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Minutes - Board - 2012-07-26COSTA MESA SANITARY DISTRICT MINUTES OF BOARD OF DIRECTORS REGULAR MEETING JULY 26, 2012 I. CALL TO ORDER The Board of Directors of the Costa Mesa Sanitary District met in regular session on July 26, 2012 at 5:30 p.m. at 628 W. 19th Street, Costa Mesa. I1. PLEDGE OF President Ooten led the Pledge of ALLEGIANCE Allegiance. III. INVOCATION Director Scheafer led the Invocation. IV. ROLL CALL DIRECTORS PRESENT: Robert Ooten, James Ferryman, Jim Fitzpatrick, Art Perry, Mike Scheafer DIRECTORS ABSENT: None STAFF PRESENT: Scott Carroll, General Manager; Anna Sanchez, Administrative Service Manager; Robin B. Hamers, District Engineer; Alan Burns, District Counsel; Marc Davis, District Treasurer; Teresa Gonzalez, Accounting Manager; Noelani Middenway, Deputy District Clerk; Javier Ochiqui, Management Analyst OTHERS PRESENT: Dean Ruffridge, CR &R; Lawrence Jones, CR &R; Don Harper, Resident; Jim Mosher, Newport Beach Resident; John Bartel, Bartel Associates V. CEREMONIAL MATTERS AND PRESENTATIONS None. VI. ANNOUNCEMENT OF LATE COMMUNICATIONS None. COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 VII. CONSENT CALENDAR REPORTS A. MINUTE APPROVAL 1. Operations Committee — June 19, This item was pulled from the Consent 2012 Calendar for separate vote. 2. Regular Board of Directors Meeting — This item was pulled from the Consent May 24, 2012 and June 28, 2012 Calendar for separate vote. B. FINANCIAL REPORTS 3. Occupancy Report and payment to The Occupancy Report and payment to Costa Mesa Disposal — July 2012 Costa Mesa Disposal for July 2012, was approved as submitted. 4. Contract Payment to CR Transfer for The Contract Payment to CR Transfer for Recycling Services & Disposal for Recycling Services & Disposal for June .June 2012 2012 was ratified. 5. Adoption of Warrant Resolution No. CMSD 2013 -1 Ratifying Payment for the Month of June 2012 in the amount of $1,025,063 The payment was approved and ratified. 6. Directors' Compensation and Directors' Compensation and Reimbursement of Expenses for the Reimbursement of Expenses for the Month Month of June 2012 of June 2012, as listed in the Agenda Report dated July 26, 2012, were approved and ratified. 7. Budget Transfer for Installation of The Budget Transfer for Installation of Electric Strike on HQ Door System Electric Strike on HQ Door System was approved. 8. Conflict of Interest Code Biennial The Conflict of Interest Code Biennial Update Update was approved. 9. Resolution No. 2012 -817, Authorizing Resolution No. 2012 -817, Authorizing the the Disposition of District Assets Disposition of District Assets was adopted. COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 10. Strategic Plan for Fiscal Years The Strategic Plan for Fiscal Years 2010 -15 — Quarterly Progress Report 2010 -15 — Quarterly Progress Report 2011-123 rd and 4th Quarters 2011 -12 3rd and 4th Quarters was received and filed. END OF CONSENT CALENDAR Regarding the minutes from the Operations Committee meeting of June 19, 2012, and the minutes from the May 24, 2012 Regular Board of Directors meeting, General Manager Carroll noted typographical corrections to be made. Director Scheafer moved to accept the minutes from the May 24, 2012, Regular Board Meeting and June 19, 2012 Operations Committee Meeting with the noted corrections. Director Ferryman seconded the motion, which carried 5 -0. VIII. PUBLIC HEARING NONE IX. PUBLIC COMMENTS President Ooten opened the Public Comments section of the meeting and invited those interested in addressing the Board to do so at that time. There was one public comment by Jim Mosher, a Newport Beach resident. President Ooten closed the Public Comments section of the meeting. X. GENERAL MANAGERS REPORTS 11. Pension and Retirement Health Unfunded Liability Administrative Service Manager Sanchez introduced Mr. John Bartell of Bartell Associates who provided a presentation on the pension and retirement health unfunded liability. Mr. Bartell presented an actuarial study on the unfunded pension liability and retirement health unfunded liability facing the District in future years. He addressed the District's pension benefits unfunded and other post - employment benefits (OPEB) compared to others. He indicated that staff sought direction from the Board to establish a reserve for retirement when CalPERS releases CMSD's actuary results, to reserve 50% from the Solid Waste fund balance and 50% from the Liquid Waste fund balance to the retirement fund, and to prefund OPEB in an irrevocable CalPERS Trust at 7 %. COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 Discussion followed regarding the employers obligations to continue to pay into the CalPERS account post an employee's retirement, and the differences in contribution rates between Tier 1 and Tier 2 contributors. General Manager Carroll requested direction from the Board based on the recommendations of Mr. Bartell to establish a reserve fund for retirement. President Ooten recommended that staff report back to the Board of Directors upon receipt of the CalPERS actuary results. Director Fitzpatrick made a motion that staff report back to the Board to specifically review a 50/50 reserve and OPEB irrevocable trust when CalPERS releases the CMSD's actuary results. This motion failed for lack of a second. Director Ferryman questioned if there were any advantages or disadvantages if the District were to invest monies prior to receiving CMSD's actuary results. Mr. Bartell commented that the advantage or disadvantage depends on the rate of return at the time CalPERS makes the investment. Director Fitzpatrick moved to direct staff to prefund OPEB in an irrevocable CalPERS trust at 7 %. Director Scheafer seconded the motion with a question. Director Scheafer questioned as to how the $17,000 would be funded annually. Accounting Manager Gonzalez indicated that the $17,000 could be split 50/50 between the Liquid Waste and Solid Waste funds or based on the percentage of salaries within each fund. Director Fitzpatrick amended his previous motion and moved to direct staff to prefund OPEB in an irrevocable CalPERS trust at 7% sourced from the Solid Waste and Liquid Waste funds based on the corresponding salary percentages. Director Scheafer seconded the motion, which carried 5 -0. Director Fitzpatrick moved to direct staff to establish a reserve for retirement when CalPERS releases CMSD's actuary results and direct Staff to reserve 50/50 from the Solid Waste and Liquid Waste funds to establish that retirement reserve. Director Scheafer seconded the motion with a question as to if the same corresponding salary percentages should apply. Director Fitzpatrick revised his motion and moved to direct staff to establish a reserve for retirement when CalPERS releases CMSD's actual results and direct staff to establish a reserve reflecting the salaries of the Liquid Waste and Solid Waste funds. Director Scheafer agreed to the revision of the motion. The motion carried 5 -0. COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 12. Quarterly Budget Report General Manager Carroll introduced the item as the Quarterly Budget Report, which would also serve as the Year End Budget Report. He reported that there was a surplus is both the Liquid Waste and Solid Waste funds and turned the time over to Accounting Manager Teresa Gonzalez to provide the report. Accounting Manager Teresa Gonzalez presented the Quarterly Budget Report for the quarter and year ending June 30, 2012. She noted that figures of the report are preliminary as additional accruals and adjustments are being made and shows a projected surplus of $320,310 in the Liquid Waste fund and $207,233 in the Solid Waste fund. She noted that the figures were based on the operations and maintenance expenses and did not factor in the revenues. Discussion followed regarding the flow of projects and the balances of the capital improvement projects. Ms. Gonzalez noted that the remaining funds for completed capital projects will be rolled over into the next fiscal year. Director Fitzpatrick suggested that the calculating, charting and budgeting of tonnage in comparison to the rates that General Manager Carroll recently completed would be beneficial for the Operations Committee to review at an upcoming meeting. Discussion followed regarding the raising of the solid waste fund and the tonnage reflections. President Ooten instructed staff to place the calculating, charting and budgeting of tonnage in comparison to the rates on the upcoming Operations Committee meeting agenda. Director Scheafer posed a question regarding the payment of liability insurance for liquid waste and solid waste. Discussion followed regarding the purchasing and allocation of insurance and whether or not the District is audited based on its payroll. Administrative Service Manager Anna Sanchez noted that SDRMA conducts a comparison based on what is submitted in the annual report. The report was received and filed. 13. Project #195 — Front Lobby Expansion General Manager Carroll reported that the construction of the project came in under budget, however, the overall expense for the project exceeded the budgeted amount by $7,677. COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 Director Scheafer moved to accept the improvements, exonerate the bonds and file a notice of completion. Director Ferryman seconded the motion, which carried 5 -0. 14. Consider Establishing a Second Monthly Board Meeting to Replace the Operations Committee General Manager Carroll presented details of the request to replace the Operations Committee meeting with a second monthly Board meeting. He noted that only two Board Members can participate in action items and the other Board Members attending the meeting as observers are unable to share important information with the Committee. He indicated that, should it be the desire to have all Board members participates in these types of meetings, staff recommends that the Board establish a Board of Directors Workshop in the morning on the second Thursday of the month to strictly focus on sewer and solid waste related items. Director Fitzpatrick commented that he was the champion of this recommendation. He expressed interest in re- establishing the Recycling and Sewer Committees. Director Scheafer commented on the limitations of having only two committee members being able to speak and expressed concern that the Operations Committee meeting seemed very cumbersome. He indicated that he would like to continue the Operations Committee meeting for another couple of months and bring it back to the Board for evaluation. Discussion followed regarding presentations and the possibility of holding a second monthly Operations Committee meeting or a Special meeting. Director Ferryman moved to maintain the Operations Committee meeting schedule for another two months and bring it back to the Board for re- evaluation. Director Scheafer seconded the motion, which carried 5 -0. 15. Award Contract to Manufacture and Deliver One Vactor Truck General Manager Carroll presented details on the contract with Municipal Maintenance Equipment to manufacture and deliver one vactor truck. He indicated that the cost is well below the budgeted amount of $390,000, and that staff approved additional add - ons to the vehicle specifications for a total cost of $333,164.88 Discussion followed regarding the location of Municipal Maintenance Equipment's repair shop, the warranty on the vehicle, and the manufacturing and delivery turn- around time. COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 Director Scheafer moved to award a contract to Municipal Maintenance Equipment (MME) in the amount of $333,164.58 for the manufacturing and delivering one combination vactor truck. Director Perry seconded the motion, which carried 5 -0. OPERATIONS COMMITTEE 16. Friday, July 20, 9:30 a.m. (Director Ferryman and Director Perry) Director Ferryman reported that waste diversion had increased from 54% to 57 %. General Manager Carroll indicated that there was an error in the report and it was confirmed the waste diversion had not increased and the percentage remained consistent with previous months at 54 %. He added that Management Analyst Javier Ochiqui will bring the information forward at the next Operations Committee meeting. Director Ferryman provided background on the report presented by Harvest -to -Home. He indicated that staff was instructed to collaborate with Harvest -to -Home on incorporating the District's composting equipment into their business function. Discussion followed regarding the excellent work staff had done on the District's promotional videos. General Manager Carroll indicated that the videos will be placed on DVD's to be provided as educational tools for the schools and suggested providing the same DVD's to new residents. Director Ferryman spoke of the Orange Coast College (OCC) recycling center expansion and the District's possible financial involvement. The recycling tonnage was discussed and the reporting requirements. Director Fitzpatrick indicated that he would like to discuss the utilization of the solid waste fund and what is considered to determine a gift of public funds. He expressed interest in discussing OCC's financial needs for their expansion. Director Ferryman reported details of the trash cans in the alleys and household hazardous waste program, signage on the CR &R trucks and the PICA project. District Engineer Rob Harriers provided details on the success of the recently completed PICA project and confirmed that there are spot repairs to be made. Discussion followed regarding the timetable to conduct the repairs. Mr. Harriers reported on the FOG management program and indicated that it is going very well. Director Perry questioned District Engineer Harriers on the status of installation of the backup power and pumping program. Mr. Harriers indicated that they are approaching COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 the end of the design phase and are considering prequalification of bidders or potential sole sourcing of the project. ENGINEER'S REPORTS 17. Project Status Report District Engineer Hamers indicated that all projects are successfully moving forward as scheduled. There were no additional comments or questions regarding this item and the report was accepted. 18. Project #129 Bristol Street Sewer Replacement, Phase II Improvements Director Schaefer moved to accept the improvements, file notice of completion and exonerate bonds. Director Perry seconded the motion, which carried 5 -0. 19. Project #164 Root Control Program District Engineer Hamers indicated that there were approximately 13 hot spots and that General Manager Carroll spearheaded a hot spot meeting. Director Ferryman moved to accept the improvements, file notice of completion and exonerate bonds. Director Schaefer seconded the motion, which carried 5 -0. 20. Sewer Cleaning Program Mr. Hamers indicated that the staff report suggests that the District could clean one half of the yearly footage and National Plant Services (NPS) could clean the other half of the footage, resulting in a savings of over $100,000 per year. He noted that we are in the third year of the three year contract and indicated that a renegotiation of the contract would be acceptable to request that they reduce their footage. Director Ferryman questioned if NPS would increase their rate due to the decrease in volume. Discussion followed regarding the current cost of cleaning per foot and the flexibility in cleaning the lines. District Engineer Hamers noted that the Board did not need to make an immediate decision on this item and suggested that a decision be made after the District had receives the new vactor truck and staff has completes training on the new equipment. COSTA MESA SANITARY DISTRICT PAGE 9 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 Director Scheafer suggested that, as a courtesy, staff notifies NPS of the District's new vactor truck and that the District is taking action. TREASURER'S REPORT 21. Investment Report for the month of June 2012 District Treasurer Marc Davis reported on an overview of the investments and portfolio earnings. He noted that the investments portfolio was in compliance with the investment policy. President Ooten requested to see a breakout on future reports of those funds that have been reserved or designated for future use. Director Scheafer moved to accept the investment report of June 2012. Director Fitzpatrick seconded the motion, which carried 5 -0. 22. Resolution No. 2012 -818, Adopting Statement of Investment Policy for Fiscal Year 2012 -13 District Treasurer Davis presented background on Resolution No. 2012 -818 adopting Statement of Investment Policy delegating authorization for the Treasurer to make investments on the behalf of the District. Director Perry moved to adopt Resolution No. 2012 -818. Director Scheafer seconded the motion, which carried 5 -0. ATTORNEY'S REPORTS District Counsel Alan Burns confirmed with the Board that they had received his memo regarding the suspension of part of the Brown Act and indicated that the District will maintain compliance with the Brown Act. He also reported that Fair Political Practice Commission Regulation 18705.5 had been amended and adopted. Discussion followed regarding the partial suspension of the Brown Act due to the inability to fund the mandate and whether it was a necessity for the District to publicize its decision to continue to abide by the Brown Act regulations. Accounting Manager Gonzalez stated that the District has submitted claims for the past seven years and has never received any payments in return. COSTA MESA SANITARY DISTRICT PAGE 10 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 CLERK OF THE DISTRICT'S REPORT 23. Resolution No. 2012 -819, Ordering that Ordinance No. 90 Has Been Published 24. Resolution No. 2012 -820, Ordering that Ordinance No. 91 Has Been Published Director Ferryman moved to approve Resolution No. 2012 -819 and Resolution No. 2012 -820. Director Perry seconded the motion, which carried 5 -0. LOCAL MEETINGS One public comment was received by Mr. Mosier regarding a possible typographical error in the Government Code listed on the agenda. Legal Counsel Burns responded that the Government Code was correct and that the District is in full compliance. He added that corrections will be made, if any, and will be brought to the Board's attention. Discussion followed regarding the clarification of compensation per day versus per diem, and the regulations of AB1234 regarding expense reimbursement. A. Orange County Sanitation District (OCSD) Director Ferryman reported on the OCSDs secondary treatment project to be completed in November. He also discussed information that he received from PIMCO, commented on the upcoming community open house, and that OCSD's fleet services was recognized in the top 100 best government fleet services in the nation. B. Santa Ana River Flood Protection Agency (SARFPA) Director Ferryman commented that the District is currently in a lawsuit with SARFPA and they have appointed the arbitrators. Should the District not prevail, there is a possibility that the District will need to replace a line at a cost of approximately $100,000,000.00 C. Independent Special Districts of Orange County (ISDOC) None D. California Special Districts Association (CSDA) None COSTA MESA SANITARY DISTRICT PAGE 11 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 E. California Association of Sanitation Agencies (CASA) None F. Other Meetings Qualifying for Reimbursement under CMSD Ordinance No. 55, Operations Code Section 3.01.030 President Ooten reported on the Chamber of Commerce meeting he attended where City of Costa Mesa Chief of Police Tom Gazsi spoke and noted that crime had slightly increased but is still significantly less than years passed. Director Perry added that Costa Mesa is utilizing the Huntington Beach Police Department's helicopter service on an on -call basis at a significantly reduced rate while receiving exceptional service. Director Scheafer reported that he would be attending a CSDA training in Vista, CA regarding a Board Members role in Human Resources for General Managers evaluations on Friday, July 27, 2012. He also stated that he will be attending the quarterly ISDOC meeting on Tuesday, August 7, 2012 at 7:30a.m. Discussion followed regarding the timeframe in which expense reimbursement reports were to be submitted. It was noted that expense reports for the current month are to be submitted at the end of the current month for approval at the next month's. Board of Directors meeting. OLD BUSINESS None NEW BUSINESS None ORAL COMMUNICATIONS AND DIRECTOR COMMENTS Director Scheafer reported on a soliciting flyer that was left at his residence from a recycling company for collection and removal of household items. He expressed concern that the recycling company's services were not in accordance with the District's regulations. Discussion followed regarding the possibility that a second recycling company violates the District's contract with CR &R. Legal Counsel Burns indicated that the recycling company may not be in violation per the Palm Springs Recycling case that states until the resident places the trash out to be COSTA MESA SANITARY DISTRICT PAGE 12 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 collected by the trash collector, the trash belongs to the resident and may be disposed of. District Engineer Hamers commented on Director Ferryman's report on OCSDs secondary treatment project and noted that at peak construction OCSD spent over one million dollars a day and had 13 cranes operating at pump station number one. Director Fitzpatrick commented that he thought it would be a good idea for Staff to partner with Mesa Water District on the closed loop system for the community to see how these organizations work together and the benefit that the community is versus others in the county and state. Director Fitzpatrick made a recommendation that staff consider posting campaign disclosure forms online for public viewing. President Ooten concurred with the recommendation and directed staff to place this item on the Operations Committee agenda. Director Fitzpatrick commented on his interest in discussing the use of the solid waste fund at an upcoming meeting. General Manager Carroll indicated that a Special Meeting is scheduled for September to specifically address a solid waste technology study and indicated that it may be an opportune time to discuss alternative projects. Discussion followed regarding the calendaring of agenda topics to be scheduled for discussion at future meetings and possibly incorporating the topics to be reported on as a standing report during the Operations Committee meetings. President Ooten commented that September may be a good time to begin the calendaring of agenda topics to be discussed at future meetings. PUBLIC COMMENTS ON CLOSED SESSION ITEM Legal Counsel Burns indicated that Director Fitzpatrick would not be able to address the Board as a member of the Board but would be able to comment as a member of the public. Director Fitzpatrick indicated that he had comments to state as a Board Member and comments to make as a member of the public. Mr. Mosher, Newport Beach resident, questioned if the closed session item were two separate items and expressed concern regarding the proper noticing of the closed session item. He commented that he felt this item is no longer theoretical as Director Fitzpatrick had resigned from the Planning Commission. COSTA MESA SANITARY DISTRICT PAGE 13 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 Legal Counsel Burns clarified that the closed session item is one item to discuss the payment of legal fees. Director Fitzpatrick indicated that he had a legal question regarding indemnifying a Board Member and stated that he understood that we are not in a legal action but are asking the Attorney General for the permission and opportunity to take a legal action, however, no conflict of interest has been determined. He added that his position was that no conflict exists. Legal Counsel Burns interjected and advised the Board that it was advised that Director Fitzpatrick address the Board as a member of the public and noted that the Board was certainly free to ignore his advice. Director Fitzpatrick agreed and addressed the Board as a member of the public. Mr. Fitzpatrick commented that during this action there has been a presumption of guilt by requiring him, an elected official, to move out without a determination that a conflict exists. He added that there has been a predetermination of conflict and stated that the Board has excluded him from Closed Session as a result of that and reiterated that his position is that no such conflict exists. He requested that the Board ask Legal Counsel to specifically define where the definitive conflict of interest exists. He stated that he is shocked that an elected or appointed. official can have the full weight of the government come after them. Mr. Fitzpatrick commented on the Board's negotiation strategies with NPS and indicated that a Closed Session would be appropriate to discuss real property interests as to not reveal what the negotiation strategies are. He requested that the Board vote not to take this action behind closed doors or justify to the public why the Board feels the need to take it behind closed doors. He stated that he felt the Board should conduct the people's business in front of the Board. Mr. Fitzpatrick concluded by indicating that he concurred with the member of the public's statement in that the theoretical conflict has been removed and that continuing this action and spending rate payer money is unacceptable. Legal Counsel Burns responded to Mr. Fitzpatrick's question on how to define a conflict. He indicated that a proceeding has been filed with the Attorney General and the determination as to whether the action can proceed is still pending and will ultimately determine whether or not there is a conflict. He then responded to Mr. Fitzpatrick's comment regarding not going in to Closed Session and indicated that negotiations can be discussed in open session and noted that the Board is in an adverse relationship with Director Fitzpatrick. President Ooten questioned the Board's pleasure as to whether to discuss the item in Closed or Open Session. Director Ferryman stated that the agenda states that the COSTA MESA SANITARY DISTRICT PAGE 14 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD JULY 26, 2012 Board will enter Closed Session. Director Scheafer concurred. Legal Counsel Burns read the closed session title. President Ooten recessed into closed session at 8:05PM CLOSED SESSION Conference with District Counsel — Existing Litigation (Gov. Code § 54956.9(a)) Name of case: In the Matter of the Quo Warranto Application "The People of the State of California, on the relation Costa Mesa Sanitary District, a public agency, Bob Ooten, Jim Ferryman, Mike Scheafer, and Art Perry, as individuals" — Opinion No 12 -602 Attorney Baric's request that the District pay legal fees incurred in defending Jim Fitzpatrick President Ooten reconvened the Regular Board of Directors meeting of the Costa Mesa Sanitary District at 8:30PM. REPORT ON CLOSED SESSION ACTIONS Legal Counsel Burns reported that the Board of Directors voted to deny Attorney Baric's request that the District pay legal fees incurred in defending Jim Fitzpatrick by a vote of 4-0-1 -with Director Fitzpatrick abstaining. ADJOURNMENT President Ooten adjourned the meeting at 8:35PM 1 Secretary