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July 2, 2012

MSWD Study Session & Board Meeting - April 12 & 16

The audio recording of the Thursday study session on Aril 12, 2012, of the Mission Springs Water District Board of Directors is available here. I'll blend in the regular board meeting of Monday, April 16, as well. The audio recording of the Monday board meeting is available here.

TKE Engineering Contract Renewal

One year, not to exceed $120,000. TKE is used on an as-needed basis. General Manager Arden Wallum is the only engineer at the district, so outside engineers are called upon as necessary (which is quite a bit). Services include review of engineering documents and development documents, project and program management, management of active capital projects, future planning, and development of the capital improvement program. All for less than the cost of one in-house engineer. Mike Thornton, who we see at many district meetings, works at TKE.

Mr. Wallum said he has been using Mr. Thornton to represent the district in the settlement agreement management plan.

Approved 5-0.

Financial Master Plan Update

This was a discussion of the citizens' committee meeting which took place the night before. President Wright said that she thought the highlight was Finance Director McCue's report at the beginning of the meeting. John Soulliere reported that 17 members of the committee were present.

Richard Cromwell, who is on the citizens' committee, said that in his group most of the people simply deleted without reading the email that had come from Jim Jones and Malcolm McLean.

Director Martin said he had forwarded the Jones/McLean/Sobotta emails to Councilmember Betts. Mr. Betts wrote back that the three had it wrong about amortization, that in fact MSWD is not taking enough depreciation. He said the MSWD may be "too fiscally responsible." [Time for a party?]

Mr. McCue tried to summarize what he said for the benefit of the four directors who were not at the committee meeting. He said the numbers had been taken out of context. The rise in personnel costs is due mostly to the rising cost of insurance and benefits, not salaries. Much of those additional costs are mandated by law.

President Wright expressed optimism that Mr. McLean, being an intelligent gentleman, will speak with Mr. McCue and get a more accurate picture of the finances of the district.

Concurrence With ACWA HBA Termination

Something of a technical issue with ACWA health insurance. The Health Benefits Authority is going to transition into the ACWA Joint Powers Insurance Authority. HBA provides health insurance for district employees. JPIA provides insurance for the district itself. The district (and a bunch of districts) must concur for this to take place. The goal is to save money and increase efficiency. Hey, it's got a dedicated website!

Approved 5-0.

Consent Agenda

The consent agenda included a claim for damages by Suresh Shah, the developer of the Village at Mission Lakes. Mr. Shah asserts that delays by MSWD have cost him $1.3 million. The claim is directed at both the City of DHS and the water district. He said that throughout 2011 he was unable to get "clear, correct and decisive information as to the bonding requirements." He said he was ping-ponged from the city to the district and back again.

Staff recommendation was to deny the claim. Approved 5-0.

Financial Report

This report covers the period ending February 29, 2012. The net operating loss was $1,173,645. Net non-operating income was $885,452. Resulting in a net loss of YTD $288,193. This is better than budgeted. Water revenue is 2% less than budgeted. There was a net positive cashflow of $200,308.

The total long-term debt of the district is about $3 million. Director Furbee said that because of the district's low debt and the state of the economy, this is a good time to borrow. He asked for a future report on the district's ability to borrow.

Water production rose for the fourth month in a row. Compared with the same month a year earlier:

  • 12/2011 +5.0%
  • 1/2012 +13.1%
  • 2/2012 +15.3%
  • 3/2012 +1.4%


Several directors reported on the Chamber of Commerce breakfast, commenting on how good it was, and how good all of the speakers are that the Chamber invites to its breakfasts.

Vice President Brown reported on the ACWA Federal Tariffs meeting in Sacramento. He said it was good and frank. They discussed the Nuñez bill which was a fix-it bill for California infrastructure problems. The official ACWA position on the bill was "watch" (i.e., neither favor nor oppose). But, Mr. Brown said, when you listened to the discussion you realized it was a bad bill. Some ACWA members support some components of the Nuñez bill. But its passage in the House means now there is an opportunity to develop a Senate water bill.

The California water bond measure is being put off to 2014, when it will be even less relevant. It takes a bigger vote in the legislature to revise the measure than to postpone it. A federal policies committee, which Mr. Brown will participate in, will look at California water projects that could be included in a Senate water bill.

Mr. Bowman reported on the Hoteliers. He said the Hotel Lautner is joining the Hoteliers, even though it is outside city limits.

He also reported on the problem created by the ADA's requirement for EVERY swimming pool (except at private residences, I'm sure) must have a permanently installed, powered lift to help handicapped people put themselves in the pool. These lifts cost several thousand dollars each.

Mr. Martin brought up the city's work on a drainage master plan and whether the district participates or should participate. The general opinion seemed to be that the district should participate.

Proposal From Slovak Baron & Empey

This item was added to the agenda after the Thursday study session, so (obviously) it was discussed solely at the Monday board meeting. The district has been successfully using this law firm in the legal fight against the initiative referendum. The law firm is doing other good work for justice in Desert Hot Springs. And now the firm wants to make an offer.

One of the attorneys from SB&E got up to say that they are cognizant of the fact that the district already has an ongoing relationship with an attorney. Their proposal is for a fixed retainer, which would allow the district to contact them at any time without incurring additional expense. The amount they propose ($6,500/month) is in line with what the district is currently paying per month, he said. The deal would not include bond work or special counsel type activities, like adjudication of water rights.

Mr. Furbee praised SB&E as a great firm, but said he doesn't like the idea of a retainer. He thinks there's no need for it. He thinks that in the future we will have little need for legal services.

The attorney from SB&E said they would be happy to work with the district on a retainer basis or an hourly basis. The $6,500/month figure works out to about $180/hour (about 36 hours). they have no intention of changing the existing relationship the district has with its present law firm. SB&E proposes to provided everyday legal services.

Director Bowman was concerned that the law firm had made this offer in February, but it was not presented to the board until April. Even so, there was no information as to how much the district had spent over the last 2 to 4 years on legal services. The $6,500 offer is based on legal services rendered in the previous year only. Mr. Wallum said he would go back and get those numbers for the last three years.

Mr. Brown said that if you go back two or three years, you will probably find less legal activity than in the past year. But he thinks that if staff goes back to the last time the district had a lot of legal activity, then we'll find more relevant data for this decision.

The SB&E attorney said any decision to go on a retainer basis can be changed any day. The district would not be locked in. They offer a retainer fee only to public agencies because they need lower costs and they need to budget. He said that with a retainer the law firm is available for questions 24/7. This helps prevent mistakes and results in fewer lawsuits.

Science Fair Winner

Since 2008 the water district has sponsored the first place environmental division award for PSUSD's science fair. This year's winner is a 5th Grade student, Zane Husky, at Sunny Sands Elementary who competed against high school students and won with his "Whole House Light Bulb" project. He brought in his project and demonstrated that one light bulb could power nearby solar panels that are connected to lights in other rooms.

General Manager's Report

  • 370 customers have signed up for electronic billing.
  • Work has begun that will allow customers to pay via credit card over the phone.
  • Staff is researching the idea of putting residential sewer bills on the tax rolls rather than billing monthly.
  • Various dental insurance carriers were analyzed to see if the district could save money. One provider offered a lower price but also offered a lower level of service, so staff decided to stick with Premier Access.
  • Projected health insurance increases in 2013 are as follows: Anthem Blue Cross PPO - 10%-12%; Anthem Blue Cross CaliforniaCare HMO - 10%-12%; Kaiser - 7%-9%.
  • There were 28 service line leaks in March, but no main line leaks and no fire hydrants were lost.
  • Five backflow units were stolen in March, including one at Horton WWTP. The replacement at Horton was moved inside the perimeter fence for security.
  • There were 680 customer service calls requiring 266.5 staff hours. But there were NO customer complaints.
  • Interior recoating of the Two Bunch #1 Reservoir was completed.
  • Rehab of the Mission Lakes Reservoir began in March.

Several students from Painted Hills Middle School took a tour of district facilities and met with staff.

Mission Springs Improvement Corporation Annual Meeting

An annual legal ritual in which the minutes of the previous ritual are approved. 5-0. In July 2001 the corporation issued certificates of participation in the amount of $348,000. $45,000 in principal payments have been made. The final payment is due in 2041.

In Memory Of Richard Milanovich

The Monday board meeting was adjourned in memory of the late tribal chairman Richard Milanovich.

Filed under Desert Hot Springs | permalink | July 2, 2012 at 03:32 PM


Since there seems to be a disagreement on exactly what Councilman Russ Betts wrote to me in an email which I subsequently read in its' entirety to the MSWD Board during the study session, it might be beneficial to print my comment which is contained in your tape recording of the study session. Councilman Betts has conveyed to me that your edited version changes the context and meaning of his comment. I did read word-for-word what Councilman Betts wrote. I stand by what I reported at the meeting.

Posted by: russ martin at Jul 6, 2012 6:26:21 PM

Russ Martin and I have had a lot of conversations regarding MSWD. I most certainly did not tell Russ that MSWD is "too fiscally responsible."

There is a balance to be struck between the need to spend when it is beneficial and the need to be financially conservative. If MSWD is guilty of either of those, it would be on the side of being very fiscally conservative.

Given the pitfalls at either end of the spending philosophy spectrum, I side with the approach MSWD has taken over the years. It seems to be in good financial shape after a lot of hard work by its directors and top management.

On the subject of depreciation, that is too involved for discussion here. Generally, Russ and I have talked on several occasions about making sure the cost to replace the system is properly reflected in each year's budget. I don't have those details but again trust that MSWD is acting responsibly in this area also.

All of which is to say I never said MSWD is too fiscally responsible.

As always, thanks for this opportunity to clarify my position.

Best Regards,
Russell Betts

Posted by: Russell Betts at Jul 6, 2012 3:56:09 PM

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