STAFF REPORT. ITEM NO. 1 MEETING DATE: March 31, 2017 MEETING: Board of Directors / Finance Committee SUBJECT:

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3 ITEM NO. 1 MEETING DATE: March 31, 2017 MEETING: Board of Directors / Finance Committee STAFF REPORT SUBJECT: SUBMITTED BY: RECOMMENDED ACTION: Minutes of February 23, 2017 Finance Committee Meeting Cheryl Howlett, Finance Analyst, Administrative Services Division Approve ATTACHMENT: 1. Minutes of February 23, 2017 Finance Committee Meeting

4 ** DRAFT ** MINUTES OF FEBRUARY 23, 2017 MMWD BOARD FINANCE COMMITTEE MEETING IN ATTENDANCE: MARIN MUNICIPAL WATER DISTRICT BOARD OF DIRECTORS / FINANCE COMMITTEE Directors present: Cynthia Koehler, Larry Bragman, Jack Gibson, and Larry Russell Directors absent: Armando Quintero CALL TO ORDER: Director Koehler called the meeting to order at 9:33 a.m. ADOPT AGENDA: By simple motion, the agenda was adopted. PUBLIC EXPRESSION: None ITEM 1. Minutes of January 26, 2017 meeting were approved. ITEM 2. Monthly Financial Update The General Manager, Krishna Kumar, introduced the new Administrative Services Division Manager, Charlie Duggan to the Finance Committee and also proposed a new standard presentation which summarizes the monthly financial picture. Fiscal year to date with the month ending January 31, 2017, water revenue was at 63% of budget and all other operating revenue was at 46% of budget, for total operating revenue of 62%. Capital revenue was 56%, fire flow revenue was 26%, with the total of all revenue collected being 59% of budget. Fiscal year to date, actual operating expenses total 50% of budget. Total operating and capital expenses combined were 49% of the total FY 2017 budgeted expenses. The total unrestricted reserves were $24.5M, which is 4.7 months of operating budget. The new presentation layout was well received by members of the Finance Committee and will be used going forward. A brief discussion ensued pertaining to the discretionary spending of budgeted expenses, building and allocating reserve funds and bond funding versus pay go funding for capital projects. It was noted that the debt coverage ratio should be added to the presentation for next month. Roger Roberts commented on the debt ratio and debt reserves. ADJOURNMENT There being no further business, the meeting of February 23, 2017 adjourned at 9:49 a.m. 1

5 ITEM NO. 2 MEETING DATE: March 31, 2017 MEETING: Board of Directors / Finance Committee STAFF REPORT SUBJECT: SUBMITTED BY: Monthly Financial Update Charles Duggan, Administrative Services Division Manager/Treasurer Administrative Services Division RECOMMENDED ACTION: Information EXECUTIVE SUMMARY: The Monthly Financial Update as of February 28, FISCAL IMPACT: YES NO X FISCAL YEAR: 2016/17 BACKGROUND: Water Sales and Consumption Monthly Water sales for the month of February 2017 were $2,910,956 which is $274,107 or 9% below budget. Compared to the prior year February 2016 was $83,494 or 3% above January Billed water consumption (in CCFs) for February 2017 was 606,381 CCFs, which is 80,055 CCFs or 12% below budget. Compared to the prior year, billed water consumption for February 2017 decreased 25,097 CCFs or 4%. Total meter service charges for the month of February 2017 were $1,631,126 which is $15,654 below budget. Compared to the prior year, meter service charges increased by $669,174 or 70%. The Watershed Fee revenue for the month of February 2017 is $371,990 or $2,606 below budget. There is no prior year comparison for the Watershed Fee as it was implemented in March The total water sales and fixed charges (Service and Watershed Fee) for the month of February 2017 was $4,914,073, or $292,366 or 6% below budget and compared to February 2016 an increase of $1,124,661 or 30%. Fiscal Year to Date Fiscal year to date, water sales through February 28, 2017 were $33,317,951, which is $348,623 or 1% below budget. Compared to the same period last year, water sales through February 28, 2017 increased by $2,929,089 or 10%.

6 Monthly Financial Update March 23, 2017 Page 2 Billed water consumption (in CCFs), through February 28, 2017 was 6,482,728 CCFs, which is 281,686 CCFs or 4% below budget. Compared to the same period last year, billed water consumption through February 28, 2017 increased by 179,034 CCFs or 3%. Total water sales and fixed charges (service and Watershed Fee) as of February 28, 2017 was $47,126,911 when compared to the budget of $47,490,838 is $363,927 or 1 % below budget. The 2016/17 water sales and fixed charges compared to prior fiscal year through February 28, 2016 of $36,998,092 is an increase of $10,128,819 or 27%. Water production for the month of February 2017 was 6.8% below February 2016 production. Net water production for the 12 month period ending February 28, 2017 was 20,840 acre feet. The net water production assumed in the Cost of Service Analysis was 22,000 acre feet. Budget to Actual Comparison All Funds Attached is the budget to actual comparison for fiscal year 2016/17 as of February 28, The budget to actual comparison is prepared by fund and includes revenues, expenditures and reserve balances. As of February 28, 2017 the year to date net increase for the Operating Fund was $8.9 million. For the Operating Fund, total revenues as of February 28, 2017 are $49.2 million or 69.0% of budget. Total operating expenditures of $41.4 million, not including depreciation and amortization, is 57.5% of budget. Compared to the same period last fiscal year operating expenses as of February 28, 2017 increased by $1.0 million or 3.0%. For the Capital and Fire Flow Funds, total revenues are $3,613,743 or 40.8% of budget and spending on capital and fire flow projects at $13.4 million is 47.6% of budget as of February 28, The Watershed Fund for the year ended February 28, 2017 reflects a surplus of $291,018. Fund Balances Per the attached Reserve Balance Summary as of February 28, 2017, unrestricted / undesignated - operating reserves are $25.5 million or 4.3 months of annualized projected operating expenses for 2016/17.

7 Monthly Financial Update March 23, 2017 Page 3 STRATEGIC PLAN ALIGNMENT: The requested action aligns with the district s Strategic Plan Goal 2: Financial Stewardship - Strategy 2 ensure activities are transparent and reporting is accurate Objective 3 provide monthly reporting. REVIEWED BY: A.S.D. Manager/Treasurer [ X ] NA [ ] General Counsel [ X ] NA [ ] General Manager [ X ] NA [ ] ATTACHMENTS: 1. Total Water Sales and Fixed Charges & Fees 2015/ /17 2. Billed Water Consumption in CCFs FY 2009/ /17 3. Daily Water Production February 2016 vs. February Budget to Actual Comparison for 2016/17 as of February 28, Reserve Balance Summary as of February 28, Watershed Fund & Non-Rate Based Revenue as of February 28, Operating Fund and Reserve Summary as of February 28, CIP Budget to Actual Comparison for 2016/17 as of February 28, 2017

8 Total Water Sales and Fixed Charges & Fees Fiscal Years 2015/ /17 Fixed Charges Water Sales Service Charges Watershed Fee Total Water Sales and Fixed Charges 15/16 16/17 16/17 15/16 16/17 16/17 15/16 16/17 16/17 15/16 16/17 16/17 Month Actual Budget Actual Actual Budget Actual Actual Budget Actual Actual Budget Actual July $ 3,448,051 $ 4,400,000 $ 4,401,041 $ 694,773 $ 1,161,530 $ 1,161,533 $ - $ 273,160 $ 273,160 $ 4,142,824 $ 5,834,690 $ 5,835,735 August 5,364,106 6,840,000 6,848, ,907 1,646,780 1,646, , ,621 6,324,013 8,861,376 8,870,546 September 4,034,569 4,060,235 4,809, ,457 1,161,530 1,163, , ,722 4,713,025 5,494,925 6,244,114 October 5,378,999 5,813,022 6,076, ,159 1,646,780 1,651, , ,744 6,340,157 7,834,398 8,104,171 November 3,307,946 3,201,419 2,908, ,848 1,161,530 1,160, , ,145 3,987,794 4,636,109 4,341,261 December 4,118,679 4,046,825 3,484, ,585 1,646,780 1,649, , ,153 5,102,265 6,068,201 5,508,989 January 1,909,051 2,120,009 1,878, ,552 1,161,530 1,157, , ,194 2,598,603 3,554,699 3,308,023 February 2,827,462 3,185,063 2,910, ,950 1,646,780 1,631, , ,990 3,789,412 5,206,439 4,914,073 March 1,540,206 1,930,248-1,106,022 1,161, , ,160-2,908,689 3,364,938 - April 2,841,304 3,464,083-1,581,252 1,646, , ,596-4,781,874 5,485,459 - May 2,105,916 2,509,903-1,008,813 1,161, , ,160-3,351,517 3,944,593 - June 4,975,794 5,245,777-1,690,586 1,646, , ,596-7,052,578 7,267,153 - TOTAL $41,852,082 $46,816,584 $33,317,951 $11,995,902 $16,849,860 $11,222,230 $1,244,765 $3,886,536 $2,586,730 $55,092,749 $67,552,980 $47,126,911 Original Budget-to-Actual Basis -0.77% Actual-to-Actual Basis 27.38% % of total budget received 69.76% 4 Monthly Water Sales - FY Water Sales ALL Water

9 Actual to Monthly Actual 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 16/17 Budget % Month Actual Actual Actual Actual Actual Actual Actual Budget Actual Variance Change July 958, , , , , , , , , % 15.23% August 1,524,804 1,505,682 1,373,824 1,552,514 1,483,888 1,387,986 1,141,147 1,283,055 1,312, % 14.97% September 1,016,214 1,005, ,293 1,016, , , , , , % 9.26% October 1,374,363 1,431,554 1,326,605 1,377,982 1,400,285 1,209,902 1,125,237 1,188,757 1,205, % 7.11% November 687, , , , , , , , , % % December 825, , , ,615 1,059, , , , , % % January 491, , , , , , , , , % -8.13% February 698, , , , , , , , , % -3.97% March 394, , , , , , , ,107 April 707, , , , , , , ,964 May 528, , , , , , , ,764 June 1,044,386 1,118,447 1,215,077 1,377,068 1,150,742 1,020,910 1,079,197 1,072,973 TOTAL 10,251,300 10,286,367 10,308,698 11,016,248 11,059,765 9,906,304 8,849,444 9,537,222 6,482,728 Budget-to-Actual Basis -4.16% Actual-to-Actual Basis 2.84% % of total budget 67.97% Billed Water Consumption In CCF's Fiscal Year 2009/ /17 5 Water Consumption Monthly Water Sales - FY

10 0.00 Daily Water Production Change 14 from 15 Prior 16 Year FEBRUARY 2017 versus FEBRUARY % (5.00) -2.00% (10.00) -4.00% (15.00) -6.00% -6.80% -8.00% (20.00) % (25.00) % (30.00) Columns Lines % Daily Change Amount Accumulated Change Amount Daily % Change Accumulated % Change 6

11 Marin Municipal Water District Budget to Actual Comparison for 2016/17 - All Funds Actual as of February 28, 2017 Unaudited Revenues and Expenditures 2016/17 Amended Budget Revenues: Water Sales and Service Charge: Water Sales 46,816,584 Actual as of % of February 28, 2017 Budget $ $ 33,316, % Service Charge 16,849,860 11,220, % Watershed Management Fee 3,886,536 2,586, % Total Water Sales and Service Charge 67,552,980 47,123, % Other Revenues: Rents and Royalties 682, , % Grants 553, , % Watershed Rents and Royalties 944, , % Watershed Payments 319, , % Late Payment and Special Read Charges 375, , % Interest 146, , % Miscellaneous 672, , % Total Other Revenues 3,695,287 2,067, % Total Operating Revenues 71,248,267 49,191, % Expenditures: Personnel services 41,591,289 25,740, % Materials and supplies 3,202,790 1,244, % Operations 5,535,840 2,251, % Water conservation rebate program 260, , % Electrical power 4,700,000 1,865, % Water purchased 7,072,724 3,214, % Insurance, including claims 1,445,000 1,431, % General and administrative 2,450,672 1,786, % Debt service - interest and principal 8,143,348 4,322, % Capital equipment purchases 1,528, , % Overhead cost allocated to capital (3,957,215) (1,210,493) 30.6% Total Expenditures and Capital Purchases 71,972,648 41,389, % Net Operating Fund Increase(Decrease) $ (724,381) $ 7,801,646 Operating Reserves Opening Reserves $ 16,947,253 $ 16,947,253 Net Operating Fund Increase(Decrease) (724,381) 7,801,646 Capital equipment purchases charged to Capital Fund - 569,188 Less Transfer to Capital - - Accrual adjustments - 193,296 Ending Reserves $ 16,222,872 $ 25,511,383 3/29/2017 7

12 Capital and Fire Flow Funds Actual as of % of Revenues and Expenditures 2016/17 Amended Budget February 28, 2017 Budget Revenues: Connection Charges $ 1,165,690 $ 365, % Interest Income 15,000 25, % Contributed Capital: Fire Flow 4,500,000 2,508, % Connection Fees and Grants 3,166, , % Total Revenues and Contributed Capital 8,846,690 3,613, % Capital Expenditures: Capital Projects - District 23,652,000 10,116, % Capital Projects -Fire Flow 4,500,000 3,576, % Total Capital and Fire Flow Expenditures 28,152,000 13,692, % Net Capital and Fire Flow Fund Increase(Decrease) $ (19,305,310) $ (10,079,041) 52.2% Capital Reserves Capital Fund Opening Reserves $ 18,974,590 $ 18,974,590 Net Capital Fund Increase(Decrease) (19,320,310) (9,036,334) Capital equipment purchases charged from Operating Fund (569,188) Proceeds from Loan/Bonds 10,400,000 Accrual adjustments - (1,295,333) Add Transfer from Operating - - Ending Reserves $ 10,054,280 $ 8,073,735 Fire Flow Fund Opening Reserves $ 656,839 $ 656,839 Net Fire Flow Fund Increase(Decrease) 15,000 (1,067,768) Accrual adjustments - 410,929 Ending Reserves $ 671,839 $ 0 3/29/2017 8

13 Reserve Balance Summary Actual Projected /30/2013 6/30/2014 6/30/2015 6/30/2016 2/28/2017 Restricted $ 10,893,269 $ 8,265,799 $ 10,376,200 $ 9,346,061 $ 9,501,989 $ 9,327,468 $ 4,783,431 Board Designated 4,973,962 6,580,067 8,762,502 9,633,824 11,491,220 9,441,758 11,299,224 Rate Stabilization Fund - - 2,400,000 7,300,000 5,900,000 5,700,000 5,700,000 Fire Flow Fund 3,855,977 4,684,736 2,483,468 1,736,460 1,939, ,839 - Capital (including bond proceeds) 22,584,419 67,469,110 56,573,146 47,305,458 30,044,160 18,974,590 8,073,735 Unrestricted/undesignated - Operating 6,770,936 12,207,534 19,872,504 21,026,900 19,959,569 16,947,253 25,511,383 Total $ 49,078,563 $ 99,207,248 $ 100,467,820 $ 96,348,703 $ 78,836,467 $ 61,047,907 $ 55,367,773 Months Reserve Urestricted - Operating to Annualized Actual Expenditure Debt Coverage Ratio /29/2017 9

14 Marin Municipal Water District Watershed & Other Non Rate Based Revenue and Expenditures Actual as of February 28, 2017 Unaudited 2016/17 Actual as of % of Revenues and Expenditures Budget February 28, Budget Watershed Revenues Watershed Management Fee $ 3,558,240 $ 2,586, % Rent and Leases 944, , % Permits, Parking and Passes 319, , % Grants Other 8,841 Total Watershed Revenues 4,821,897 3,406, % Expenditures Operating and Capital Operating 5,294,637 3,053, % Capital equipment purchases 21,084 61, % Total Expenditures and Capital Purchases 5,315,721 3,115, % Surplus (Deficit) (493,824) 291, % Transfer from Operating Fund 493,824 Net Surplus (Deficit) $ $ 291,018 Other Non Water Revenue Rent and Leases Non Watershed 363,694 Total Non Rate Based Other Revenues 363,694 Discount Program for Low Income & Medically Disabled Low Income Fee waived 143,670 Medically Disabled Fee waived 61, ,597 Net Surplus (Deficit) 158,097 3/29/

15 Operating Fund and Reserve Summary As of February 28, /17 Budget % of Month Year to Date Budget Expense Salaries & benefits $ 3,187,900 $ 25,740,556 $ 37,634, % Operating & debt service 1,315,428 10,569,742 22,565, % Water purchases & electricity 246,817 5,079,535 11,772, % Total Expenses 4,750,144 41,389,832 71,972, % Revenue Water sales and service charges 13,734,210 47,123,691 67,552, % Other 805,964 2,067,787 3,695, % Total Revenue 14,540,174 49,191,478 71,248, % Net Income $ 9,790,030 $ 7,801,646 $ (724,381) Operating Reserves $ 25,921,270 Months of Annualized Operating Expenses 4.38 Total Ending Reserves $ 55,367,773 11

16 Marin Municipal Water District Budget to Actual Comparison for 2016/17 - Capital Fund Actual as of February 28, 2017 Unaudited CIP Projects FY2016/17 Adopted Budget Capital Projects YTD Actual Expenditures As of 2/28/17 District Pipeline Replacement / Improvement $ 8,080,000 $ 4,002,943 Replacements - Tank Maintenance & Replacement $ 1,610,000 $ 910,948 Replacements - Treatment Plant Facilities $ 3,860,000 $ 2,065,712 Replacements - Dam/Pump/Control System/Meters $ 4,750,000 $ 1,458,715 Fire Chief's Fund $ 150,000 $ - System Improvements $ 1,060,000 $ 303,407 Watershed Capital Improvement Projects $ 960,000 $ 995,537 Grant Projects $ 2,242,000 $ 299,667 Other CIP Projects $ 940,000 $ 79,647 Fire Flow Replacement $ 4,500,000 $ 3,576,208 Total Capital Projects $ 28,152,000 $ 13,692,784 12

17 ITEM NO. 3 MEETING DATE: March 31, 2017 MEETING: Board of Directors / Finance Committee SUBJECT: SUBMITTED BY: RECOMMENDED ACTION: STAFF REPORT Extension of Auditing Agreement with Badawi & Associates, Certified Public Accountants Charlie Duggan, A.S. Division Manager/Treasurer Mikyung Pustelnik, Assistant Finance Manager Administrative Services Division For review and referral to the board with the Finance Committee s recommendation for the General Manager to execute a two year extension of the district s agreement with Badawi & Associates, Certified Public Accountants for auditing services EXECUTIVE SUMMARY: Staff recommends approval of a two year extension of the Badawi & Associates auditing agreement to enable the firm to perform the annual audit of the district s finances for fiscal year 2016/17 and 2017/18. FISCAL IMPACT: YES X NO FISCAL YEAR: 2016/17 AND 2017/18 EXPENDITURES FUNDING SOURCES Budgeted Amount $47,000 Budgeted Amount $47,000 Budget Augmentation Requested Budget Augmentation Requested TOTAL EXPENDITURES $47,000 TOTAL EXPENDITURES $47,000 FISCAL IMPACT NARRATIVE: The budget for the service is included in the 2016/17 operating budget in the Accounting department as auditing professional fees. The amount for FY 2017/18 audit is included in the proposed operating budget to be adopted in June BACKGROUND: Staff recommends that the Finance Committee approve a recommendation to the board for the General Manager to execute a two year extension to the Badawi & Associates auditing agreement to enable the firm to audit the District s finances for fiscal years ending 2016/17 and 2017/18. An annual audit is an irreplaceable tool to ensure that our financial procedures are in order thereby building confidence in the strength of our financial systems. Badawi & Associates have audited the district for the last seven fiscal years from 2011/12 through 2013/16,

18 Extension of Auditor Agreement March 23, 2017 Page 2 providing exceptional service in completion of the audit and support during the year. Badawi & Associates also conducts annual training for clients on new and developing financial and governmental accounting pronouncements. Badawi & Associates have offered to keep the price at $43,000 per year for the annual financial audit, and a single audit of federal financial assistance, if needed, for an additional $4,000 per year. A single audit is required when federal grant expenditures exceed $750,000 for 2016/17. The Finance Department is under the new Administrative Services Division with a new division manager. Due to this transition, staff recommends that the District retain the previous knowledge gained by Badawi and Associates for two more years of audit service, and after that, staff plans to seek a new audit contract in 2019 as required by Government Code section (b) to rotate an audit firm. STRATEGIC PLAN ALIGNMENT: The requested action aligns with the district s Strategic Plan Goal 2: Financial Stewardship Strategy 2 ensure financial activities are transparent and reporting is accurate and Strategy 4 ensure cost-effective and efficient business processes. REVIEWED BY: A.S.D. Manager/Treasurer [ X ] NA [ ] General Counsel [ X ] NA [ ] General Manager [ X ] NA [ ] ATTACHMENTS: 1. Amendment No. 4 to Agreement for Professional Services Between Marin Municipal Water District and Badawi and Associates, a California Professional Corporation(Miscellaneous Agreement No. 4957) 2. Badawi & Associates Extension Letter

19 AMENDMENT NO. 4 TO AGREEMENT FOR PROFESSIONAL SERVICES BETWEEN MARIN MUNICIPAL WATER DISTRICT AND BADAWI AND ASSOCIATES, A CALIFORNIA PROFESSIONAL CORPORATION (Miscellaneous Agreement No. 4957) This second amendment to Miscellaneous Agreement No ("Second Amendment") is entered into by and between Marin Municipal Water District ("District") and Badawi and Associates, a California Professional Corporation ("Badawi"). For good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Recitals: A. In 2010, the District entered into Miscellaneous Agreement No with Caporicci & Larson for professional auditing services which contract was later assigned to Badawi in A m e n d m e n t N o. 2 t o Miscellaneous Agreement No expires in fiscal year B. The parties desire to enter into an amendment to Miscellaneous Agreement No to allow Badawi to conduct audit services for fiscal years 2017 and Section 2. Terms: A. Amendment to Agreement: This Third Amendment modifies Miscellaneous Agreement No Except for the modifications contained herein and those contained in Amendment No. 1 to the same agreement, all of the terms of Miscellaneous Agreement No shall apply. B. Terms: 1. Part A Section l (b) and (c) of Miscellaneous Agreement No. 4957are amended to read as follows: (b) The fee and fee payment for such work shall not exceed $43,000 in total for each fiscal year audit and if necessary, $4,000 for a single audit in each fiscal year of this F o u r t h Amendment. (c) The schedule and order of tasks shall be in accordance with that included in Attachment A of this agreement (Scope of Work) which is attached hereto and incorporated herein as if fully set forth and shall be completed by December 31, 2017 and December 31, 2018 for the subsequent fiscal year. BADAWI AND ASSOCIATES Dated: Dated: By Ahmed Badawi, President MARIN MUNICIPAL WATER DISTRICT By Krishna Kumar, General Manager

20 March 3, 2017 Mikyung Pustelnik Assistant Finance Manager Marin Municipal Water District 220 Nellen Ave Corte Madera, CA Dear Ms. Pustelnik: I would like to take this opportunity to thank you and your staff for the confidence and support you have provided to us over the past several years. I would also like to take this opportunity to present this letter for your consideration regarding extending the Badawi &Associates audit contract with the Marin Municipal Water District. Over the past years, we have developed an understanding of the District s operation that has aided us in providing quality audit services. With that knowledge, we ve been able to expand our audit efforts and provide observations that, hopefully, have assisted District staff. We have also demonstrated our ability to respond to requests of the District and our ability to deliver a quality product. We trust the District has been satisfied with our efforts. Per your request, we are pleased to present this proposal to provide audit services to the District for the years ending June 30, 2017 and The objective of our audit is to issue an opinion regarding the fairness of presentation of the District s financial position for each year in accordance with generally accepted accounting principles. The audit to be performed will follow generally accepted auditing standards, U.S. General Accounting Office s Government Auditing Standards, Single Audit Act and the Federal Uniform Guidance. Our fees for the year 2017 and 2018 will be as follows: Audit Year Amount Basic Financial Statements - June 30, 2017 $ 43,000 Single Audit -June 30, 2017 $ 4,000 Basic Financial Statements - June 30, 2018 $ 43,000 Single Audit -June 30, 2018 $ 4,000 Address: 180 Grand Avenue, Suite 1500 Oakland, CA Phone: Fax:

21 Marin Municipal Water District Page 2 The service we will provide will follow the guideline as outline in the original proposal to the District. We would very much like to continue our relationship with the District and stand ready to provide the level of service and commitment for which the District has become accustomed. If you have any questions, please feel free to call me at (510) Sincerely, Ahmed Badawi President Badawi & Associates, CPA Oakland, California RESPONSE: This letter correctly sets forth the understanding of the Marin Municipal Water District. By: Title: Date:

22 ITEM NO. 4 MEETING DATE: March 31, 2017 MEETING: Board of Directors / Finance Committee STAFF REPORT SUBJECT: SUBMITTED BY: RECOMMENDED ACTION: Update on Proposed Rate Changes and Prop 218 Notification Charles Duggan, Administrative Services Division Manager/Treasurer Information EXECUTIVE SUMMARY: On March 7 th, Board authorized staff to mail notifications of proposed increases to water service rates, fees and charges to real property owners and ratepayers via a special mailing. Accordingly staff mailed 110,171 notices on 3/24/17. At the March 31 st Finance Committee meeting, staff will be making a presentation on the key factors leading to the proposed rate recommendation. FISCAL IMPACT: YES NO X FISCAL YEAR: 2017 BACKGROUND: On March 7, 2017, based on the draft 2017 cost of service analysis update (COSA) by Carollo Engineers, which was presented to the Finance Committee at the January 26, 2017 meeting, staff received board approval to issue the notice of proposed rate increases to water service rates, fees and charges to property owners and ratepayers via a special mailing, in accordance with the provisions of Article 13D section (6) (a) of the California Constitution. The proposed rate adjustments include increasing the fixed Service Charge, fixed Watershed Management Fee and the Tier Rates for all customer classes. This March 7 th Board authorization directed staff to mail notifications of proposed increases to water service rates, fees and charges to real property owners and ratepayers via a special mailing. Accordingly staff mailed 110,171 notices on 3/24/17. Since the notice went out on 3/24/2017, the public received the notice 53 days in advance of the May 16th public hearing, 8 days before the legally required 45 days. At the March 31 st Finance Committee meeting, staff will be making a presentation on the key factors leading to the proposed rate recommendation.

23 STRATEGIC PLAN ALIGNMENT: Update on Proposed Rate Changes and Prop 218 Notification March 31, 2017 Page 2 The requested action aligns with the district s Strategic Goal 2: Financial Stewardship We will prudently manage the public resources entrusted to us and Strategy 1: Ensure financial planning is sufficient to address MMWD needs and risks. REVIEWED BY: A.S.D Manager/Treasurer X NA General Counsel X NA General Manager X NA ATTACHMENTS: NONE