various costs and report back to the Board. District Counsel Burns stated that exactly what was done, may not be public record because it may divulge some attorney /client matter that would be inappropriate to disclose. He stated dollar amounts would be available. President Ooten noted his recommendation is to continue to quantify and report on the exact Meyers -Nave costs. District Counsel Burns indicated he will segregate the costs relating to the Quo Warranto. Director Fitzpatrick inquired regarding specific checks and whether a proposal has been received from CR &R for handling household hazardous waste. General Manager Carroll indicated a proposal has not yet been received but acknowledged it will be placed on a • priorities list. Director Fitzpatrick requested a list of projects and their priorities. He asked regarding a check in payment of anti - scavenging activities and Mr. Carroll reported it includes purchase of lock -able containers. Director Fitzpatrick pointed out that when the Board discussed engaging Meyers -Nave, the budget was for $1,500. He referenced a request that the same amount be budgeted to obtain a legal opinion regarding incompatibility of office and that the amount was increased to $5,000. Director Fitzpatrick noted the bill came out to $4,933. He stated the document was never made public but that someone made it available to the press. President Ooten asked for a review of the issue by the City Attorney. District Counsel Burns directed Members of the Board to stick to an orderly process. Director Perry moved to adopt item Vlll. B. 6. (Warrant Resolution No. CMSD 2012 -9). Director Ferryman seconded the motion. Director Fitzpatrick indicated he had called out the item and was not given an opportunity to discuss it. The motion carried 4 -1, with Director Fitzpatrick, opposed. PUBLIC COMMENTS COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 • President Ooten opened the Public Comment section of the meeting. Joy Williams reported she has rental properties and expressed concerns with tenants not informing owners of Code Enforcement actions. She asked that the District notify owners on record regarding code violations. In addition, she stated concerns regarding CR &R rates noting that there are eighteen nearby cities that pay less per month than the City of Costa Mesa. She indicated she would like to see an open -bid process that is transparent and felt CMSD should post accounts payable and receivable information as well as financial statements on the District's website for public review. Richard. Rinehart stated support for a competitive bidding process. He referenced consideration of a 20 -year contract for trash pickup; felt that is an unreasonably long term and asked the Board to give the issue careful consideration. Director Ferryman noted there is no contract being considered presently. He stated the District has received a proposal, but assured no increases in rate for the next year and no need to discuss the issue in the budget this year. Director Fitzpatrick thanked the public for their comments, stated he did not agree with Director Ferryman's comments and encouraged them to stay for further discussion. • District Counsel Burns noted that Members of the Board are limited as to how they can respond to public comments and cannot respond to non - agenda items. Al Morelli reported he teaches Management at USC and noted the difficulty of having two bosses. He thanked the Board for doing a great job, indicated he is thankful that residents don't have to separate their garbage and thanked the District on the money spent on capital improvements. Bill Taromina reported he is considering buying property in Costa Mesa. He stated the public looks to the Board as leaders and to do its due diligence. He felt the tension can be cut like a knife, hoped the Board can resolve its differences and continues doing a great job. He declared the District has the best garbage contractor in the State of California. Mr. Taromina felt asset management is valuable and that more value can be extracted if Members work together. He congratulated CR &R for their award. Director Fitzpatrick requested the inclusion of fifteen (15) emails providing public comment regarding the trash - collection contract, into the record and presented the documents. District Counsel Burns advised these be presented at the time when the item is presented. Brief discussion followed regarding previous submission of the emails. GENERAL MANAGER'S REPORTS ADMINISTRATION REORGANIZATION Administrative Service Manager Sanchez reported the recent retirement of the District's COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 Clerk signaled a need for re- evaluation of the organizational structure. She noted that a District Clerk position is not typical and suggested reclassification of the position to an Executive Assistant/Deputy Clerk which will perform the functions of the previous District Clerk. Ms. Sanchez presented recommendations to reclassify the position as an Executive Assistant/Deputy District Clerk which would allow for a new position of Management Assistant and listed the corresponding duties. In addition, Ms. Sanchez addressed the creation of a Management Intern position which would permit promotion of a public administration career path. Ms. Sanchez stated the need to re- classify the position of Office Specialist to Administrative Assistant since it is currently incompatible with the requirements and the current workload has an increased level of responsibility. The recommended action would help in keeping within the goals of maintaining personnel costs at 20% of the budget and Ms. Sanchez addressed the job descriptions. Discussion followed regarding the possibility of considering job experience in lieu of a college degree. Ms. Sanchez explained experience would be taken into consideration and reported the vehicles wherein the position will be advertized. 'Ensuing discussion pertained to maintaining the budget at step one of the compensation levels and the possibility of exceeding the 20% at subsequent steps. It was noted next level • of compensation would stay at 20% of the budget within the next five to ten years. Director Fitzpatrick requested an organizational chart and succession planning and indicated the item is not included in the present budget. General Manager Carroll noted the present priorities are for an Executive Assistant/Deputy Clerk and re- classification of the Office Specialist position. He added the Management Assistant and Intern positions could wait for the budget process. Director Fitzpatrick moved to approve the Executive Assistant/Deputy Clerk position and re- classification of the Office Specialist position to Administrative Assistant. Director Perry seconded the motion. The motion carried 5 -0. RTA FIRST AMENDMENT. General Manager Carroll reported construction in the front lobby will begin on Monday and stated the proposal is above the 10% for approving change orders. He stated there will be a change order to install a fence around the transformer to avoid transients in the area which will bring the amount to $3,500. Director Ferryman moved to approve the item. Director Scheafer seconded the motion, which carried 5 -0. APPROVE CONTRACT ADMINISTRATION AND INSPECTIONS FOR PROJECT #171 General Manager Carroll introduced the item, explained Project #171 and deferred to staff COSTA MESA SANITARY DISTRICT PAGE 9 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 • for a report. Accounting Manager Gonzalez presented details of the report noting a request for bids was issued to engineering firms for contract administration and inspections. She reported five bids were received ranging in amounts from $16,000 to $54,000 and that differences were due to the number of inspection hours and higher rates. Ms. Gonzalez reported the District decided to accept a bid from Robin Hamers & Associates, based on his existing contract and a bid of $15,857. She reported the rate was very reasonable and that based on the level of service he has provided so far, .Mr. Hamers will do a good job. She added the item is for informational purposes. Discussion followed regarding steps to take to assure that there is no conflict of interest. District Counsel Burns reported there are no special steps to be taken, that Mr. Hamers cannot attempt to influence the Board, whether the Board approves it or not. Director Fitzpatrick indicated Mr. Hamers has always done great work, addressed the range of bids and inquired regarding hours of inspection. General Manager Carroll noted that Mr. Hamers knows the District's sewer systems very well whereas other bidders do not. 0 RESCHEDULE APRIL 26, 2012 BOARD OF DIRECTORS MEETING President Ooten reported there is a conflict with the April 26, 2012 Board meeting due to a CASA conference being attended by Members. Discussion followed regarding possible dates to reschedule the meeting and the possibility of cancelling the conference. Director Scheafer moved to reschedule the April 26, 2012 Board meeting to April 16, 2012 at 5:30 p.m. Director Perry seconded the motion. The motion carried 5 -0. RECESS AND RECONVENE President Ooten called for a recess at 6:50 p.m. The assembly reconvened at 6:55 p.m. with all Members, present. SOLID WASTE Director Ferryman explained there are many important issues to consider under this item and requested keeping discussion concise. . President Ooten suggested the possibility of re- scheduling the item for another meeting. Director Fitzpatrick indicated much of the information will be new and needs to be given careful consideration and time. • COSTA MESA SANITARY DISTRICT PAGE 10 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 President Ooten indicated if the issue is important, the Board will take the time necessary for discussion. Brief History of CMSD CR &R Existing Contract 2012 Solid Waste Rate Survey Franchise Fee Proposed Rate Stabilization Plan CR &R Anaerobic Digestive System and Proposed Contract Extension General Manager Carroll provided a PowerPoint presentation addressing a brief history of the CMSD including goals, existing contract, term, renewal with a six -year evergreen contract, responsibility for containers, rate limits, signage, banners on trucks, log of complaints, rights to market and sell recycled goods, contributions by CR &R to CMSD, right to audit, solid waste survey and franchise fee. It was noted the assessment pays for operating and management of the District. Mr. Carroll explained it is a ten -year contract with a six -year evergreen fee and presented examples of how that is determined. Mr. Carroll explained the contract is not a public works contract and is not required to go out to bid. He presented details of the rate stabilization plan, addressed use of property taxes, options including using reserves to subsidize the rates, the need for a Proposition 218 hearing with one of the options, the benefits of the various options presented including lower rates and a twenty -year rate stabilization. He recommended lowering the rates for next year's budget. Discussion followed regarding the timeline for the Anaerobic Digestive System. Director Fitzpatrick felt history is important noting that historically, Costa Mesa had the highest rate in the County that the owner of the trash company also owned the container company and that Costa Mesa was the only special district in the region that owned its trash containers. Discussion followed regarding purchase of containers and service issues with prior operators. District Counsel Burns advised Members that under the rules, cross - examination is not allowed. Director Fitzpatrick inquired why there was no competitive bidding done in 2006. Director Ferryman noted the District owned the trash containers and later sold. Mr. Burns reminded Members that all questions should be directed to the presiding officer, the presiding officer then may re- direct the question to staff and that Members should not engage in cross - examination of each other. COSTA MESA SANITARY DISTRICT PAGE 11 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 • Director Fitzpatrick explained he is seeking insight and inquired as to the records management at that time. General Manager Carroll stated the records management system is in need of improvement and that is why the District is using consultants to improve the system. District Engineer Hamers reported the owner, Raul Rangel was the owner of Costa Mesa Disposal. He stated he didn't know whether he was the.owner of Roto Industries, who sold the District the trash containers and indicated he believed there were other owners besides him. He stated agreement with the General Manager's report. Director Fitzpatrick reiterated that at the time, Costa Mesa had the highest rates in the County, when the contract was signed with CR &R. He felt that was the time the Board should have exercised its fiduciary rights to the rate payers to seek competitive bids. He noted that Director Ferryman and Director Perry were signatories at that time and opined they were responsible for the higher rates. District Counsel Burns explained how the Board should receive comments from its Members. Director Ferryman stated he resents the innuendos from Director Fitzpatrick, noted there • were other circumstances that needed to be considered at that time, and addressed purchase of the trash containers by CR &R and the ability to subsidize the rate. District Counsel Burns re- instructed the Board. Director Fitzpatrick stated the same person who was the beneficiary of the agreements made by the Board at the time and that the contract never went out to bid. President Ooten noted there was no necessity to go out to bid, but rather is an option. Director Fitzpatrick commented on the term of the contract. President Ooten explained the contract can be cancelled six (6) years from the time of sunset. District Counsel Burns explained the contract was for a ten (10) year term and has a six (6) year evergreen clause and addressed termination of the contract. Director Fitzpatrick referenced a previous motion where he asked for sunset of the contract. He addressed a conversation with the General Manager where he affirmed it is a ten (10) year contract with a six (6) year evergreen clause. • Discussion followed regarding terminating the contract by a majority vote of the Board, the current term of the contract and amortization for the trash containers should the District terminate the contract. COSTA MESA SANITARY DISTRICT PAGE 12 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 General Manager Carroll explained that if the contract is terminated early, CMSD would have to pay for the containers. Dean Ruff ridge, CR &R explained termination by cause and reported CMSD would owe for the containers. He also explained termination without cause. District Counsel Burns read the re- purchase guarantee and addressed the schedule of amortization. Director Perry explained then CMSD would own the trash containers again. Discussion followed regarding clarification of the six -year evergreen clause. Director Fitzpatrick noted he made the suggestion to consider net to the hauler and addressed comparison rates. President Ooten explained the difference between the rate charged and net to the hauler pays for administrative costs. District Counsel Burns re- instructed the Board. Director Fitzpatrick requested an explanation of the calculation of established (Exhibit A in the contract) and average rates within the County. General Manager Carroll explained that $19.95 is the rate and the net rate is what $16.96 is what CR &R charges. He noted the Exhibit A in the contract is an example of how the rates are calculated. In response to Director Ferryman's inquiry, Mr. Carroll reported the 2012 Solid Waste Rate Survey was conducted by CR &R. Director Fitzpatrick opined the CMSD does not have a method for calculating the average rate within the County. Mr. Carroll reported that according to the contract with CR &R, they' had to conduct a rate survey to make sure the rates are compatible with other agencies. Director Fitzpatrick felt CMSD has no process for determining the average rate. Director Ferryman explained that in the past, the Clerk would conduct the survey; however, he noted the issue of the administrative fee so that comparisons were not on an equal basis. Director Fitzpatrick stated that consideration of the net rate was his suggestion, that up to • this time, the District has not achieved the goal of keeping the rates average within the County. General Manager Carroll reiterated that CR &R gives the District an average rate but that the • COSTA MESA SANITARY DISTRICT PAGE 13 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 District has an additional assessment for payment of operations and special programs. Director Fitzpatrick reiterated that there is no process in place to evaluate rate based on its contractual goal of an average rate. District Counsel re- instructed the Board. Director Fitzpatrick commented on the rates by Midway City noting they have lower rates and receive a check of recyclables. He indicated not having seen a report regarding recyclables. Director Ferryman explained other issues involved with Midway City and that their contract is different. Director Scheafer declared there is no need to grandstand to communicate points. In response to Director Fitzpatrick's inquiry, General Manager Carroll reported there has never been an independent certified audit of CR &R's records and noted that staff will advise CR &R to submit a log of complaints. Director Fitzpatrick asked if the money received from the sale of containers went into the reserve fund. Mr. Carroll affirmed that money from containers was included in the reserve fund and addressed other related items including that staff is lean, is conscious of spending habits, savings are being obtained and that it is desirable to have a positive balance in the fund. Director Fitzpatrick commented regarding five -year contract term limits and exceptions in the operations code and felt a long -term zero bid contracts is not in the best interest of rate payers. He commented on a twenty (20) year contract. District Counsel Burns suggested taking certain items out of order to allow hourly staff to depart. Mr. Carroll explained the goal is to obtain zero waste and increase diversion to 83 %. If the Board would like to consider that option, one suggestion is to have a fourteen (14) year commitment, not twenty (20) years. He added this is just informational and not consideration of a contract. Director Ferryman agreed and noted the Board is currently not considering any contract. Mr. Carroll reported the Board will not consider anything until the citizen survey results are presented to the Board for action. He explained the options presented tonight are another way to keep rates stabilized. Brief. discussion followed regarding the need for a Proposition 218 hearing. COSTA MESA SANITARY DISTRICT PAGE 14 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 President Ooten announced the Treasurer's Report would be considered at this time. TREASURER'S REPORTS REVIEW OF FEBRUARY 2012 INVESTMENT REPORT Staff presented details of the February 2012 Investment Report addressed interest earned by the portfolio, duration, bonds, investments and receipt of annual charges from the County. Director Perry moved to accept the report. Director Scheafer seconded the motion. The motion carried 5 -0. District Engineer Hamers requested consideration of the Engineer's Report at this time. President Ooten announced the Engineer's Report would be considered at this time. ENGINEER'S REPORTS Mr. Hamers addressed the late communications item regarding the National Plant Services contract that needs to be approved in order to stay on schedule of having the sewer • systems cleaned by June 30, 2012. He added District Counsel has confirmed the item can be considered, the Accounting Manager has confirmed the money is available and reiterated recommendations to approve a budget of $235,000. Accounting Manager Gonzalez explained the item was originally approved at $185,000 which represents charges for sewer cleaning. Mr. Hamers stated the need to add money to ensure that the District meets its Sewer System Management Plan commitments. Director Perry moved to accept the proposal. Director Ferryman seconded the motion. Discussion followed regarding problems with the District's vactor truck as well as the City's and other options considered. It was noted that purchase of a new truck is being placed in next year's budget that this was an emergency situation and that alternatives will be presented during consideration of the budget. Ensuing discussion pertained to the need to proceed and the terms of the National Plan Services contract. It was noted the addition is for root - cutting services. The motion carried 5 -0. 9 PROJECT STATUS REPORT Mr. Hamers presented the Project Status Report and offered to answer questions from the Board. • COSTA MESA SANITARY DISTRICT PAGE 15 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 There were no questions from the Board. CMSD PROJECT #171 - IRVINE FORCE MAIN REHABILITATION PROJECT BID OPENING AND AWARD OF CONSTRUCTION CONTRACT Mr. Hamers reported on the bid opening which was conducted in accordance with procedures, listed results and recommended awarding a contract to the lowest bidder. He added the contract amount is for $293,500. Director Perry moved to approve the item. Director Scheafer seconded the motion. The motion carried 5 -0. NEWPORT BANNING RANCH DEVELOPMENT - SEWER SERVICE PROVIDER Mr. Hamers suggested tabling the item to a different agenda. Director Fitzpatrick asked if this is the first time the item is being considered. Mr. Hamers reported the issue has been the subject of on -going conversations between staff and Board Members, addressed an EIR by the City of Newport Beach and request by • the Board of a written report. He noted this is the first time a written report addressing the Board's questions and concerns has been issued. Director Fitzpatrick stated that when the issue returns to the Board, he would like an explanation and recommendations as to the appropriate actions to take. Director Fitzpatrick moved to table the item to the next Board meeting. Director Perry seconded the motion. The motion carried 5 -0. Mr. Hamer's stated agreement with the General Manager's report. The Board returned to consideration of item X. E. (General Manager's Report, Solid Waste). General Manager Carroll requested direction regarding the rate for next year's budget. Director Scheafer suggested starting at the rate of $19.95. Director Fitzpatrick suggested reducing the rates. He suggested staff provide a proposal were the Board can vote on the evergreen contract and consider decreasing rates and suggested hiring a consultant to look at the issue. He asked the issues be considered at the April 11, 2012 agenda. iDiscussion followed regarding when to schedule the item. District Counsel Burns asked the item be placed on a regular agenda rather than the special meeting of April 11, 2012. • COSTA MESA SANITARY DISTRICT PAGE 16 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 General Manager Carroll noted he will present the proposed budget at the April 16, 2012 Board meeting and will also place consideration of terminating the CR &R contract on that agenda. Dean Ruffridge, CR &R, indicated they are prepared to give a presentation at this time but indicated the organization would not have a problem with waiting until the next regular meeting of the Board. He expressed concerns with possible misinformation and stated the company is planning to begin infrastructure construction on July 1, 2012. Discussion followed regarding giving CR &R the opportunity to present at this time. Mr. Ruffridge stated not all of the facts presented have been correct. He provided a PowerPoint presentation addressing the path to zero waste, decreased green house emissions and a contract proposal. He stated he would like to hold questions until after the presentation. Mr. Ruffridge addressed assumptions regarding solid waste stream, project timeline to zero waste utilizing CR &R and without CR &R (2015 versus 2030) and zero waste single - family residential program, multi- family program and commercial program as well as other programs. He deferred to Paul Relis, CR &R for additional information. • Mr. Relis summarized the Anaerobic Digestive System (ADS) project addressing a development plan update, steps to date toward development of an ADS and start and completion of construction. He addressed the decrease in green house emissions directly related to ADS and noted when there is a shift to renewable natural gas, green house impacts will be reduced by 101%. He spoke of the benefits of ADS gas and specific emission factors. Mr. Ruffridge presented a proposal noting he is not present to ask for an extension or amendment. He presented details of the proposal including the franchise rate for two additional years and offered to respond to questions. Director Perry felt this was a good presentation and suggested CR &R provide it to other community groups. Director Fitzpatrick reported he has been trying to get zero waste implemented and that no current zero waste strategies or plan exists. He referenced AB3341 and stated that nothing compels the District to have 75% diversion but rather the requirement is for 50 %. Director Fitzpatrick referenced the proposed timeline and reported he has visited five (5) material disposal facilities that have all indicated they can handle the Costa Mesa capacity and are able to submit a bid. He felt other alternatives should be considered as well as other .technology and stated he does not agree with the CR &R timeline and that CMSD should • develop its own timeline. Discussion followed regarding the term of the proposed contract. COSTA MESA SANITARY DISTRICT PAGE 17 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 • District Counsel Burns advised the Board of its rule to preserve order and decorum and not to engage in personal attacks. Director Fitzpatrick stated he has not seen CR &R financial statements. Discussion followed regarding the avoidance of "rubberstamping ", the length of the meeting and the need to get through with the business of the Board. Director Fitzpatrick submitted fifteen (15) emails dated February 22, 2012 to be included in the record. Discussion followed regarding previous submittal of the emails as well as positive comments received and Director's attempt at swaying public opinion by distributing email blasts President Ooten noted there were other emails for the agenda. District Counsel Burns reported the record is now complete. Interested parties were invited to address the Board on this item. Richard Rinehart stated he doesn't have email so he came to the meeting, personally. • Bill Taromina, Clean City, reported he has never seen a proposal like the one presented by CR &R, felt that it is incredible and that it should be celebrated and accepted. He reported on the history of CMSD, indicated why rates were so high because it included unlimited service, no commercial subsidy of residential rates and recommended the District issue an RFP for the commercial contract. He added that when the barrels were purchased, they were paid as if they were brand new, when in fact; they were. approximately ten (10) years old. Mr. Taromina stated that the City of Anaheim financed their containers over twenty (20) years at a 3% bond issue. CR &R paid cash. He listed cities that "piggy backed" on CR &R's bid to buy the containers and that the container company at that time was the only company that provided a ten (10) year guarantee. Mr. Taromina noted that Director Fitzpatrick is getting the answers he deserves and reported that the current recycling system is very expensive. He hoped that the Board can work together to resolve its issues and offered to provide free consulting to help the Board bind as an organization. Director Fitzpatrick stated many companies would provide proposals to and achieve similar diversion rates. Mr. Taromina agreed there are many companies that would provide proposals but none that would provide what CR &R is providing. He addressed the need to work as a team to obtain . more value to the rate payers. He stated his company is a huge competitor of CR &R but felt they are offering something very valuable. Seeing and hearing no one else wishing to address the Board, President Ooten closed the 0 COSTA MESA SANITARY DISTRICT PAGE 18 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 public comments. RECYCLING COMMITTEE The Recycling Committee meeting met on March 19, 2012. Director Fitzpatrick, Chairman of the Committee, gave a report on the meeting including consideration of an Orange County recycling grant and addressed a citizen survey update as well as solid waste measurement. He added that performance measures will go before the committee and return to the full Board. SEWER SYSTEM COMMITTEE The Sewer System Committee met on March 13, 2012. President Ooten, Chairman of the Committee, gave a report on the meeting including consideration of a yearly report, lessons learned on a project that had 100 %.change order, continued discussion on sewage system contingency planning for a pump station and alternatives, discussion of I and I and the sewer lateral systems program. In addition, fee waivers were addressed and consideration was given to private pump station systems, survey of cleaning and televising sewer systems, a letter to the City arborist on trees and parkways as well as articles and projects of interest. Director Fitzpatrick commented on the OCSD proposed transfer and stated what he believes should be the position of the District. He reported the lessons learned was a good exercise to go through looking at a significant change order, felt there is an unenforceable clause in the contract and noted it is up to the District to do its due diligence. District Counsel Burns reported he did not have an opportunity to participate in the "unenforceable clause ". President Ooten reported consideration of different methods of data presentation and putting the contractor on notice. Mr. Burns reported that if a condition is represented as existing, there may be a liability and addressed distinctions. Director Fitzpatrick indicated he was pleased on the I and I project and is thankful he asked for validation. He addressed sewer lateral programming, clean water summit partners and noted the issue will be discussed in the Recycling Committee. He felt the letter to the City's arborist is valuable for the District. ATTORNEY'S REPORTS Mr. Burns noted no reports at this time but stated an upcoming item will be on the use of electronic devices. LOCAL MEETINGS • COSTA MESA SANITARY DISTRICT PAGE 19 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 ORANGE COUNTY SANITATION DISTRICT (OCSD) Director Ferryman reported the OCSD will meet March 24, 2012. SANTA ANA RIVER FLOOD PROTECTION. AGENCY (SARFPA) Director Ferryman stated the meeting was held this afternoon and they were able to get $72,200,000 for the Army Corp of Engineers. He reported.Jim Warner chaired the meeting and is recovering well from colon cancer. In addition, he addressed funds available for a feasibility study in the Westminster Water Shed area. He added they are finishing up on the dike work at Prado and there will be a field trip in June to observe the SARI line construction. INDEPENDENT SPECIAL DISTRICTS OF ORANGE COUNTY ( ISDOC) President Ooten reported noting there was a food service establishment hearing and the District is not getting responses from the owner. He stated the restaurateur presented information and the committee decided not to plug his sewer. Director Scheafer reported the ISDOC quarterly meeting will take place on March 29, 2012. • CALIFORNIA SPECIAL DISTRICTS ASSOCIATION (CSDA) No report. CALIFORNIA ASSOCIATION OF SANITATION AGENCIES (CASA) No report. OTHER MEETINGS QUALIFYING FOR REIMBURSEMENT UNDER CMSD ORDINANCE No. 55, OPERATIONS CODE SECTION 3.01.030 Director Scheafer reported attending the Chamber of Commerce breakfast and hearing a presentation from the Local News and suggested staff look into the organization. Director Perry commented on a recent WACO meeting and addressed the main speaker who spoke about climate and felt it was very informative. Director Fitzpatrick stated he attended as well and commented positively on the event. OLD BUSINESS None. • NEW BUSINESS DISCUSSION TO WAIVE DIRECTOR COMPENSATION UNTIL QUO WARRANTO LEGAL COSTS ARE COSTA MESA SANITARY DISTRICT PAGE 20 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 RECOVERED, EFFECTIVE APRIL 1, 2012 Compensation Waiver for Entire Board President Ooten indicated he is not in favor of the public expending legal fees for incompatibility issues and proposed the Board waive its fees until legal costs are paid. He noted he would pay 1/5 of the legal costs. President Ooten moved that Board Members reduce their stipend fees to pay for the legal costs related to incompatibility issues. Director Fitzpatrick expressed disappointment that the Board decided to take the action before considering how the legal fees will be paid. He stated there was never a discussion regarding impacts on rates or how the legal fees will be paid. The motion died for lack of a second. Compensation Waiver for Individual Board Members President Ooten announced he will waive his stipend fees and will ask staff to advise regarding the costs and he will pay 1/5. Mr. Burns reported the best way to keep track would be for President Ooten to do so, himself. Accounting Manager Gonzalez discussed the tax consequences of the President's actions. She stated the income will still need to be reported on his W2 and that he will need a professional tax opinion. President Ooten reported he will pay for a tax opinion as well. Director Fitzpatrick reiterated how the Board is now discussing how to pay after the action was taken. He commented on "button pushers" and stated he would like to see Directors earn their stipend. He believed he has done so. District Counsel Burns advised the Board to observe decorum. RECONSIDER BOARD OFFICERS AND COMMITTEE ASSIGNMENTS Director Perry expressed concerns with President Ooten's health and acknowledged he is under a lot of pressure and stress. President Ooten affirmed he feels he is fine to continue his duties as President of the Board. Director Perry addressed the possibility of combining the Sewer and Recycling Committees to an Operations Committee. COSTA MESA SANITARY DISTRICT PAGE 21 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 • Director Perry moved to combine the Sewer and Recycling Committees into an Operations Committee. Director Scheafer seconded the motion. General Manager Carroll addressed the pro's and con's of doing so. Director Fitzpatrick felt that since he is Chair of the Recycling Committee, it has been a rich and robust group and that combining the committees would diminish both. District Counsel Burns noted that the Board would need to adopt a resolution if something like that is done. President Ooten indicated the committees should remain separate. Director Fitzpatrick made a substitute motion to keep the committees separate. President Ooten seconded the motion. The motion failed 2 -3 with Directors Scheafer, Perry and Ferryman, opposed. Discussion followed regarding justification for combining the committees and the possibility of finding another Chair. Director Fitzpatrick presented his arguments for Chairing the newly formed Operations • Committee. A call of the original motion resulted in the motion carrying 4 -1 with Director Fitzpatrick, opposed. Director Scheafer moved to nominate Director Ferryman as Chair of the newly formed Operations Committee. Director Perry seconded the nomination. The motion carried 4 -1 with Director Fitzpatrick, opposed. Director Perry suggested forming a personnel committee. General Manager Carroll reported that personnel issues should be out of the Board's hands and that the Board handle only policy - related issues. Director Scheafer recommended suspension of the Branding Committee for two months. Director Fitzpatrick inquired regarding addressing filming and the need to move the item forward. The issue will be brought before the Operations Committee. Discussion followed regarding the need to bring a resolution to the Board at its meeting on April 16, 2012. It was noted that there will be no Operations Committee meeting in the month of April. • ORAL COMMUNICATIONS AND DIRECTOR COMMENTS Director Fitzpatrick felt the OCSD is the Board's most important appointment and that leadership is lacking. COSTA MESA SANITARY DISTRICT PAGE 22 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD MARCH 22, 2012 Director Fitzpatrick moved to appoint President Ooten as the primary liaison to the OCSD. The motion died for lack of a second. Director Ferryman requested that the City of Costa Mesa provide a copy of the legal opinion rendered by Kim Barlow, former City Attorney, regarding incompatibility of office. Mr. Burns advised the item should be considered as part of the agenda at a regular Board meeting. Director Ferryman requested placement of the item on the agenda of the next regular meeting of the Board. Director Fitzpatrick requested a formal CMSD investigation regarding leak of legal information regarding Meyers -Nave issues to the public. Director Perry reported he gave the information to. a reporter and thought it was appropriate. Director Fitzpatrick requested a formal legal opinion. District Counsel Burns addressed his comments that issues disclosed in closed session . could not be discussed. But if it is an attorney - client matter and it is disclosed, the Member would risk the ire of the other Members. He added it is the client's right to break that privilege. He indicated the need for Board action and the need for concurrence. He stated the Board's rule that one Director shall not cause action which would cause expenses for the District. Discussion followed regarding Meyers -Nave read in open session. Director Fitzpatrick requested placement of the item in the agenda for the Board's April 16, 2012 meeting. Director Scheafer addressed a Taco retailer that has an electronics recycling bin on their premises. He reported an email regarding an editorial by Director Fitzpatrick that the Board Members have been part of an orchestrated attempt to remove him from office. Director Scheafer clarified that nothing has been orchestrated and stated he felt that the editorial infers there has been a Brown Act violation. He indicated these were misstatements and that care should be taken regarding what is said. Director Fitzpatrick reported on a recent meeting with the Midway Sanitary District where the full Board attended and there was no notice of the meeting. He felt that was a violation of the Brown Act. General. Manager Carroll stated that he believes the meeting was not noticed, but could not • confirm. President Ooten added that no actions or decisions were made by the Board at that COSTA MESA SANITARY DISTRICT PAGE 23 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING FIELD MARCH 22, 2012 meeting. Director Scheafer requested a legal opinion on the matter. District Counsel Burns reported he will look into the matter and return with a report to the Board and agreed there might be an issue. ADJOURNMENT President Ooten adjourned the meeting at 10:48 p.m. Secretary President • •