Ord 2015-108 ORDINANCE NO. 108
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 Finance Manager, 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 Finance Manager, determined that they should be
increased to adequately protect the District; and
WHEREAS, the Finance Manager has recommended, and the Board does
hereby approve, those recommendations to raise 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 4.03.010 of the Costa Mesa Sanitary District Operations
Code is amended to read as follows:
"4.03.010 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 30% of its operating budget within its Solid Waste
Fund and- 25% of its operating budget within its Wastewater 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 4.03.020 of the Costa Mesa Sanitary District Operations Code
is amended to read as follows:
"4.03.020 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 30% of its operating budget within its Solid Waste Fund, and 25% of its
operating budget within its Wastewater Fund.
(b) Operating Reserves Required: The Reserves for Working Capital for
Operating Funds will be maintained at a level equal to 30% of its operating budget
within its Solid Waste Fund, and 25% of its operating budget within its Wastewater
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;
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 30% of the Solid Waste operating budget and 25%
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 27th day ofAugust, 2015
'LA-A(Lk-
Secretary P,esident
APPROVED AS TO FORM:
HARPER & BURNS LLP
District Counsel
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) SS
CITY OF COSTA MESA )
I, NOELANI MIDDENWAY, Clerk of the Costa Mesa Sanitary District, hereby
certify that the above and foregoing Ordinance No. 108 was duly and regularly passed
and adopted by said Board of Directors at a regular meeting thereof, held on the2ih
day of August , 2015 by the following votes:
AYES: Scheafer, Retry, Ooten, Ferryman
NOES: None
ABSENT: Schafer
ABSTAIN: None
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the
Costa Mesa Sanitary District, this27 th day of Aug' 15.
Af,A4. riaY10.a
CI-rk of th- Cos9a San' arlstrict