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COSTA MESA SANITARY DISTRICT
MINUTES OF BOARD OF DIRECTORS REGULAR MEETING
JULY 28, 2016
CALL TO ORDER The Board of Directors of the Costa Mesa
Sanitary District met in regular session on
July 28, 2016 at 5:30 P.M. at 628 W. 19th
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, James Ferryman
DIRECTORS ABSENT: None
STAFF PRESENT: Scott Carroll, General Manager; Alan Burns,
District Counsel; Robin Hamers, District
Engineer; Noelani Middenway, District Clerk;
Wendy Davis, Finance Manager; Marc Davis,
District Treasurer.
OTHERS PRESENT: Lawrence Jones, CR&R; Luke Money, The
Daily Pilot; Jim Mosher, resident; Roger
Faubel, Roger Faubel Public Affairs, Inc.;
Peter Whittingham, Curt Pringle &
Associates.
CEREMONIAL MATTERS AND PRESENTATIONS—NONE
ANNOUNCEMENT OF LATE COMMUNICATIONS—NONE
PUBLIC COMMENTS—NONE
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MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING
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President Scheafer opened public comments. Seeing no one from the public wishing to
comment, President Scheafer closed public comments.
President Scheafer requested to move Items 24 and 25 to follow the Consent Calendar.
Hearing no indication of opposition, Items 24 and 25 were moved to follow the Consent
Calendar.
CONSENT CALENDAR
1. Board of Directors Study Session The Board of Directors Study Session
Meeting Minutes of June 14, 2016 Meeting Minutes of June 14, 2016 was
approved as presented.
2. Board of Directors Special Meeting The Board of Directors Special Meeting
Minutes of June 23, 2016 Minutes of June 23, 2016 was approved
as presented.
3. Board of Directors Regular Meeting The Board of Directors Regular Meeting
Minutes of June 23, 2016 Minutes of June 23, 2016 was approved
as presented.
4. Occupancy Report and Payment to The Board of Directors accepted the
CR&R Environmental Services occupancy count as presented using
22,398 as the correct number of active
units and directed staff to prepare a
warrant to CR&R Environmental Services
in the amount of $219,397.37 to be ratified
in the July 2016 warrant list, for June 2016
collection.
5. Contract Payment to CR Transfer The Board of Directors approved payment
for Recycling & Disposal Services to CR Transfer in the amount of
$197,165.93 for recycling and disposal
services for the month of June 2016.
6. Adoption of Warrant Resolution No. The Board of Directors adopted Warrant
CMSD 2017-01 Approving District Resolution No. CMSD 2017-01 approving
Warrant Registers District warrants for the month of June
2016 in the amount of$1,012,933.29.
7. Payroll Transparency Disclosure for The Board of Directors approved the
June 2016 Payroll Transparency Disclosure for June
2016 as presented.
8. Directors' Compensation and The Board of Directors approved the
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MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING
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Reimbursement of Expenses Directors' Compensation and
Reimbursement of Expenses for June
2016 as presented.
9. Sewer Lateral Assistance Program The Board of Directors approved the SLAP
(SLAP) Update report as presented.
10.Resolution No. 2016-890 Ordering The Board of Directors adopted Resolution
that Publication of Ordinance No. No. 2016-890.
115 Confirming Annual Charges for
Solid Waste and Wastewater for
2016-17 has Occurred
Director Ferryman made a motion to approve the Consent Calendar as presented. Vice
President Perry seconded the motion, which passed unanimously with a 5-0 vote.
There were no further questions or comments.
END OF CONSENT CALENDAR
NEW BUSINESS
24. Mesa Water District Optimal Governance Structure Study
Recommendation: That the Board of Directors discuss the study and provide
direction to staff.
District Treasurer, Marc Davis, provided a review of the study. Mr. Davis commented
that he has concerns regarding the objectivity of Arcadis U.S. Inc., provided that Arcadis
U.S. Inc. has conducted other studies and projects for Mesa Water District in past
years.
Secretary Ooten indicated that he has concerns with changes that were made to the
line cleaning portion of the study.
General Manager, Scott Carroll, requested that the Board of Directors refrain from
questions and comments until Mr. Davis concludes his presentation.
Mr. Davis presented several sources of concern within the study, including the use of
financial statements from 2015 and the lack of consideration of changes made to the
District's biennial budget since its adoption in 2015. He clarified that Mesa Water
District's AAA credit rating is in reference to their bonds rather than a rating of their
agency as a whole. Mr. Davis also shared that the District has an asset replacement
plan that is based upon a 35-year rolling look ahead to plan necessary infrastructure
improvements. In terms of real estate, he noted that the study proposes that Mesa
Water District's current headquarters has sufficient space to house a consolidated
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MINUTES OF THE BOARD OF DIRECTORS REGULAR MEETING
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agency; however, Mesa Water District's Board of Directors held a closed session
meeting to discuss acquiring the property next door to its headquarters in May of 2016.
Mr. Davis addressed the financial management portion of the study and indicated that
the estimated one-time and annual savings calculations are flawed and should not be
relied upon to make informed decisions about whether the two agencies should be
consolidated. He added that the study's data was used by Mesa Water District's Board
of Directors in a decision to submit an advisory ballot measure during their July 28,
2016 Special Meeting.
Secretary Ooten read the advisory ballot measure that was passed at Mesa Water
District's July 28, 2016 Special Board Meeting.
Discussion followed regarding the language used in the advisory ballot measure and the
possibility of challenging the advisory ballot measure. Additionally, discussion followed
regarding Mesa Water District's debt and the proposed service area of a consolidated
agency.
President Scheafer noted that Mesa Water District does not currently serve the area of
Santa Ana Heights, while the District does serve this area.
Vice President Perry asked when the deadline for the advisory ballot measure and all
responses were due.
District Clerk, Noelani Middenway, noted that they are due on August 12, 2016.
Finance Manager, Wendy Davis, provided commentary regarding Mesa Water District's
financial status.
Discussion followed regarding the proposed service area, the proposed organizational
structure of a consolidated agency, and possible Brown Act violations regarding the
Mesa Water District Board of Director's decision to initiate a study.
Mr. Carroll suggested that the Board of Directors approve the formation of an Ad Hoc
Committee containing two Board Members to meet with District staff and consultants in
regards to the District's public relations.
President Scheafer opened public comments and invited Jim Mosher, a member of the
public, to speak.
Mr. Mosher provided commentary regarding the advisory ballot measure.
President Scheafer closed public comments.
Mr. Carroll asked if an Ad Hoc Committee could provide staff with direction to proceed
with proposed actions.
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The Board of Directors indicated that the Ad Hoc Committee may provide staff with
direction.
Vice President Perry made a motion to establish an Ad Hoc Committee including
President Scheafer and Secretary Ooten (and Vice President Perry as an alternate) to
meet with staff and consultants in regards to the District's public relations and Mesa
Water's proposed consolidation. Assistant Secretary Schafer seconded the motion,
which passed unanimously with a 5-0 vote.
There were no further questions or comments.
25. Professional Consulting Services
Recommendation: That the Board of Directors considers entering into an
agreement with Roger Faubel Public Affairs, Inc. for professional consulting
services.
Mr. Carroll presented a proposal for the District to enter into an agreement with Roger
Faubel Public Affairs, Inc. to enhance the District's public relations.
President Scheafer opened public comments and invited Mr. Mosher to speak.
Mr. Mosher provided commentary regarding the nature of the agreement and the role of
the Ad Hoc Committee.
Assistant Secretary Schafer made a motion to enter into an agreement with Roger
Faubel Public Affairs, Inc. for professional consulting services. Secretary Ooten
seconded the motion, which passed unanimously with a 5-0 vote.
Roger Faubel of Roger Faubel Public Affairs, Inc. and Peter Whittingham of Curt Pringle
& Associates provided commentary regarding the scope of work for the agreement.
The Board of Directors directed District Counsel, Alan Burns, to submit a public records
request to Mesa Water District for all emails pertaining to the study and the proposed
consolidation.
There were no further questions or comments.
President Scheafer adjourned the meeting to a brief recess at 6:47 P.M. and
reconvened from the recess at 6:53 P.M.
PUBLIC HEARINGS- NONE
GENERAL MANAGER'S REPORTS
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11. Preliminary FY 2015-16 Year-End Budget (4th Quarter Budget Report)
Recommendation: That the Board of Directors receive and files the report.
Ms. Davis presented the 4th Quarter Budget Report. She noted savings that the District
experienced due to paying a lower tonnage rate for the Organics Recycling Program
during FY 2015-16.
Discussion followed regarding local developments and their responsibility to maintain
their sewer laterals.
There were no further questions or comments and the report was received.
12. CMSD Contribution Program Application — CMHS Mustang Football Stadium
Banners
Recommendation: That the Board of Directors accepts the application from the
CMHS Mustang Football Program and approve a monetary contribution of$1000
for two stadium banners.
Mr. Carroll presented the Contribution Program Application from Costa Mesa High
School.
Vice President Perry asked if the requestedmonetary contribution included the cost of
producing the banners.
Mr. Carroll noted that the cost of production is included in the request.
Director Ferryman made a motion to accept the application and approve a monetary
contribution of $1000 for two stadium banners. Vice President Perry seconded the
motion, which passed unanimously with a 5-0 vote.
Discussion followed regarding the Contribution Program Application.
There were no further questions or comments.
13. Unfunded Other Post-Employment Benefits (OPEB)
Recommendation: That the Board of Directors approve a $125,000 appropriation
from Net Position towards paying down the District's California Employers'
Retiree Benefit Trust Fund (CERBT) obligation as of June 30, 2016.
Ms. Davis presented report details and noted that the appropriation will remove the
District's Unfunded OPEB liability for the year.
Discussion followed regarding the District's history of fiscal prudency toward funding its
Unfunded OPEB liability.
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Vice President Perry made a motion to approve a $125,000 appropriation from Net
Position towards paying down the District's CERBT obligation. Assistant Secretary
Schafer seconded the motion, which passed unanimously with a 5-0 vote.
There were no further questions or comments.
14. FY 2015-20 Strategic Plan Update (4th Quarter)
Recommendation: That the Board of Directors accepts and files the report.
Mr. Carroll presented the FY 2015-20 Strategic Plan Quarterly Update.
There were no questions or comments and the report was received.
15. Reschedule August 9, 2016 Study Session and Host the Meeting at 290
Paularino Avenue— Oral Report
Recommendation: That the Board of Directors approves rescheduling the August
9, 2016 study session meeting to August 16, 2016 and direct staff to host the
meeting at 290 Paularino Avenue.
Mr. Carroll presented the proposed rescheduling of the August Study Session, which
was previously discussed by the Board of Directors at the July 12, 2016 Study Session.
Vice President Perry made a motion to approve rescheduling the August 9, 2016 study
session meeting to August 16, 2016 at 290 Paularino Avenue. Director Ferryman
seconded the motion, which passed unanimously with a 5-0 vote.
There were no further questions or comments.
16. Rewarding Ideas Program
Recommendation: That the Board of Directors approves rewarding Joel Ortiz,
Wastewater Maintenance Worker Ill, $500.00 for his idea to relocate the Adams
Pump Station mobile generator to Calvert Avenue.
Mr. Carroll presented the idea submitted by Mr. Ortiz.
Secretary Ooten made a motion to approve rewarding Joel Ortiz $500.00 for his idea to
relocate the Adams Pump Station mobile generator to Calvert Avenue. Vice President
Perry seconded the motion, which passed unanimously with a 5-0 vote.
There were no further questions or comments.
ENGINEER'S REPORTS
17. Project Status Report
Recommendation: That the Board of Directors receive and file the report.
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District Engineer, Robin Hamers, presented the Capital Improvement Program (CIP)
report.
There were no questions or comments and the report was received.
18. Conflict of Interest Report
1. 227 22nd Street, Costa Mesa, which is owned / developed by Mark Cernicky.
Mr. Hamers noted one conflict of interest report to be filed.
There were no questions or comments and the report was received.
19. Project No. 310 — Indus Sewer and Manhole Rehabilitation — Acceptance of
Improvements
Recommendation: That the Board of Directors approves the following:
1. Accept improvements as completed and file a Notice of Completion.
2. Authorize payment of 5% retention 35 days after Notice of Completion is
recorded.
3. Exonerate Labor and Material Bond 35 days after Notice of Completion is
recorded and exonerate Faithful Performance Bond one year after Notice
III of Completion is recorded.
Mr. Hamers presented report details.
Discussion followed regarding the public's positive response to the District's CIP
projects.
Vice President Perry made a motion to accept improvements as completed and file a
Notice of Completion, authorize payment of 5% retention 35 days after the Notice of
Completion is recorded, and exonerate the Labor and Material Bond 35 days after the
Notice of Completion is recorded and exonerate the Faithful Performance Bond one
year after the Notice of Completion is recorded. Assistant Secretary Schafer seconded
the motion, which carried unanimously with a 5-0 vote.
There were no further questions or comments.
20. Project No. 316 Adams Pump Station Electrical Improvements — Consideration of
Easement Agreement and Temporary Construction Easement Agreement
Recommendation: That the Board of Directors approves the following:
1. Approve and execute the Easement Agreement and transmit to the
County Recorder for recording.
2. Authorize payment to Mr. Ibarra in the amount of$10,000.
3. Approve and execute the Temporary Construction Easement Agreement.
4. Direct the General Manager to continue proceeding with the project.
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Mr. Hamers presented report details and related attachments.
Assistant Secretary Schafer made a motion to approve and execute the Easement
Agreement and transmit to the County Recorder for recording, authorize payment to Mr.
Ibarra in the amount of $10,000, approve and execute the Temporary Construction
Easement Agreement, and direct the General Manager to proceed with the project. Vice
President Perry seconded the motion, which carried unanimously with a 5-0 vote.
Discussion followed regarding the potential liability associated with the easement.
There were no further questions or comments.
TREASURER'S REPORTS
21. Investment Report for the Month of June 2016
Recommendation: That the Board of Directors approves the Investment Report
for the month of June 2016.
Mr. Davis provided report details and noted that the portfolio was earning 1.188% as of
June 30, 2016.
Assistant Secretary Schafer made a motion to approve the Investment Report for the
month of June 2016. Director Ferryman seconded the motion, which passed
unanimously with a 5-0 vote.
There were no further questions or comments.
ATTORNEY'S REPORTS- NONE
LOCAL MEETINGS
A. Orange County Sanitation District (OCSD) — (Director Ferryman)
Recommendation: That the Board of Directors accepts oral report.
Director Ferryman provided an overview of the OCSD meeting on July 27, 2016 and
noted that OCSD is looking to purchase a new headquarters building.
There were no further questions or comments and the report was received.
B. Santa Ana River Flood Protection Agency (SARFPA)— (Vice President Perry)
Recommendation: That the Board of Directors accepts oral report.
Vice President Perry provided an overview of the SARFPA meeting that he and Director
Ferryman attended.
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There were no further questions or comments and the report was received.
C. Independent Special Districts of Orange County (ISDOC) — (President
Scheafer)
Recommendation: That the Board of Directors accepts oral report.
President Scheafer provided an overview of the ISDOC Executive Committee meeting
on July 12, 2016.
There were no further questions or comments and the report was received.
D. California Special Districts Association (CSDA) - (Assistant Secretary
Schafer)
Recommendation: That the Board of Directors accepts oral report.
Assistant Secretary Schafer provided updated regarding CSDA. She noted that CSDA
will hold its Annual Conference in San Diego from October 10-13, 2016.
There were no further questions or comments and the report was received.
E. Special District Risk Management Authority (SDRMA)— (President Scheafer)
Recommendation: That the Board of Directors accepts oral report.
President Scheafer noted that the next SDRMA meeting will take place on August 3-4,
2016, and an oral report will be provided at the August Board Meeting.
There were no further questions or comments and the report was received.
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 shared that he, Assistant Secretary Schafer, and Director
Ferryman attended the Water Advisory Committee of Orange County (WACO) meeting
on July 8, 2016.
President Scheafer noted that he and Gina Terraneo, Management Analyst I, will no
longer be able to attend the Solid Waste Association of North American (SWANA)
WASTCON® Conference on August 22-25, 2016.
There were no further questions or comments and the report was received.
OLD BUSINESS— NONE
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NEW BUSINESS
22. Resolution No. 2016-891 Nomination to Serve on the Executive Committee of the
Independent Special District of Orange County (ISDOC)
Recommendation: That the Board of Directors adopt Resolution No. 2016-891
nominating President Scheafer to serve as President of the Executive Committee
of ISDOC.
Mr. Carroll presented Resolution No. 2016-891.
Directory Ferryman made a motion to adopt Resolution No. 2016-891 nominating
President Scheafer to serve as President of the Executive Committee of ISDOC. Vice
President Perry seconded the motion, which passed unanimously with a 5-0 vote.
There were no further questions or comments.
23. Resolution No. 2016-892 Nomination to Serve on the Executive Committee of the
Independent Special District of Orange County (ISDOC)
Recommendation: That the Board of Directors adopt Resolution No. 2016-892
nominating Assistant Secretary Schafer to serve as Vice President of the
Executive Committee of ISDOC.
Mr. Carroll presented Resolution No. 2016-892. He noted that a correction was to be
made to the recommendation, as it would nominate Assistant Secretary Schafer to
serve as First Vice President of the Executive Committee of ISDOC.
Vice President Perry made a motion to adopt Resolution No. 2016-892 nominating
Assistant Secretary Schafer to serve as First Vice President of the Executive Committee
of ISDOC. Director Ferryman seconded the motion, which passed unanimously with a
5-0 vote.
There were no further questions or comments.
ORAL COMMUNICATIONS AND DIRECTOR COMMENTS
Vice President Perry shared that he will not be present for the August Study Session
and Board Meeting.
ADJOURN To CLOSED SESSION
President Scheafer opened public comments and invited Mr. Mosher to speak.
Mr. Mosher provided commentary regarding Item 27. He indicated concern regarding
the nature of the District's "significant exposure to litigation."
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26. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION
(Government Code Section 54956.9(d)(1)):
1. Costa Mesa Sanitary District v. Santa Ana Regional Water Quality Control
Board (OC Sup Ct#30-2016-0084260 CU-CM-CJC)
In regards to Item 26, Mr. Burns shared that the Attorney General has not completed
preparing the Administrative Record and therefore there is nothing to report at this time.
President Scheafer adjourned to closed session at 7:48 P.M.
27. CONFERENCE WITH LEGAL COUNSEL—ANTICIPATED LITIGATION
Significant exposure to litigation pursuant to para (2) of subdivision (d) of
Government Code Section 54956.9 (1 case)
RECONVENE To OPEN SESSION
President Scheafer reconvened to open session at 7:59 P.M. He reported that the
Board of Directors gave General Manager, Scott Carroll, direction in regards to
anticipated litigation.
ADJOURNMENT
There being no further business to come before the Board, President Scheafer
adjourned the meeting at 7:59 P.M.
Robert Ooten Mi• ael Scheafer
Secretary President