MINUTES. December 9, 2009

Transcription

1 NEVADA IRRIGATION DISTRICT BOARD OF DIRECTORS MINUTES December 9, 2009 The Board of Directors of the Nevada Irrigation District convened in regular session at the District's main office located at 1036 W. Main Street, Grass Valley, on the 9th day of December, 2009 at 9:00 a.m. Present were John H. Drew, President; W. Scott Miller, Vice-President; Nancy Weber, Jim Bachman and Nick Wilcox, Directors. Staff members present included Ron Nelson, General Manager; Tim Crough, Assistant General Manager; Marie G. Owens, Finance Manager/Treasurer; Don Wight, Operations Manager; Gary King, Chief Engineer; Yvonne Du Bose, Human Resources Manager; Peggy Davidson, Recreation Administrator; Jeff Meith, District Counsel; and Lisa Francis Tassone, Board Secretary. MINUTES November 18, 2009 Meeting Approved the Minutes of the Board of Directors meeting on November 18, 2009, as amended. M/S/C Wilcox/Bachman EMPLOYEE HEALTH BENEFITS CalPERS Health Plan (Res , and ) Adopted Resolution No (Fixing Employer s Contributions under the Public Employees Medical and Hospital Care Act). M/S/C Weber/Wilcox Adopted Resolution No (Fixing Employer s Contributions under the Public Employees Medical and Hospital Care Act [Aetna Retirees]). M/S/C Weber/Wilcox Adopted Resolution No (Fixing Employer s Contributions under the Public Employees Medical and Hospital Care Act [Directors]). M/S/C Weber/Wilcox 410

2 CLAIMS & SUITS Stoddard Received and filed release of Claim by Gary Stoddard. M/S/C Weber/Wilcox RECREATION RATES Recreation Rates Day Use Fees Scotts Flat Greenhorn Peninsula Long Ravine Orchard Springs Day Use $6.50 $6.50 $6.50 $6.50 $6.50 Day Use w/boat Launching $13.00 $13.00 $13.00 $13.00 $13.00 Kayak/Canoe $9.25 N/C $9.25 $9.25 Each Pet $3.00 $3.00 $6.00 $3.00 $3.00 Entry by foot $1.55 $1.55 $1.55 $1.55 $1.55 Overnight Camping Cabins N/A N/A $55.00 N/A $59.00 Premium RV Sites $35.00 * $35.00 $35.00 $33.00 $33.00 Non Premium RV Sites $30.00 * $31.00 $31.00 $29.00 $29.00 Premium Tent Sites $30.00 Non Premium Tent Sites $25.00 Extra Vehicles $10.00 $15.00 $10.00 $15.00 $6.25 Boats $6.00 $6.25 $6.50 $6.00 $6.00 Pets $3.00 $3.00 $3.00 $3.00 $3.00 Sanitation * Charge included in RV N/A N/A $10.00 N/A Dump Fee Site Price After 4:00 P.M. After 5:00 P.M. After 4:00 P.M. After 4:00 P.M. After 4:00 P.M. Day Use $4.00 $4.00 $4.00 $4.00 $4.00 Boat Launching $9.25 $9.25 $10.00 $9.25 $9.25 Kayak/Canoe $5.25 $5.25 $5.25 Season Passes Season Pass Day Use $75.00 $ $ $ $ Season Pass w/watercraft $ $ $ $ $ Season Slip $ $ $ $ $ Approved increase to rates for District s recreation facilities for the 2010 season. M/S/C Weber/Wilcox 411

3 EMPLOYEE RELATIONS Bevard, Retirement Presentation (Res ) Bill Morrow, Hydroelectric Maintenance and Operations Superintendent, recognized Michael J. Bevard for his service of 20 years with the District and his retirement. Mr. Bevard could not be present at this meeting because he had a prior commitment. Mr. Bevard came to the District from PG&E in September 1989 where he worked with general construction. He began his career with the District as a Hydroelectric Technician and was instrumental in installing the SCADA system for the Yuba-Bear Hydroelectric Project that allowed the Yuba-Bear Project to be connected with PG&E s Drum switching center. He was also instrumental in maintaining communications via the radio system for the last 20 years. President Drew presented the Resolution of Appreciation (Res ). EMPLOYEE RELATIONS Partington, Retirement Presentation (Res ) John Kirk, Maintenance Manager, recognized Robert S. Partington for his service of 23 years with the District. Mr. Partington began his employment with the District in 1983 as a temporary employee in the Maintenance Department. In 1986, he was selected out of 300 applicants for the Storekeeper position. Since then, Mr. Partington has worked his way up to the position of Sr. Storekeeper. His position is critical to the District because he oversees and manages the fixed asset and rotating stock inventories. He has been instrumental in maintaining the inventories ensuring there is sufficient stock on hand to handle emergencies. He has been an asset to the Purchasing Department. Mr. Kirk congratulated Mr. Partington on his retirement. Mr. Partington thanked the Board for the opportunity and stated that he has had a good career with the District. President Drew presented the Resolution of Appreciation (Res ). EMPLOYEE RELATIONS Service Awards The following employees were recognized for their length of service with the District and were congratulated by their department manager prior to being presented with recognition awards: Employee Name Title Hire Date 35 Years James Williams Purchasing Supervisor 07/01/74 30 Years Vernon Smith Brian Stafford Supervising Engineer Vegetation Control Specialist II 07/09/79 07/26/79 25 Years Brett Brady Asst. Treated Water Superintendent 09/26/84 20 Years David Seaton Vegetation Control Specialist II 07/05/89 William Winkle Sr. Water Distribution Operator 07/13/89 412

4 Michael Bevard Hydroelectric Technician 09/05/89 Scott Shoemaker Water Distribution Operator II 09/11/89 10 Years Cindy Kincheloe Sr. Customer Account Assistant 07/26/99 Eric Fassler Water Distribution Operator II 08/16/99 John Kirk Maintenance Manager 08/16/99 Tony Moscini Construction Inspector I 08/16/99 Cameron Price Equipment Operator 08/23/99 Ken Copher Maintenance Crew Supervisor 12/13/99 LABOR CONTRACT 2009/2010 MEMORANDUM OF UNDERSTANDING (MOU) AND RELATED SIDE AGREEMENT Tim Crough, Assistant General Manager, distributed Exhibit A to the Side Agreement pertaining to the Employee Safety Rules. He noted that the Rules were adopted March 28, 1990, and explained that it is likely these Rules will need to be modified to reflect current safety regulations, etc. After some discussion and clarification about what the Board is acting on, Mr. Crough explained that he is asking the Board is to consider approving the Side Agreement and minor revisions to the MOU. Director Miller emphasized that the public needs to know that District employees will not be receiving a pay raise in He believes this is a precedent, and he feels that the public and rate payers are entitled to know this information. He apologized to the wonderful employees and staff, but stated that these are remarkable times. Director Wilcox pointed out that that the salary schedule reflects a zero increase, and this has been included in the agenda packet under the Budget matter. Ms. Owens added that salary schedule in the Budget is the same as Exhibit A to the MOU. Approved the Side Agreement to the Labor Contract 2009/2010Comprehensive Memorandum of Understanding (MOU), and received and filed minor corrections to the MOU. M/S/C Miller/Weber AGREEMENTS: Darkhorse Subdivision Phase 3 Agreement with Nevada County Director Weber asked how many lots are occupied in the Darkhorse subdivision. Gary King, Chief Engineer, stated that three lots are currently occupied in the Darkhorse Phase 3 subdivision. Director Weber asked if a waterline has been installed in front of the vacant lots. Mr. King answered in the affirmative. He estimated that there are 70 vacant lots, and the waterline was installed by the developer. 413

5 Mr. King explained that the District has received benefits from Phase 3 of the Darkhorse subdivision. There are three objectives in order for the project to be completed: 1) to serve water to the existing lots; 2) to serve water to the Combie Homeowners Association (this has been achieved); and 3) to run water through the Darkhorse facility from the District s tanks into the Lake of the Pines system. Two of the three objectives are District centered, and this is why the District is trying to resolve this matter by way of an Agreement with the County. As of now, PG&E has stepped in to resolve their issues, and the Nevada County Sanitation Department has redesigned their system. Director Weber asked if the project is still in bankruptcy. Mr. King stated that the project is fully foreclosed, and the bond company has provided Nevada County a check. Director Weber asked if the District will recoup capacity fees. Mr. King explained that fees will be paid by property owners when they apply for a building permit. Approved Agreement with Nevada County for completion of the Darkhorse Subdivision Phase 3 project. M/S/C Weber/Miller BUDGET: Final Budget and 2010 Water Rates Public Hearing Marie G. Owens, Finance Manager/Treasurer, stated that she would like to present the budget and discuss water rates. She provided the Board with a List of Assumptions she used when preparing the Budget. (Please see next page) 414

6 LIST OF ASSUMPTIONS FOR THE FINAL BUDGET Revenue Water Sales Rate Increase Average* Average* Average* * Details to be explained more fully Issuance of Certificates of Participation $30 M Property Tax Growth Rate 1% 2% 2% Supplemental Revenue Augumentation Fund (SRFA) (442,000) 442,000 Net Reserve Withdrawals Operations $5.9 M $6.8 M $8.1 M Expenditures Capital $10 M $1.8 M $1.5 M Payroll Percentage Increase 0% 5% 5% NOTE: Excludes promotions, step increases and conversion of limited term assignment positions to regular status PERS Retirement Rate 17.26% 19.96% 23.31% Health Insurance Percentage Increase 5% 0% 0% OPEB Liability $922K $954K $986K Positions Approved: Information Systems 1.00 same same Operations (0.50) same same Maintenance 2.00 same same Positions Frozen: Management 1.00 same same Information Systems 1.00 same same Customer Service 0.50 same same Accounting 1.00 same same Engineering 6.00 same same Operations 1.00 same same Maintenance 4.00 same same Cement Hill State Loan % $125 K $ 690K $ 690K New Debt Service - $30M in % $0.00 $1.2 M $2.4 M FERC Relicensing $2.0 M $2.0 M $1.5 M With regard to revenues, Ms. Owens explained that when she prepared the Budget for 2010, 2011 and 2012, she used an average rate increase for each of the three years. She will discuss this in more detail later in the meeting. The Supplemental Revenue Augmentation Fund (SRFA) is what the State is taking from the District (property taxes). Half will be taken in 2009 and the other half will be taken in She is anticipating that the State will pay back the District with two payments, one which will occur in 2012, and the second in Ms. Owens included in the Budget net reserve withdrawals. She pointed out that in 2012, there is an $8.1 million operational reserve withdrawal from a reserve that has no 415

7 money. She placed that number in the Budget in order to balance the Budget, but she does not have an operating reserve to withdraw from. This would mean that the District would have to borrow money from a capital reserve, if there is a capital reserve to borrow from. With regard to expenditures, she has reflected a zero percent payroll increase in 2010, a five percent increase in 2011 and a five percent increase in She noted that the zero percent payroll increase excludes promotions, step increases and conversions of limited term assignment positions to regular status. These have been embedded in the Budget. She estimated the CalPERS retirement rates, and has since received correspondence that indicates the rates will be lower than she projected. New projections have been calculated as follows: percent in 2010 (this amounts to an approximate $112,000 decrease in the District s overall retirement expense); percent in 2011 (this amounts to an approximate $333,000 decrease); and 20 percent in 2012 (this amounts to an approximate $340,000 decrease). She would like to revise the 2011 and 2012 amounts and present revised Budgets to the Board on January 13, She included a five percent increase for Health Insurance in 2010, a zero percent increase in 2011 and a zero percent increase in She also included the new liability pertaining to Other Post Employee Benefits (OPEB). With regard to salaries and positions, Staff had asked the Board to approve a position in the Information Systems Department, to remove half of a position in the Operations Department, and to add two new Maintenance Department positions. Likewise, the Board directed Staff to freeze the remaining unfilled positions. She pointed out that even though approval was received to add an Information Systems Department position, the position has now been frozen. The Cement Hill State Revolving Loan Fund has also been included in the Budget for 20 years at 2.3 percent interest. New debt service for the $30 million that will need to be borrowed has been included in the Budget: $1.2 million in 2011 and $2.4 million in The Federal Energy Regulatory Commission (FERC) relicensing costs have also been included in the Budget. Director Wilcox stated that he would prefer that in 2012, the $8.1 million reserve withdrawal not be reflected since there will be no reserves available. He thinks that it would be more honest to show that the reserve is out of money, and not pretend that the District has $8.1 million. Ms. Owens provided the Board with the proposed water rates for irrigation water and treated water, as recommended by the Water Rates Committee and the Administrative Practices Committee: 416

8 PROPOSED RAW WATER RATES SUMMER SEASONAL IRRIGATION RATES - INSIDE DISTRICT (See footnotes below for all Others) $$ % INCREASE INCREASE ACTUAL PROP 218 AVERAGE over 2009 over 2009 Flow Per Miner's Inch (M.I.) 0.25 $ $ $ $ % % % % % % % 3.5 1, , , % 4 1, , , % 4.5 1, , , % 5 1, , , % 6 1, , , % 7 1, , , % 8 1, , , % 9 2, , , % 10 2, , , % 11 2, , , % 12 2, , , % 13 2, , , % 14 2, , , % 15 3, , , % 16 3, , , % 17 3, , , % 18 3, , , % 19 3, , , % 20 3, , , % 20+ per M.I.: Fixed Charge per Account % 20+ per M.I.: Variable Rate per each M.I % Footnotes: Winter Seasonal Irrigation Rates = 125% of Summer Seasonal Irrigation Rates Annual Raw Water Rates = Total M.I. at Summer Rate + 1/2 M.I. at Winter Rate; divided by 6 for bi-monthly charge (except 1/4 M.I. customers who are billed for 1/4 M.I. for both summer and winter) Demand Water = Existing rate factors (based upon the numbers of days water is requested) multiplied by the applicable miner's inch rates shown above. A minimum of 35% of 1 M.I. will be charged Fall/Stock Water = 10 M.I. summer seasonal rate divided by 1830 M.I.D = Rate per M.I. per day, rounded up. A minimum of 35% of 1 M.I. will be charged Intermittent Flow = 20+ M.I. variable rate divided by 9.07 acre feet multiplied by 80% (w/ a minimum) All Outside District Rates = 125% of Inside District Rates 417

9 PROPOSED TREATED WATER RATES $$ % INCREASE INCREASE ACTUAL PROP 218 AVERAGE over 2009 over 2009 FIXED MONTHLY MINIMUM RATES NONCOMMERCIAL IN 5/ % 3/ % % 1-1/ % % % % % , , % COMMERCIAL IN (With Phase Out of Differential) 5/ (0.14) -0.75% 3/ % % 1-1/ % % % % % 8 1, , , % WATER USAGE RATES $ per hcf $ per hcf $ per hcf NONCOMMERCIAL IN Tier hcf % Tier 2 > 5 hcf % COMMERCIAL IN (With Phase Out of Differential) Tier hcf % Tier 2 > 5 hcf % Examples of treated water rate impacts: 5/8" meter 10 hcf per month % 3/4" meter 10 hcf per month % 5/8" meter 5 hcf per month % Ms. Owens explained that District Counsel has advised Staff to revise the 2011 and 2012 Budget to reflect the Proposition 218 Notice rates, because this preserves the District s rights to raise rates up to those amounts in the future, should the Board decide to do so. At this time, she would like to request the Board to consider approving rates for 2010, and to direct Staff to resubmit the 2011 and 2012 Budgets with the revised rates and the CalPERS retirements rates. The amount of reserve withdrawals will 418

10 change because of these revisions. Another revision to the Budget would include removing the $8.1 million reserve withdrawal and indicating a deficit in 2012, as suggested by Director Wilcox. She would like to provide the Board the revised Budgets at the Board meeting of January 13, Director Weber would like to preserve the Community Investment Program (CIP). She asked how District financed waterline extensions are being dealt with in the Budget. Ms. Owens explained that $375,000 has been included for 2010, $275,000 has been included for 2011 and $275,000 has been included for The funds budgeted would cover the initial costs associated with any project that the District decides to participate in, whether or not there will be 100 percent participation by the District or partial participation by the District. This would include seed monies to help get the projects off the ground. Projects would be reviewed by the Project Review Committee, the Engineering Committee, and the Administrative Practices Committee before being presented for approval by the Board of Directors. Director Weber asked if fire hydrants would be included in this Budget. Ms. Owens answered in the affirmative. Director Weber asked where the money will come from if projects exceed the amount budgeted. Ms. Owens stated that, in her opinion, the Board may choose not to complete a District project, so a budget transfer would occur to provide funds for the CIP. The other alternative is to borrow money. Director Weber stated that this weakens the CIP and the District s Strategic Plan s number one objective is to extend waterlines. She does not think that $375,000 reflects the number one objective. Before, there was $1 million in the CIP Budget. President Drew stated that the Board has the authority to amend the amount. Director Weber stated that another project would be sacrificed in order to maintain the CIP. Ms. Owens added that a number of District projects do not move forward as scheduled, which may provide an opportunity to provide additional funding to the CIP. Director Miller pointed out that there was no money budgeted for the CIP. The Administrative Practices Committee discussed maintaining the CIP, but with less money in the Budget. Director Wilcox stated he appreciates Staff s and the Administrative Practices Committee s efforts at trimming costs in the Budget, which has resulted in a 22 percent Budget reduction. This is rather substantial. 419

11 Director Wilcox asked if this is more or less a bare bones Budget. Ms. Owens stated that on the operational side, the District has a very realistic Budget. With regard to the capital side, the only factor she cannot speak to are the projects. If a project is delayed, she has no way of knowing about the delay in advance. Director Wilcox stated that the Budget will be balanced in 2010 and But in 2012, the Budget is not balanced. The District does not want to borrow money to pay for operational expenses. Ms. Owens stated that there is another option. Property taxes, with the exception of the portion that is deposited into the Operating, Repair and Replacement and Rate Stabilization Reserve, are utilized to fund projects. That money resides in the capital Budget. If the Board were to make a conscious decision not to proceed with certain projects, then that property tax money could be used in 2012 to fund the operating deficit. This is a big decision on the part of the District as to whether or not projects can be delayed or postponed. Director Wilcox stated that in order to balance a budget, expenses can be decreased and revenues can be increased. In terms of increasing revenues, the District has control over rates, but not control over property taxes. He asked if the Budget were to be balanced with rates alone, what the rate increase would be to do so. Ms. Owens estimated that rates would have to be raised a minimum of 25 percent for Because the past summer was not a hot summer, rate payers did not use as much water which resulted in less revenue. In order to compensate for this type of situation, rates would have to be raised a minimum of 35 percent. Director Weber stated that lands the District does not need should be sold making up some of the deficit before the District borrows money in as a way of Director Wilcox asked Ms. Owens what she projects the level of reserves will be in Ms. Owens projects a minimum reserve balance of $30 million. Director Wilcox pointed out that the District is planning to borrow $30 million, and so the District will have essentially depleted current reserves by 2012, and for practical purposes, operations will be funded on borrowed money. Ms. Owens clarified that the deficit would be funded with borrowed money. Ms. Owens stated that if the District does not borrow money in 2011, there will be no reserves. She has been directed by the Board to maintain a minimum reserve balance of $40 million. She may request that the District borrow more money in order to provide 420

12 some assistance until the District obtains a new license for the Yuba-Bear Hydroelectric Project. Director Wilcox stated that one of the Strategic Plan objectives is to develop a Financial Plan to deal with this issue. Now is the time to develop the Financial Plan. Director Weber asked Ms. Owens to disclose the degree to which the District is subsidizing water rates with property taxes. Ms. Owens explained that when the Cost of Service Study was completed, the Study indicated that the District was supplementing treated water rates with 45 percent of property taxes and supplementing raw water rates with 55 percent of property taxes. Currently, she estimated that the District is supplementing treated water rates with 37 percent of property taxes, and supplementing raw water rates with 49 percent of property taxes. Ms. Owens stated that an updated Cost of Service Study should be commenced sometime in April or May of 2010 after the audit. She added that the Board will need to direct Staff to proceed with the update. Director Wilcox stated that when the last Cost of Service Study was completed, the recommendations from the consultant were to raise water rates an average of 6.5 percent. He asked if the District would experience a deficit in 2012 if the District had implemented the recommended rate increases. Ms. Owens stated that, theoretically, the District would break even in The original Proposition 218 Notice was for five years beginning in Based on projections, the District would no longer be supplementing rates with property taxes, or rates would be supplemented with a much smaller percentage of property taxes. Director Weber stated that by using property taxes to supplement rates, there is no money to fund infrastructure projects. Ms. Owens agreed. Ms. Owens referenced the debt service schedule: DEBT SERVICE - CURRENT & PROPOSED DESCRIPTION TOTAL PMTTOTAL PMTTOTAL PMTTOTAL PMTTOTAL PMTTOTAL PMTTOTAL PMTTOTAL PMT 2002 COP 1,396,975 1,403,375 1,387, , , , , COP 1,130,838 1,129,038 1,128,000 1,128,600 2,002, ,000 COPs - Existing 2,527,813 2,532,413 2,515,975 1,919,825 2,796, , , , COP - $30M - 20 yrs 1,200,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 2,400,000 TOTAL COPs 2,527,813 3,732,413 4,915,975 4,319,825 5,196,900 3,191,000 3,194,250 3,191,

13 Ms. Owens stated that the District s debt service will peak in She noted that in 2015, the 2005 Certificates of Participation will be paid off. Above and beyond what occurs with property taxes, the District has to service the debt and the debt is paid for with property taxes. A summary of the District s total 2010 divisional budgets is as follows: Revenue: Water Division = $36,866,000 (61 percent) Hydroelectric Division = $ 6,845,500 (11 percent) Recreation Division = $ 1,207,500 (2 percent) Net Reserve Withdrawal = $15,823,000 (26 percent) Total = $60,742,000 Expenditures: Water Division = $52,689,000 (87 percent) Hydroelectric Division = $ 6,845,500 (11 percent) R ecreation Division = $ 1,207,500 (2 percent) Total = $60,742,000 ~~~~ Detailed revenue and expenditure budgets by division for 2010: Water Division Operation and Maintenance Revenue: Water Sales = $15,325,000 (69 percent) Treated and Raw Water Operating Revenue = $ 521,000 (2 percent) Non-Operating Revenue = $ 600,000 (3 percent) Net Reserve Withdrawal = $ 5,857,000 (26 percent) Total = $22,293,000 Water Division Operation and Maintenance Expenditures: Payroll Costs = $14,608,920 (65 percent) Services and Materials = $ 7,035,080 (32 percent) Contingencies = $ 649,000 (3 percent) T otal = $22,293,000 ~~~~ Water Division Capital Revenue Summary: Assessments = $10,791,000 (35 percent) Capacity Fees = $ 250,000 (1 percent) Non-Operating Revenue = $ 9,379,000 (31 percent) Net Reserve Withdrawal = $ 9,976,000 (33 percent) Total = $30,396,000 Water Division Capital Expenditure Summary: Community Investment Program = $ 6,801,000 (22 percent) Debt Service = $ 2,769,600 (9 percent) Materials & Equipment Leases = $ 205,000 (1 percent) Consulting = $ 2,000,000 (7 percent) Contracts & Construction = $ 509,400 (2 percent) 422

14 Trucks & Equipment = $ 875,000 (3 percent) Salaries & Benefits = $ 1,551,000 (5 percent) Contingency = $ 885,000 (3 percent) Projects = $14,800,000 (48 percent) Total = $30,396,000 ~~~~ Hydroelectric Division Revenue Summary: Yuba-Bear Project = $ 5,347,000 (72 percent) Rollins Power Project = $ 742,000 (10 percent) Other NID Plants = $ 1,335,000 (18 percent) Total = $ 7,424,000 Hydroelectric D ivision Expenditure Summary: Administrative = $ 2,688,500 (36 percent) Contingency Expenditu res = $ 16,000 (0.2 percent) Loan Repayment & Tra nsfers Out = $ 1,078,500 (15 percent) Additions & Betterments = $ 777,500 (10 percent) Routine Maintenance = $ 1,559,800 (21 percent) Non-Routine Maintenance = $ 375,000 ( 5 percent) Operation of Plant = $ 928,700 (13 percent) Total = $ 7,424,000 ~~~~ Recreation Division Revenue Summary: Scotts Flat = $ 589,000 (49 percent) Rollins = $ 105,000 (9 percent) Orchard Springs = $ 282,000 (23 percent) Combie Lake = $ 28,000 (2 percent) Subsidy - Excess Hyd ro Revenue = $ 203,500 (17 percent) Total = $ 1,207,500 Recreation Division Expend iture Summary: Scotts Flat = $ 640,100 (53 percent) Rollins = $ 109,700 (9 percent) Orchard Springs = $ 368,700 (31 percent) Combie Lake = $ 15,400 (1 percent) Upper Division = $ 73,600 (6 percent) Total = $ 1,207,500 ~~~~ President Drew opened the public hearing regarding the 2010 Budget. Hearing no testimon y, President Drew closed the public hearing. Adopted the District s 2010 Budget, as amended, and directed Staff to revise the Budgets for 2011 and 2012 to be presented to the Board on January 13, M/S/C Miller/Wilcox 423

15 Director Wilcox state d that his motion was made subject to the rate schedule that will be considered in the next motion. Director Weber explained that she voted in favor of the Budget with reluctance because she would like to protect the CIP. President Drew opened the public hearing regarding water rate increases. Hearing no testimony, President Drew closed the public hearing. Director Bachman made a motion to direct Staff to implement 2010 rates as presented (rate incre ases reduced by half of the approved Proposition 218 Notice rates). Director Miller seconded the motion. Motion passed on the follo wing roll call vote: Division I Aye Division II Aye Division III Aye Division IV Aye Division V No WARRANTS Approved the following warrants: Yuba-Bear Revolving Fund Nos through 22336, inclusive; General Fund Revolving Account Nos through 48520, Nos , and being void; Recreation Fund Nos through 2139, inclusive; and Payroll Direct Deposit and Warrant Nos through 52113, Nos through being void. M/S/C Weber/ Bachman LOWER CASCADE CANAL / BANNER CASCADE PIPELINE PROJECT Local Bidder s Preferen ce (Language) Gary King, Chief Engineer, stated that as part of the Lower Cascade Canal / Banner Cascade Pipeline Project (LCCBCPP), Staff has been developing a local bidder preference. The local bidder preference would require that the Project s contractor make a good faith effort to utilize local bidders. The minimum required percentage would be 12 percent of the contract quoted price excluding the purchase costs of pipe larger than 36 inches in diameter. He pointed out that the Engineering Committee originally approved a 35 percent requirement. After discussing with the contractors selected for the Project, various local contractors and District Legal Counsel, Staff came up with a 12 percent requirement. Barbara Bashall, Executive Director of the Nevada County Contractor s Association, expressed appreciation to the District for working collaboratively with the local contractors association. She is pleased with the effort, especially due to the hard economic times. The Association is looking forward to working with the District so there 424

16 is as much local participation as possible. She thanked the Board for their support of the local bidder preference. Director Weber referenced Item 2 in the Local Vendors/Laborers Preference document which reads as follows: A contractor submitting a quote will be expected to seek local participation under this policy such that a minimum of 12 percent of the total contract quoted price, of which only can be applied to materials, will be spent within the Local Bidder Preference LBP of this project. The Contract shall exclude the purchase costs of the pipe greater than 36 inch in diameter from the total contract quoted price in determining the amount to be expended for the LPB. The Board agreed that Item 2 should be amended as follows: A contractor submitting a quote will be expected to seek local participation under this policy such that a minimum of 12 percent of the total contract quoted price, excluding the purchase costs of the pipe greater than 36 inch in diameter, will be spent within the Local Bidder Preference LBP of this project. Director Bachman asked if this requirement was part of the Cement Hill Water Supply Project. Mr. King stated that a good faith effort was requested of the contractor to select local bidders, but a greater effort is being made for this Project. Director Drew stated that it would be appropriate for a direct communication link to be established with the Nevada County Contractors Association due to the magnitude of this Project to make sure every effort is being made to include local contractors. Ms. Bashall explained that the Association has a large plan room, and the plans are available in digital format or hard copy format. s have been distributed to the Association s members so that they are aware of the local bidder preference. Director Weber thanked Mr. King for his efforts in developing the local bidder preference policy. Approved addition of a Local Bidder Preference (LBP) requirement for the Lower Cascade Canal / Banner Cascade Pipeline Project. M/S/C Wilcox/Weber RODEO FLAT ROAD PIPELINE AND PUMP STATION PROJECT Preliminary Review & Initial Study (Res. No ) Keane Sommers, Associate Engineer, presented the Preliminary Review and Initial Study for the Rodeo Flat Road Pipeline and Pump Station Project. Purpose of the Project: Expand treated water service area to 36 parcels in Assessment District No Part of the Community Investment Program 425

17 Project Description: 5,600 feet of 8-inch waterline; 750 feet of 4-inch waterline Pump Station - Variable Frequency Drives (VFD) with small hydropneumatic tanks - Designed for future expansion Extended 3 phase power line for pumps Budget: Estimated at $1.6 million Included in 2010 Budget Public Outreach: Notification by mail during initial stages of design Discussions with individual property owners during field investigation Telephone conversations Public meeting during the evening of June 24, 2009 No tice published in The Union newspaper on November 9, 2009 and the Auburn Journal newspaper on November 12, 2009 Documents submitted to the State Clearinghouse Notification by mail of Public Hearing to property owners within 300 feet of the Project Key Mitigation Measures: Air quality Biological resources (training, red legged frog, northwestern pond turtle, nesting birds and raptors) Cultural resources Geology and soils Hydrology and water quality Noise President Drew opened the public hearing. Hearing no testimony, President Drew closed the public hearing. Mr. Sommers explained that he received correspondence from the Northern Sierra Air Quality Management District which agreed with the District s findings and agreed with the mitigation measures. The Board Secretary confirmed that the District received no other correspondence. Director Drew stated that something that is not quantified or qualified is that before the advent of the District and the water system that was in this region, the amount of habitat available to the red legged frog was very small. As a result of the development of the water distribution systems, the amount of habitat available to the red legged frog and the yellow legged frog has been increased significantly. 426

18 Another item not quantified nor considered an impact is the amount of paper that is generated for the environmental documents. This amounts to time, paper, wood, buildings, people, fuel, electricity and carbon dioxide. There is no mitigation in the environmental documents for the concerns he has brought up. Director Weber stated that the Preliminary Review and Initial Study is a well done Study with one exception regarding deferred mitigation. She referenced material from a class she attended: Mitigated Negative Declarations cannot be used when they rely on the presumed success of future mitigation measures that have not been formulated at the time of project approval. Director Weber stated that this environmental document indicates that there are future studies to be conducted. The District needs to get out ahead of what projects need to be done and give the consultants time to do those studies in advance. She stated that this is about the fifth time she has made this request. She has worked with Staff and tried to work with consultants. She does not want to vote against this matter, but she asked to be given something to vote for. President Drew stated that recently the Board received communications from the consultants on deferred mitigation. Within that communication there were multiple examples where deferred mitigation is not only appropriate, but legal. In this situation, deferred mitigation meets those standards. Gary King, Chief Engineer, stated that there are one or two areas that mitigation measures will be deferred to in the future. Out of the 36 lots in the Project area, five lots do not have water. They run a hose from their neighbor s house in order to have water. If the District were to defer this mitigation, the construction schedule will be delayed to late July By deferring mitigation measures, the Project can start much sooner, so that five property owners can receive water. Director Wilcox pointed out that as part of Resolution No , the Board would be adopting a Mitigation Monitoring and Reporting Program (MMRP). That Program is binding on the District. By adopting the MMRP, the District will be ensuring that the monitoring and mitigation measures will be performed. Director Weber referenced the MMRP pertaining to trees: On site mitigation is preferred, but trees may be replanted off site if on site mitigation is not feasible. Director Weber stated that it seems to her it would be important to state whether the District will replant trees on site or off site, so that property owners know what to expect. Director Drew made a motion to adopt Resolution No (Adopting a Mitigated Negative Declaration and Approving the Project and Mitigation Monitoring and Reporting Program Rodeo Flat Road Pipeline and Pump Station Project). Director Miller seconded the motion. 427

19 Motion passed on the following roll call vote: Division I Division II Division III Division IV Division V No Aye Aye Aye Aye Meeting recessed at 11:01 a.m. and reconvened at 11:10 a.m. CLIPPER CREEK SIPHON REPLACEMENT PROJECT Preliminary Review & Initial Study (Res. No ) Brian Powell, Special Projects Manager, presented the Preliminary Review and Initial Study for the Clipper Creek Siphon Replacement Project. This subsequent Initial Study is somewhat different than the District s standard Study. The California Environmental Quality Act (CEQA) provides that once a project has been approved and the Final Environmental Impact Report (EIR) is certified, a subsequent EIR is not necessary if there are no new or more severe significant impacts. The District s consultant, Jones and Stokes, determined that the District can proceed with a subsequent Initial Study and Negative Declaration and utilize the mitigation measures that were established in the 2007 EIR for the Lower Cascade Canal / Banner Cascade Pipeline Project (LCCBCPP) because a portion of the Clipper Creek siphon was part of this original EIR. Summary: This subsequent Initial Study/Negative Declaration utilizes the Mitigation Measures from the previously approved Lower Cascade Canal / Banner Cascade Pipeline Project Environmental Impact Report from 2007 Full Site Assessment conducted: - Special Status Biological Survey - California Red Legged Frog Survey Contractor will use Mitigation Monitoring and Reporting Program for the LCCBCPP Communication 2009: October 23: Public meeting with property owners in Oak Ridge Drive neighborhood at Mr. and Mrs. Haifley s home to discuss the Project and answer questions October 28: - Letter sent to notify property owners of Negative Declaration and Project; - Requested written comments for 30 day public comment period (October 28 through December 9) 428

20 There has been a full site assessment conducted for this alignment. A special status biological and red legged frog survey study has been conducted for the entire alignment. There were no significant affects determined by this change in the Project. The contractor for the LCCBCPP will use the Mitigation Monitoring and Reporting Program from the LCCBCPP. The Clipper Creek Siphon is located four miles east of Nevada City and is situated between the Cascade pipeline lower bench and the new Banner Cascade pipeline. The original EIR studied two sections of the Clipper Creek Siphon in which approximately 800 feet of the original Techite siphon was to be replaced. Techite pipeline is an inferior pipe material and has proven to be a problem for the District. Staff has been systematically replacing the Techite material throughout the system over the years. During the EIR process John and Mark Paye, who own a large amount of property along the Clipper Creek Siphon, had requested that the siphon be replaced due to the potential hazard that the siphon represented. The replacement was not put into the EIR but the District s Engineering Staff believed that it would be better to replace the entire Clipper Creek siphon and create a reliable pipeline from the Deer Creek diversion down to the treatment plants. In September 2008, the Board approved a change order to include the design of the Clipper Creek Siphon into the LCCBCPP. The design is now complete and Staff plans to include the Clipper Creek siphon construction into the full bid package for the LCCBCPP. Discussion ensued regarding construction of the by-pass pipe. Mr. Powell stated that the goal is to maximize the amount of pipeline in the roadway. He added that there will be two outages during construction Staff held a public meeting at Mr. and Mrs. Haifley s home on Oak Ridge Road to discuss the project and answer questions. One major concern that came from the meeting was access out of Oak Ridge Road during construction. They suggested a potential access out the back side to Banner Lava Cap Road. After reviewing several alternatives, Staff spoke with two property owners to develop temporary access for the Project. Collaboration was achieved as a result of the public meetings. Director Bachman asked if there is any hope that material costs will be lower than what was budgeted. Mr. Powell explained that prices are coming down, and there is potential for a reduction in Project costs. Directo r Weber stated that the Paye property is outside the District, and these property owners have wanted water for some time. The property is on the exterior boundary of 429

21 the District. At some point, when the District is ready to expand the exterior boundaries, this would be a prime area to consider. This was not mentioned in the description. Mr. Powell stated that surplus could be provided from the inverted steel siphon, but property owners would pay for water at an outside-district rate (an additional 25 percent). President Drew stated that he is aware of the District providing surplus water to interior exclusions within the District, but unaware of the District providing water outside the District s exterior boundaries. Jeff Meith, District Counsel, stated that the District currently sells surplus water outside the District s exterior boundary. He added that surplus water is not part of the Project. Mr. Powell concurred. When the lower bench was installed on the Cascade Canal, a raw water manifold was installed and provides water to the Paye s and three other property owners who are charged outside-district rates. Mr. Meith advised the Board to discuss the Project, and not the surplus water issue. Director Wilcox stated that it is his guess that this matter would not sit well with the State Water Resources Control Board Division of Water Rights, because they require that water deliveries be within the authorized place of use. President Drew suggested that the matter regarding surplus water be placed on the Administrative Practices Committee agenda. Director Weber stated that none of the mitigations are listed. They are referred to by number, so in order to reference the mitigation measures she would have to review the larger document. She stated that it would be helpful to have the mitigations attached to the Clipper Creek environmental documentation. Director Weber stated that the Study mentions that Clipper Creek is connected to Rollins and therefore would be considered waters of the US. That involves special permitting. She asked what the status is of the special permitting. Mr. Powell stated that this was addressed in the LCCBCPP EIR. No drainages will be crossed when constructing this new alignment. There were two drainages that were crossed in the original environmental document, but now the Project is maintained within the roadway and the ridges. Therefore, there would be no impacts. The Board Secretary confirmed that the District received no other correspondence. Director Wilcox thanked Mr. Powell and Staff for the degree of public involvement. This effort is the reason there are not throngs of angry people present at this meeting. He 430

22 has some technical issues that he would like to discuss with Mr. Powell outside of the meeting. President Drew opened the public hearing. Hearing no testimony, President Drew closed the public hearing. Adopted Resolution No (Adopting a Negative Declaration and Approving the Project Clipper Creek Siphon Replacement Project). M/S/C Weber/Miller E MINENT DOMAIN PROCEEDINGS Notice of Intent Matthew Crowe, Senior Right-of-Way Agent, stated that he is requesting authorization for the General Manager to issue a Notice of Intent for properties that have reached impasse in acquisition activities for District projects. Director Miller asked for clarification regarding whether this matter involves three specific projects or if this matter involves establishing a policy to issue a Notice of Intent without necessarily the Board s consent for all District projects. Mr. Crowe explained that this matter involves issuing a Notice of Intent for any District project. He stated that Staff is not required to address the Board regarding eminent domain proceedings until the Resolution of Necessity is required at which time the Board would take action after a hearing. The practice has been that Staff has discussed the potential of issuing a Notice of Intent and answered questions. At the same time, without having issued the Notice of Intent, it is difficult to discuss the specifics about the property and the acquisition activities. Jeff Meith, District Counsel, concurred with Mr. Crowe. The Notice of Intent is simply a notice that the Board will consider taking an action. The Board s preference historically has been to approve a Notice being issued because at times the Board members receive calls from property owners. There is no statutory requirement regarding the Board s involvement at this stage of the process. Mr. Crowe stated that from the Right-of-Way Department s perspective, Staff wants to keep the Board informed of the project activities, and does not want the Board to receive calls or inquiries from a property owner that has received a notice. The interest Staff is trying to tend to at this point is the effective use of time and energy to meet the project requirements. Given the project schedule for the Lower Cascade Canal / Banner Cascade Pipeline Project, the Cement Hill Water Supply Project and the Mt. Vernon Road Siphon Project, and other District projects, there are scheduling issues that Staff wants to try to address. If impasse is reached, Staff would like to be able to move efficiently to resolve these issues. Ron Nelson, General Manager, stated that from his perspective, he wants the Board to know everything that is going on with this process well before he takes action. The Board will be the first to know about the process, not the last. He asked if the Board 431

23 would like this matter to be presented to the Administrative Practices Committee prior to consideration by the Board. President Drew stated that it is not appropriate to give carte blanche to initiate eminent domain proceedings in any case. Each individual situation should be brought before the Board and addressed on a case by case basis. Mr. Crowe clarified that Staff would not be beginning eminent domain proceedings by issuing a Notice of Intent. The commencement of eminent domain proceedings occurs at the hearing when the Resolution of Necessity is presented to the Board. At that hearing, the project Engineer, and Staff will present the project in its entirety, including acquisition specifics. Then, the Board will be asked to confirm the necessity of the project and the acquisition of the easement(s). This is not an attempt to avoid appearing before the Board, but attempting to avoid a preliminary hearing where Staff cannot enter into an involved discussion of the matter at hand. President Drew stated that what Mr. Crowe is suggesting is that a letter would be issued to the property owners of the District s intent, and if there is not compliance, Staff would reappear before the Board. What President Drew is suggesting is that no letters are mailed until the Board is fully advised. Then Staff can move forward by issuing a Notice of Intent. Mr. Crowe stated that this would be the Board s pleasure. The Notice of Intent allows the property owner to be informed of the District s intention to review the matter, and if appropriate, to commence eminent domain proceedings. The Notice of Intent would invite property owners to discuss a hearing before the District s Board of Directors. Gary King, Chief Engineer, pointed out that the District s Budget is being hammered on the cost of District projects. At this time, there is $35 to $40 million worth of projects out to bid with over 60 parcels involved with the Lower Cascade Canal / Banner Cascade Pipeline Project, 70 parcels involved with the Cement Hill Water Supply Project, and 20 parcels involved with the Mt. Vernon Road Siphon Project. In order to move forward, Staff is asking that the General Manager be authorized to issue a Notice of Intent to the affected parcels. He asked if the Board would consider authorizing the General Manager to issue a Notice of Intent for the Lower Cascade Canal / Banner Cascade Pipeline Project and the Cement Hill Water Supply Project, instead of projects District-wide. President Drew stated that Mr. King s points are well taken and appreciated. However, the gravity of eminent domain proceedings dictate that before a letter is issued from the General Manager, the Board needs to be apprised of the situation, whether it is via letter, in this Board room or placed on the consent agenda. Director Wilcox stated that one way to address President Drew s issue, which is a legitimate and important issue, is to have a consent agenda item that basically lists the 432