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Minutes - Board - 2015-12-17 c�5p sANI rkR1. O is 'A RPORAtt° COSTA MESA SANITARY DISTRICT MINUTES OF BOARD OF DIRECTORS REGULAR MEETING DECEMBER 17, 2015 CALL TO ORDER The Board of Directors of the Costa Mesa Sanitary District met in regular session on December 17, 2015 at 5:30 P.M. at 628 W. 19`h Street, Costa Mesa. PLEDGE OF President Scheafer led the Pledge of ALLEGIANCE Allegiance. INVOCATION Vice President Perry led the Invocation. ROLL CALL DIRECTORS PRESENT: Michael Scheafer, Arthur Perry, Robert Ooten, Arlene Schafer DIRECTORS ABSENT: James Ferryman STAFF PRESENT: Alan Burns, District Counsel; Robin Hamers, District Engineer; Wendy Davis, Finance Manager; Marc Davis, District Treasurer; Noelani Middenway, District Clerk. OTHERS PRESENT: Jack Faris, Voit Real Estate. CEREMONIAL MATTERS AND PRESENTATIONS—None ANNOUNCEMENT OF LATE COMMUNICATIONS—None Scott Carroll, General Manager, shared that Alan Burns, District Counsel, recommended minor revisions to Items 1 and 2. He added that Noelani Middenway, District Clerk, made the revisions. Secretary Ooten requested that Item 4 be pulled from the consent calendar for discussion. Mr. Carroll recommended that a motion be made to add an item to the agenda after the COSTA MESA SANITARY DISTRICT PAGE 2 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 agenda was posted. The item is regarding the District's potential acquisition of a new building. He reported that the item needs action from the Board tonight because the seller needs a District response by tomorrow before he moves forward with any other offers. Assistant Secretary Schafer made a motion to add the item as presented. Secretary Ooten seconded the motion, which passed 4-0 with Director Ferryman not present. PUBLIC COMMENTS—None CONSENT CALENDAR 1. Board of Directors Study Session President Scheafer pulled this item for Meeting Minutes of November 10, discussion. 2015 2. Board of Directors Regular Meeting President Scheafer pulled this item for Minutes of November 19, 2015 discussion. 3. Occupancy Report and Payment to The Board of Directors accepted the CR&R Environmental Services occupancy count as presented using 21,927 as the correct number of active units and directed staff to prepare a warrant to CR&R Environmental Services in the amount of $213,074.04 to be ratified in the December 2015 warrant list, for November 2015 collection. 4. Contract Payment to CR&R Secretary Ooten pulled this item for Environmental Services for discussion. Recycling & Disposal Services 5. Adoption of Warrant Resolution No. The Board of Directors adopted Warrant CMSD 2016-06 Approving District Resolution No. CMSD 2016-06 approving Warrant Registers District warrants for the month of November 2015 in the amount of $731,330.68. 6. Payroll Transparency Disclosure for The Board of Directors approved the November 2015 Payroll Transparency Disclosure for November 2015. 7. Directors' Compensation and The Board of Directors approved Directors' Reimbursement of Expenses compensation and reimbursement of expenses for the month of November COSTA MESA SANITARY DISTRICT PAGE 3 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 2015. 8. Investment Report for the Month of The Board of Directors approved the November 2015 Investment Report for the month of November 2015. 9. Sewer Lateral Assistance Program The Board of Directors approved the SLAP (SLAP) Update report as presented. President Scheafer noted that Secretary Ooten requested that Item 4 be pulled from the consent calendar for discussion. Additionally, he requested that Items 1 and 2 be pulled from the consent calendar for discussion. Secretary Ooten made a motion to approve the consent calendar, omitting Items 1, 2, and 4. Assistant Secretary Schafer seconded the motion, which passed 4-0 with Director Ferryman not present. Discussion followed regarding the corrections made to the language in Items 1 and 2. Secretary Ooten made a motion to approve Items 1 and 2. Assistant Secretary Schafer seconded the motion, which passed 4-0 with Director Ferryman not present. Regarding Item 4, Secretary Ooten requested that a staff report be provided to the Board of Directors that includes the total contract payment to CR&R for recycling and disposal services rather than several individual invoices. Wendy Davis, Finance Manager, shared that CR&R has updated their software system and that the format of their bills has changed, increasing the number of bills received by the District. Mr. Carroll sought clarification regarding Secretary Ooten's request for a staff report which explains the total contract payment in addition to CR&R's invoices. Ms. Davis verified that Secretary Ooten requested for staff to format the new staff report similarly to the Occupancy Report. Additionally, she explained that District staff uses tonnage tickets to verify invoices. President Scheafer requested that the new staff report include separate totals for organic and residential waste. Discussion followed regarding whether to include a staff report in addition to CR&R's invoices or to replace the invoices with the staff report. Vice President Perry made a motion to approve Item 4. Assistant Secretary Schafer COSTA MESA SANITARY DISTRICT PAGE 4 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 seconded the motion, which passed 4-0 with Director Ferryman not present. END OF CONSENT CALENDAR PUBLIC HEARINGS—None GENERAL MANAGER'S REPORTS 10. Contract Administration for Project 196-C — Installation of Backup Power for 23rd Street Pump Station Recommendation: That the Board of Directors receive and file this report. The General Manager is approving the contract administration proposal from Robin B. Hamers & Associates (RBH) for $16,030. RBH will perform said services under his existing contract with the District. Scott Carroll, General Manager, provided report details. He explained that he will approve Robin B. Hamers & Associates' proposal to provide contract administration and services for Project 196-C to install a generator at the 23ftl Street pump station. Mr. Carroll added that the proposal is for $16,030 and it's less than ten percent of construction cost. The proposal will be included within the District's existing contract with RBH. There were no further questions or discussion and the report was received. 11. 2016 Costa Mesa Sanitary District Meeting Schedule Recommendation: That the Board of Directors approves the 2016 Costa Mesa Sanitary District meeting schedule. Scott Carroll, General Manager, presented the 2016 Costa Mesa Sanitary District Meeting Schedule for the Board of Directors to review. President Scheafer indicated that the schedule is very helpful, especially the color coding of meetings. Assistant Secretary Schafer made a motion to approve the 2016 Costa Mesa Sanitary District Meeting Schedule. Vice President Perry seconded the motion, which passed 4-0 with Director Ferryman not present. 12. Sewer System Management Plan Recommendation: That the Board of Directors approve the updates and recertify the Sewer System Management Plan, as mandated by the State Water Resources Control Board. Scott Carroll, General Manager, provided report details. He shared that revisions have been made to the Sewer System Management Plan (SSMP) as a result of the recent COSTA MESA SANITARY DISTRICT PAGE 5 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 audit by Willdan Engineering. Mr. Carroll noted that a short and long-term Capital Improvement Project (CIP) schedule have been added to the SSMP and it is now compliant with the new 2015 guidelines. Additionally, he shared that the SSMP has been reviewed by District Engineer, Robin Hamers, District Counsel, Alan Burns, and Wastewater Maintenance Superintendent, Steve Cano. Mr. Carroll noted that the SSMP is being presented to the Board of Directors for recertification, and once it is recertified, the District will add the updated SSMP to its website. Vice President Perry requested verification regarding the City of Costa Mesa's involvement in performing maintenance on the District's portable generators, as noted on page 18 of the SSMP. Mr. Carroll explained that the City of Costa Mesa performs regular scheduled maintenance on the District's portable generators. Vice President Perry indicated that he was under the impression that the City of Costa Mesa no longer maintained the District's generators. Discussion followed regarding the Board of Directors' decision to no longer have the City of Costa Mesa provide maintenance on the District's bypass pumps rather than the portable generators. Mr. Carroll reiterated that the District's portable generators are still maintained by the City of Costa Mesa. Discussion followed regarding the City of Costa Mesa's rate and qualifications to perform maintenance on the portable generators. District Engineer, Robin Hamers, commended Mr. Carroll for updating the SSMP and noted that the District updates its SSMP each time a self-audit is completed. President Scheafer commended all those who worked on the SSMP. Vice President Perry requested clarification as to whether the District must now submit the updated SSMP to the state. Mr. Hamers shared that he will notify the state by adding the SSMP to the online database once the Board of Directors approves recertification. Additionally, he requested that District Clerk, Noelani Middenway, send the Board of Directors the updated SSMP as a pdf file. Discussion followed regarding the Orange County Sanitary District's SSMP. Vice President Perry made a motion to adopt and recertify the Sewer System Management Plan. Secretary Ooten seconded the motion, which passed 4-0 with COSTA MESA SANITARY DISTRICT PAGE 6 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 Director Ferryman not present. 13. Refund of Sanitary Assessment Overpayment— 1015 Mission Drive Recommendation: That the Board of Directors approve a refund in the amount of $290.56. Finance Manager, Wendy Davis, provided report details. She explained that the staff report exhibits a request for a refund in the amount of $290.56 for the owner of 1015 Mission Drive, Costa Mesa, CA 92626. Ms. Davis noted that the resident owns a set of two duplexes that were charged as four single family residences and the refund would cover partial sewer assessments for the prior year and the current year. She added that multifamily residents (such as duplexes) are charged a lower wastewater rate than single family residences. Vice President Perry requested verification regarding the refund of the current year's sewer assessment. Ms. Davis confirmed that the resident has already paid for the current year's assessment. Discussion followed regarding the resident's assertions and the past 20 years of the District's rate history. Ms. Davis explained that the District has increased its rates over the past 20 years and the difference between the rates of single family and multifamily residences has increased as well. She noted that under tort law, the District can only refund the resident for the last and current fiscal years unless the resident had paid under protest. Ms. Davis added that the resident did not state on his check payment that he had paid under protest. Discussion followed regarding the District's policy regarding refunds. Ms. Davis noted that the resident may be refunded for the current year's sewer assessment because the District has verified that he has paid for the current year. Secretary Ooten made a motion to approve the refund. Vice President Perry seconded the motion, which passed 4-0 with Director Ferryman not present. Vice President Perry requested verification that the proper adjustments will be made to the resident's account to ensure correct billing in the future. Ms. Davis verified that the property information will be corrected in the District's system. COSTA MESA SANITARY DISTRICT PAGE 7 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 14. Establishing an Ad Hoc Committee for Developing a Program to Beautify Pump Station Control Panels through Public Art Recommendation: That the Board of Directors appoints two Board members to serve on the Ad Hoc Committee for developing a program to beautify pump station control panels through public art. Scott Carroll, General Manager, provided report details. He explained that staff presented a pilot program to beautify the pump station control panels through public art at the December 8, 2015 Study Session. Mr. Carroll noted that the Board of Directors directed staff to recommend establishing an Ad Hoc Committee where two Board Members would be appointed to meet with staff and develop the criteria for the program. Discussion followed regarding the length of the Ad Hoc Committee, the criteria for the program, and the financial impact of the Ad Hoc Committee. President Scheafer and Vice President Perry volunteered to join the Ad Hoc Committee. Secretary Ooten made a motion to appoint President Scheafer and Vice President Perry to serve on the Ad Hoc Committee for developing a program to beautify pump station control panels through public art. Assistant Secretary Schafer seconded the motion, which passed 4-0 with Director Ferryman not present. ENGINEER'S REPORTS 15. Prosect Status Report Recommendation: That the Board of Directors receive and file the report. Robin Hamers, District Engineer, offered to answer any questions regarding the Project Status Report. There were no questions or comments and the report was received. 16. Conflict of Interest Report Recommendation: That the Board of Directors receive and file the report. Robin Hamers, District Engineer, provided report details regarding the declaration of conflict of interest, and the resulting recusal and referral to the Alternate Engineer. He noted that the form has been reviewed by District Counsel, Alan Burns. There were no additional questions or comments and the report was received. 17. Award Contract — Project 196-C, Installation of Backup Power for 23rtl Street Pump Station Recommendation: That the Board of Directors approve the following: COSTA MESA SANITARY DISTRICT PAGE 8 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 1. Award a contract to the lowest responsive and responsible bidder, TSR Construction and Inspection, in the amount of$179,400.00; and 2. Approve a contingency of 10% in the amount of$17,940.00 Robin Hamers, District Engineer, provided report details. He explained that the project went out to bid and the lowest bidder was TSR Construction and Inspection, the same company that installed the generator for the Canyon Pump Station. Mr. Hamers noted that there have been delays to the project, but that this is the final permanent generator that will be installed under Project 196-C. Additionally, he noted that Mr. Carroll's estimated construction cost of the project ($1,000,000) is quite close to the current total cost of$1,080,000. Assistant Secretary Schafer made a motion to award the contract for Project 196-C, Installation of Backup Power for 23rd Street Pump Station, to TSR Construction and Inspection and approve the contingency of $17,940.00. Secretary Ooten seconded the motion. Secretary Ooten requested clarification regarding the number of District pump stations and generators. Discussion followed regarding main pump stations that have permanent generators and those which have portable generators. Vice President Perry requested an update regarding the Adams Street project. Mr. Carroll replied that a letter has been sent to the resident, but the District has not received a reply. Mr. Hamers commended Mr. Carroll for his accomplishment of providing emergency equipment for 20 District pump stations. Discussion followed regarding other emergency precautions that can be taken. The vote passed 4-0 with Director Ferryman not present. TREASURER'S REPORTS-None ATTORNEY'S REPORTS 18. Proposed Changes to the Bidding Process and Proposed Changes to the District Engineer's Agreement Recommendation: That the Board of Directors approve the following: 1. Adopt Ordinance No. 111 that revises the bidding process; and 2. The Amendment to the District Engineer's Agreement COSTA MESA SANITARY DISTRICT PAGE 9 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 Alan Burns, District Counsel, provided report details. He explained that Ordinance No. 111 seeks to ensure that the District is clear and consistent in showing that the District Treasurer, District Engineer, and District Counsel are independent contractors. Mr. Burns noted that the amendment to the District Engineer's Agreement further clarifies language to reiterate that Mr. Hamers is an independent contractor rather than a District employee. Additionally, he noted that Ordinance No. 111 creates a new exception to the bidding requirement for specialized services. Vice President Perry commented that these proposed changes were discussed at the December 8, 2015 Study Session. Secretary Ooten made a motion to adopt Ordinance No. 111. Vice President Perry seconded the motion, which passed 4-0 with Director Ferryman not present. Assistant Secretary Schafer made a motion to approve the Amendment to the District Engineer's Agreement. Vice President Perry seconded the motion, which passed 4-0 with Director Ferryman not present. LOCAL MEETINGS A. Orange County Sanitation District (OCSD)— (Secretary Ooten) Recommendation: That the Board of Directors accepts oral report. Secretary Ooten reported that the OCSD meeting had a short agenda and the most notable item was the introduction of the new Sewer System Management Plan (SSMP). B. Santa Ana River Flood Protection Agency (SARFPA)— (Vice President Perry) Recommendation: That the Board of Directors accepts oral report. Vice President Perry reported that there was no SARFRA meeting this month. C. Independent Special Districts of Orange County (ISDOC) — (President Scheafer) Recommendation: That the Board of Directors accepts oral report. President Scheafer reported that there was an Executive Committee Meeting during the previous week. He noted that there was a discussion regarding whether ISDOC should participate in the discussion with the Grand Jury. President Scheafer also shared that the notable topic at the Local Agency Formation Commission (LAFCO) was the East Orange County Water District and Irvine Ranch Water District applications to acquire OCSD wastewater system in North Tustin. Lastly, he noted that according to the Association of California Water Agencies (ACWA) report, Districts must use one third of any benefits that they receive from Prop 1 to benefit the Delta. D. California Special Districts Association (CSDA) - (Assistant Secretary COSTA MESA SANITARY DISTRICT PAGE 10 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 Schafer) Recommendation: That the Board of Directors accepts oral report. Assistant Secretary Schafer reported that she is currently part of a working group for the state Grand Jury. She shared that they will have a phone conference on December 21, 2015 and that their overall purpose is to help the state Grand Jury understand special districts. Assistant Secretary Schafer also noted that she attended the last CSDA Legislation Committee meeting of the year and she has been reappointed to the new Legislation Committee as well as the Membership Committee. Lastly, she shared that she found the Waste Management Conference to be very educational. E. Special District Risk Management Authority (SDRMAI—(President Scheafer) Recommendation: That the Board of Directors accepts oral report. Nothing to report at this time. F. Other Meetings Qualifying for Reimbursement under CMSD Ordinance No. 55 Operations Code Section 3.01.030 Recommendation: That the Board of Directors accepts oral report. Vice President Perry reported that he and Assistant Secretary Schafer had their next to last Ad Hoc Meeting for the Employee Handbook. He added that they will present all of their findings once the Ad Hoc meetings are over. In regards to the Water Advisory Committee of Orange County (WACO), Vice President Perry shared that President Scheafer, Assistant Secretary Schafer, and Director Ferryman also attended. He noted that allocations to Metropolitan Water District are increasing from 5% to 10% and that water consumption in the state of California has decreased. Discussion followed regarding the speakers and officer elections at the WACO meeting. OLD BUSINESS—None NEW BUSINESS—None ORAL COMMUNICATIONS AND DIRECTOR COMMENTS President Scheafer wished the Board of Directors and staff a happy holiday season. 19. Emergency Item Recommendation: That the Board of Directors provide direction to staff to proceed with an offer of $3,750,000 for 290 Paularino Avenue, Costa Mesa, CA 92626. Scott Carroll, General Manager, shared that this item was brought to the Board of Directors' attention after the agenda was posted regarding consideration to acquire a COSTA MESA SANITARY DISTRICT PAGE 11 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 building at 290 Paularino Avenue, Costa Mesa, CA 92626. He indicated that the topic is urgent because the seller is looking to sell the property quickly but is awaiting the District's decision before accepting any other offers. Mr. Carroll noted that the Board of Directors made a motion to have the item added to the agenda and approved it unanimously. District Counsel, Alan Burns, indicated that the discussion is not necessarily an emergency item, but there is a need for the Board of Directors to take immediate action. He noted that the Board of Directors approved the addition of the item by a 2/3 vote. Mr. Carroll presented a slideshow featuring photographs of the property and its layout. He noted that the primary reason that the District has considered acquiring a new property is a lack of necessary parking spaces and seating area for Board meetings. He noted that prospective property has 42 parking spaces. Discussion followed regarding the layout of the property. Mr. Carroll shared that the property has ample space and there is a possibility of subletting a portion of it to produce additional revenue. He noted that the current tenants have a lease that ends in April of 2016. Mr. Carroll indicated that improvements should be made to the building if it is purchased, including making the restrooms and entrance compliant with Americans with Disabilities Act (ADA), installing a video recorder in the Board Room, installing fire sprinklers, adding security doors, adding a community center, and fencing off a parking space for the Code Enforcement vehicle. Lastly, Mr. Carroll shared that the current offer is $3,750,000 (approximately $341 per square foot). Discussion followed regarding the current offer and comparable properties in the area. Mr. Carroll requested direction from the Board of Directors regarding proceeding with the recommended offer of $3,750,000. He added that the cost can be offset by selling the District's current building at 628 West 191h Street. Discussion followed regarding the cost of making improvements to the building, the amount of space the District could potentially sublet, and possible plans to add a community room. Finance Manager, Wendy Davis, recommended that the District finance the cost of the building. Discussion followed regarding the possibility of renting out the District's current headquarters, the challenges of renting and maintaining the building, and the possibility that financing could negatively impact the chances of the District's offer being accepted. Jack Faris, Voit Real Estate, commented that the District has positioned itself as a potential cash buyer. COSTA MESA SANITARY DISTRICT PAGE 12 MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING HELD DECEMBER 17, 2015 District Treasurer, Marc Davis, made the recommendation that the District pay in cash up front and then work with CSDA Finance Corporation to acquire the property through a lease purchase. He noted that there would be no restriction of assets and no need to pledge a revenue stream, but the District would need to budget the lease payments annually through a 10 or 20-year lease term. Mr. Davis added that interest rates may change to approximately 3.5 - 5% depending on the District's method of payment. Discussion followed regarding funding options. Mr. Davis indicated that in order to pay in cash, the District would need to liquidate an investment. Discussion followed regarding the District's waste and wastewater rates. ADJOURN To CLOSED SESSION President Scheafer adjourned to closed session regarding property negotiations for 290 Paularino Avenue, Costa Mesa, CA 92626 at 6:57 P.M. RECONVENE TO OPEN SESSION President Scheafer reconvened to open session at 7:10 P.M. He indicated that the Board of Directors directed Mr. Carroll to proceed with making an offer on the property at 290 Paularino Avenue, Costa Mesa, CA 92626. Vice President Perry commented that Director Ferryman should be informed of the plan and requested the Board have a special meeting on December 22, 2015. ADJOURNMENT There being no further business to come before the Board, President Scheafer adjourned the meeting at 7:11 P.M. tA ( 7 _ i Robert Ooten Michael Scheafer Secretary President