Minutes of the Regular Meeting of the Board of Directors of DELTA DIABLO SANITATION DISTRICT November 4, 2009 The meeting was called to order by Chair Glover on Wednesday, November 4, 2009 at 5:30 p.m. in the Board Room at the District offices located at 2500 Pittsburg-Antioch Highway, Antioch. Present were Directors Federal Glover, James Davis and Nancy Parent. Also present were Mary Ann Mason, District Counsel; Gary Darling, General Manager; Kerry Yoshitomi, Deputy General Manager; Dennis Laniohan, Operational Services Director; Caroline Quinn, Engineering Services Director/District Engineer; Steve Dominguez, Plant Manager; Denise Jones, Office Manager/Secretary to the Board; Cheryl Rhodes Alexander, Human Resources Manager; Angela Lowrey, Public Information Manager; Dean Eckerson, Principal Engineer; Jayne Strommer, Project Manager; Denni Baumer, Purchasing Manager; Brian Padilla, Operator II; Nicholas Steiner, Operator I; and Carlos Oblites, Public Financial Management, Inc. PUBLIC COMMENTS None RECOGNITION Commend Brian A. Padilla, Operator I, on Passing the State of California Grade II Wastewater Treatment Plant Operator Certification Exam Mr. Dominguez asked the Board to recognize and commend Brian Padilla for passing his Grade II Wastewater Treatment Plant Operator Exam. Mr. Padilla is a former PTECH student who came to the District from Vinecor. The Grade II Exam includes questions on process control and troubleshooting and ensures operators are prepared for the journeyman level. On behalf of the Board, Chair Glover congratulated Mr. Padilla on his accomplishment. Introduction of Nicholas Steiner, Operator I Mr. Dominguez reported that the Operations Department conducted an extensive recruitment for the position of Operator I and received over 300 applications. Nicholas Steiner was selected as the most qualified applicant for the position. Mr. Steiner comes to the District from Central Contra Costa Sanitary District where he was a Pump Station Operator for three years. He completed the Regional Occupational Program (ROP) and performed his internship at the District in 2006/07. On behalf of the Board, Chair Glover welcomed Mr. Steiner to the District. CONSENT CALENDAR Director Parent moved approval, seconded by Director Davis and, by unanimous voice vote, the Board approved the following Consent Calendar items according to staff recommendations: Approve Minutes of October 14, 2009; Approve District Monthly Check Register, September 2009; Approve Fiscal Year 2009/2010 First Quarter District Investment Report; Receive Notes from Finance Committee Meeting, October 29, 2009; Authorize General Manager to Execute Consulting Services Agreement in an Amount Not to Exceed $96,775, Whitley Burchett & Associates, Inc., Design Services, Arcy Lane Influent Junction Structures Replacement, Project No. 10127; Authorize General Manager to Execute Amendment No. 1 to Consulting Services Agreement in the Amount of $40,000, Edelstein, Gilbert, Robson & Smith, State Legislative Advocacy Services, Bay Area Biosolids to Energy, Project No. 10089; Authorize Issuance of Purchase Order in an Amount Not to Exceed $375,000 for One Year Beginning November 1, 2009, General Chemical Performance Products, LLC, Supply and Delivery of Liquid Aluminum Sulfate; Authorize Issuance of Purchase Order in an Amount Not to Exceed $177,280 for One Year Beginning November, 1, 2009, Kemira Water Solutions, Inc., Supply and Delivery of Ferrous Chloride; Authorize Issuance of Purchase Order in an Amount Not to Exceed $242,000 for One Year Beginning November 1, 2009, Basic Chemical Solutions, LLC, Supply and Delivery of Sodium Bisulfite; and Authorize Issuance of Purchase Order in an Amount Not to Exceed $610,000 for One Year Beginning November 1, 2009, Hasa, Inc., Supply and Delivery of Sodium Hypochlorite. Director Parent asked if staff could provide an update on Biosolids in the near future, and Mr. Darling responded that there is an update scheduled for the December Board Meeting. DELIBERATION Approve Selection of Public Agency Retirement System as the District Other Post Employment Benefits (OPEB) Trust Fund Provider and Discuss Conceptual OPEB Funding Policy Ms. Ustin reported on staff’s evaluation of two OPEB trust funds; the California Employers’ Retiree Benefits Trust (CERBT) which is part of CalPERS, and the Public Agency Retirement Services (PARS), which is a privately held company. The option of having the District establish its own fund was found to be infeasible due to the small size of the District’s estimated obligation. Staff looked at other similar agencies and conducted interviews with representatives of the two funds. The pros and cons of each fund were compared. Ms. Ustin reported that staff is recommending the District go with PARS because of its choice of eight different portfolios, which allows the Board to decide how much risk to take, and PARS’ detailed reporting function. The recommendation was brought to the Finance Committee which recommended selecting PARS. If approved, the official documents will be presented at the December meeting for approval by the Board. After retiree medical premiums are added to the trust fund, the Board will be asked on an annual basis to look at other recommended funding resources. Chair Glover asked if District Counsel had any comments. District Counsel responded that one of the cons of CalPERS is that it is a very large entity and it is difficult and expensive to get out of it. With PARS, there is more flexibility and more opportunity for input and decision making. Director Davis moved approval, seconded by Director Parent and, by unanimous voice vote, the Board approved selection of PARS as the District’s OPEB trust fund provider. Adopt Resolution Approving the Form of and Authorizing the Execution and Delivery of a Purchase and Sale Agreement and Related Documents with Respect to the Sale of the Seller’s Proposition 1A Receivable from the State; and Directing and Authorizing Certain Other Actions in Connection Therewith Ms. Ustin reported that the state is “borrowing” $163,000 of the District’s fiscal year 2009/10 ad valorem tax dollars. The Proposition 1A Securitization Program will allow California Communities to purchase the Proposition 1A Receivables, issue bonds, and will provide each local agency with the cash proceeds in two equal installments. The amount paid to the District will be 100% of the property tax reduction. All transaction costs of issuance and interest will be paid by the State, and the District will have no obligation on the bonds and no credit exposure to the State. Ms. Ustin stated that the proposed Resolution authorizes the sale of the District’s receivables and issuance of a notice to the State Controller and requires that the Board approve District participation. Director Davis moved approval, seconded by Director Parent and, by unanimous voice vote, the Board adopted the Resolution. Authorize General Manager to Execute Agreement for Alternate Payment Schedule of Capital Facilities Capacity Charges, Cypress Meadows Assisted Living Facility, 3950 Lone Tree Way, Antioch Ms. Ustin provided background information. Dr. Malfitano, owner of the Cypress Meadows Assisted Living Facility at 3950 Lone Tree Way, Antioch, was granted a deferral of $85,000 in Capital Facilities Capacity Charges (CFCCs) which were due in 2008 and are now delinquent. Dr. Malfitano has requested an additional ten-year deferral, claiming he was verbally informed by a previous District employee that that would be an option. The Ordinance that allowed the original deferral is no longer valid. The current Ordinance No. 84 allows for execution of an alternate payment agreement with certain terms to be met. Twenty-five percent of the charges must be paid at the time of execution with the remaining amount to be paid in 36 monthly installments. Ms. Ustin noted that there are no additional liens on the property at this time. Because the CFCCs are in arrears, the Board has the discretion to increase the amount owed to the current CFCC rates. The owner has not responded to the offer of an alternate payment schedule as of this date. Ms. Ustin reported that Dr. Malfitano has three options. He can pay the entire amount owed; he can enter into the alternate payment agreement; or he can choose not to pay the CFCCs, in which case the District would seek legal action. Director Parent noted that it is unreasonable for anyone doing business to believe that they would be given a perpetual deferral. Dr. Malfitano should have been setting monies aside for the payment. Director Parent stated if the Board approves granting Dr. Malfitano an alternate payment schedule; a notice of default should be included in the agreement. District Counsel noted that Dr. Malfitano would be signing a new agreement that would include terms for default. Director Davis added that the District would have the ability to call the loan in full. His concern is that Dr. Malfitano has refused to pay the debt. He has had ten years of free money, which is unheard of. The District should get a secured interest in the property. Director Davis noted that the Finance Committee reviewed the item and made a recommendation to grant an alternate payment schedule. Director Davis moved approval, seconded by Chair Glover and, with Director Parent voting no, the Board authorized the General Manager to execute an Agreement for an Alternate Payment Schedule for the Cypress Meadows Assisted Living Facility. Grant Variance from Adopted Sewer Service Charge Refund Policy and Refund Up to Four Years from Date of Claim for Assessor’s Parcel No. 068-514-004-8; Repeal Resolution No. 17/2004 Approving Policy No. 207 for the Processing of Sewer Service Charge Refund/Adjustments; and Approve New Administrative Handbook Policy No. 3035, Sewer Service Charge Refund/Adjustments Ms. Ustin provided background information. The subject egress property was purchased in 2004 by Mr. Cheney and was miscoded by the County on the Tax Rolls. No sewer service was ever provided to the property. District Policy on non-serviced properties only allows refunds back 180 days, however, for other situations where a property has received sewer service, District Policy allows refunds of up to four years. Ms. Ustin stated that from a fairness perspective, this difference is not appropriate, and staff is requesting that the Board grant a variance from the Policy to permit a refund to Mr. Cheney of payments up to four years, for a total refund of $656.37. Further, staff is requesting the Board repeal the old Policy and approve a new Policy to make its refund policies consistent. Director Davis moved approval, seconded by Director Parent and, by unanimous voice vote, the Board granted the variance for Mr. Cheney, repealed the old Policy, and approved the new Policy making refunds consistent. PRESENTATIONS AND REPORTS Receive Report on Annual Review of District Investment Policy and Approve Modifications to Administrative Handbook Policy No. 3020, Investment of District Funds Ms. Ustin provided background information, noting that Carlos Oblites from the District’s investment firm, Public Financial Management (PFM), Inc., was present to answer questions should the Board have any. Ms. Ustin noted that Mr. Oblites had provided a report to the Finance Committee at its meeting of October 29th. She noted that the primary objectives of the policy are safety, liquidity and return on investment. Ms. Ustin reported that, after review of the policy, staff was recommending one minor change to the Policy to replace the 4.5% target for return on investment. The proposed benchmarks instead would be to exceed the Local Agency Investment Fund (LAIF) returns and to be comparable to the six-month Treasury Index. The Board received and filed the report. GENERAL MANAGER'S COMMENTS Mr. Darling reported that he was contacted, along with Calpine, by General Electric (GE) and asked to speak at a Summit on Reuse to be held in New York this month. The District was recognized by GE as the largest industrial recycled water provider. The Commissioner of the United States Bureau of Reclamation will also be in attendance, along with many others. Mr. Darling noted that it is good recognition for the District. Mr. Darling reported that a staff member will be selected to attend Leadership Training in North Carolina this year. This is the same training that he himself attended last year and found to be very beneficial. The training has been budgeted for one attendee. Mr. Darling reminded the Board that the California Association of Sanitation Agencies (CASA) will hold their Mid-Year Conference from January 12-13, 2010. The Washington, D.C. Conference will be held from March 8-10, 2010. Denise will assist with travel arrangements. Mr. Darling reported that a water bill was passed earlier today and is now headed to the Governor. It includes many provisions, including an $11.1 billion bond. Some will go towards recycled water. The Waterbuses Association and CASA participated in lobbying for $1 billion in the bill for recycled water projects. DIRECTORS’ COMMENTS None CORRESPONDENCE Receive Monthly Report dated October 29, 2009, Federal Advocates, Inc., Bay Area Recycled Water Coalition, Project No. 90024 The Board received and filed the correspondence. Receive Monthly Federal Lobbying Report dated October 2009, ENS Resources, Inc., Bay Area Biosolids-to-Energy Coalition, Project No. 10089 The Board received and filed the correspondence. Receive Monthly State Lobbying Report dated October 30, 2009, Edelstein, Gilbert, Robson and Smith, Bay Area Regional Biosolids-to-Energy Coalition, Project No. 10089 The Board received and filed the correspondence. ADJOURNMENT There being no further business to come before the Board, the meeting was adjourned at 6:21 p.m. The next Regular Meeting of the Board of Directors will be Wednesday, December 9, 2009 at 5:30 p.m. Nancy L. Parent Board Secretary (Recording Secretary: Denise Jones) Board of Directors Meeting Page 5 November 4, 2009 Z:\Board\Minutes\2009\Minutes-November 4, 2009.doc Z:\Board\Minutes\2009\Minutes-November 4, 2009.doc