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February 12, 2012

MSWD Board Meeting - January 17

The audio recording of this meeting of the Board of Directors of the Mission Springs Water District is available here. This meeting was held in a small room at Mission Lakes Country Club.

Finance Director McCue introduced Arturo Ceja, the new accounting manager. He replaces Carol Nesbitt who is retiring.

Public Comments

Dick Cromwell thanked the board and staff for all the good work they are doing with the fiscal review, which includes the citizens committee.

Camille Linde came on behalf of the Trails Committee to talk about the clean up that was scheduled for Little Morongo on January 28.

Palm View Estates Water Connection Fees

General Manager Arden Wallum said that Darren Proulx, the owner, was in the audience and spoke to him, saying he had heard that he had sent a letter to the board. Mr. Wallum said he did not receive a copy of it until late this day, January 17, because Mr. Proulx did not send a copy to staff. He said he didn't see anything in the letter that would change staff's recommendation. This letter included a list of other water districts that allow payment of connection fees over time, but Mr. Proulx had been asked to send that list to staff so they could research. Instead he sent it only to the board, and staff didn't have time to research it before this meeting.

Mr. Wallum said that he had consulted with the district's attorney who told him that if the board decided to do something different than its established policy on payment of connection fees, then it would have to go through a formal process of writing and approving a waiver.

Mr. Wallum summed up Mr. Proulx's proposal, saying that it asks the renter to pay the connection fee, which benefits the property owner. Staff's opinion is that "it's not good business for the district." The district's attorney had pointed out the administrative nightmare, saying there would potentially be 74 additional contracts to keep track of.

Director Martin said the purpose of asking Mr. Proulx to get the names of other water districts from his attorney was so that staff could contact the other districts and get the details. By sending the letter to the board and not staff, the research could not be done, and "in my view that's not compliance with what we had requested."

Mr. Proulx continues to say that the financing deal he proposes is not a loan. Mr. Martin made an analogy to financing a car, which is a loan.

Director Furbee asked if it would be cheaper for Mr. Proulx to do a master meter. Mr. Wallum said he didn't know what a master meter would have cost if it had been set up that way when the mobile home park was first built in the late 1980s.

Director Bowman asked what the cost of a master meter would be now. Mr. Wallum said they had roughly calculated an estimate of what would be needed for the 118 units at Palm View Estates, and he said it was about $200,000. [That's less than $1,700 per unit.]

Mr. Bowman asked if developers are warned if the connection fee is going to rise while they are in the process of development. Or, are they able to lock in connection fees at a certain level? Director Furbee said the only way to do that is to buy the meters.

Mr. Wallum said he understands the need to promote development and business, but that has to be balanced against what's fair to the ratepayers.

Mr. Bowman asked if the water connection fee for Palm View Estates could be rolled back from the current figure (about $4,300) to $800, which is what it would have been back in the late 1980s. Mr. Wallum said it would be legal to do that with proper public notice, etc.

President Wright said the district's attorney said that capacity gets used up [and capacity is what the connection is designed to pay for]. Over time more capacity has to be developed. Today's capacity "costs this much today," she said. She compared it to Skyborne, saying that whenever they start to put in houses again, the connection fee they will pay will be the connection fee in effect at the time they connect. [With perhaps unspoken an hint that if a bargain rate is established for Palm View Estates today, Skyborne will also seek a bargain rate some day.]

Vice President Brown said the challenge is find a way to be both accommodating and consistent, without having it come back and bite the district. He recalled that when the board voted to recast the master meter rates the district recognized the fact that mobile home residents and apartment residents use about 70% as much water as a single-family residence. So how about cutting 30% (about $1,290) off the connection fee for Palm View Estates? That's a rule that could be applied consistently in the future.

Mr. Furbee made a motion to approve staff's recommendation, which would be to reject the proposal to finance the connection fees. Mr. Martin seconded.

Mr. Proulx came to the front to speak. He said that the 30% discount sounded good, but he was willing to 100% of the standard fee. "It just has to be broken up incrementally." In terms of fairness to other district customers, the system is maintained for 118 units at Palm View Estates, but income is being received from only 44 unit. [I think it's Finance Director McCue who frequently points out the income from water sold to those 44 units is for operations, the cost of water, not for infrastructure, which is what the connection pays for.] He said it could be set up like a special assessment district which would not be difficult to administer.

Ms. Wright said that in order for the economy to develop, the water district must stay solvent and reliable.

Mr. Brown said he is going to vote against the motion because even though Mr. Proulx sent the information from his attorney to the wrong people, he did identify 3 water districts that have some kind of connection fee financing. Mr. Brown said he would like to have that researched before making a decision.

Mr. Furbee suggested that Mr. Proulx take out a loan to put in a master meter. Mr. Proulx said that a major retrofit would be required. Brent Gray confirmed this. The fire service would have to be completely separated from the domestic service. It would be very expensive.

Mr. Proulx asked the board to direct staff to sit down with him and try to work out some other method of making this thing work.

Mr. Bowman said he is inclined to go with staff recommendation (to reject this), but he wondered if there was some way to establish a lower fee that Mr. Proulx's tenants could afford to pay upfront.

The vote was 4-1 in favor of staff's recommendation to reject the deal with Palm View Estates.

Mr. Proulx said he would be back with a different proposal. Board members said they were open to that.

Back Alley Service Line Replacement

This is a contract to replace 75 poly service lines with copper for a cost NTE $50,000. Mr. Wallum said that price is about $400-something per service. My math says it's $666/service. The copy of the proposal from SoCal looks like $585/service, but that's the poor quality fax I referred to earlier which is difficult to read. That would come to a total of $43,875 and then the usual practice of budgeting a slightly larger amount in case of surprises could bring it up to $50,000.

Approved 5-0.

Appointments

President Wright listed them, just as they were last Thursday:

Executive Committee: President Wright & Vice President Brown
Engineering Committee: Mr. Martin & Mr. Bowman
Finance Committee: Mr. Bowman & Mr. Furbee
Human Relations Committee: Mr. Furbee & Mr. Martin
Public Affairs Committee: Mr. Brown & Ms. Wright

Renewal Of Contract With Van Scoyoc

This is the district's Washington lobbying firm. Thane Young, our lobbyist, was present and spoke to the board. There are still no earmarks in the budget, and that means no earmarks to fund sewers in our district. But the budget includes funding for Section 219 ("Environmental Infrastructure Program") construction projects in the budget for the Army Corps of Engineers. MSWD's authorization for $35 million for sewers is a Section 219 authorization. The final budget bill provide $29.66 million. MSWD can work with district headquarters of the Army Corps to get a piece of those funds. While it's not a lot of money, Mr. Young said he thought it sets a good precedent, indicating the Congress will continue to fund that account even if the President's budget doesn't request it. Congress gave the Army Corps of Engineers until about mid-February to come up with a plan on how to spend that money. The ACE Los Angeles District Office recommended $5 million for MSWD. "But I wouldn't go to the bank with that amount of money," Mr. Young cautioned.

Prospects for legislation in 2012 are not good. The two political parties are at loggerheads in this election year with a battle for both the Presidency and Senate looming. There will be more seen in the "regulatory arena" than in the "legislative arena," he said. The EPA and Army Corps of Engineers are working on a proposed rule for "waters of the United States." MSWD has written a letter of concern stating that wastewater treatment was not appropriately exempted in the rule.

Chromium-6 legislation has been introduced by Senators Boxer and Feinstein. It would require a chromium-6 (hexavalent chromium) standard to be set within a year after the legislation is approved. EPA is doing a toxicity assessment now.

Mr. Wallum said chromium-6 legislation has the potential to be very expensive. Mr. Young said that when the MSWD delegation comes to Washington this would be a good subject to bring up with legislators and regulators, so that they hear it from a small district, not just the big ones.

The board voted 5-0 to approve the contract with Van Scoyoc for another year.

Renewal of Contract For Tax Roll Billing Services

This is with Shepherd & Staats. Approved 5-0.

ACWA Health Benefits Ballot For Director

Ms. Wright spoke in favor of Steven Ruettgers. Approved 5-0.

Financial Master Plan Update

Mr. Wallum said it's important that committee members not think that they are going to be used just to rubberstamp the board of directors. To that end, he cautioned any board members who attend the meetings not to participate, with the exception of President Wright who calls the committee meeting to order and adjournment.

Camille Linde, who is on the committee, said that the district is doing a good job with the committee. The committee is being brought along slowly and the members are learning. They see that the district is giving them building blocks, and it's working.

Mid-Year Budget Review

A supplemental budget request for $84,000. Mr. Wallum said staff doesn't put a lot of fluff in the budget, so when things change, they need to come back to the board to approve revisions. There is also a $100,000 increase in the operating budget to pay for legal expenses.

Approved 5-0.

Consent Agenda

Director Martin asked about billing from the district's regular law firm. He couldn't find it in the register of demands. Mr. Wallum said to look for the payments to "Richards, Watson & Gershon." I found one payment for $764.00 date 12/1/2011. The district hasn't been using him much, Mr. Wallum said.

Mr. Martin said he was interested in what the contract with the attorney required, and what services he was supposed to provide.

Consent agenda approved 5-0.

General Manager's Report

The district is putting together a list of projects for the $53 million in air quality mitigation funds being handled by AQMD.

Directors' Reports

Mr. Martin said that he would like the district to review its legal representation from time to time. He would like to review the contract with Richards, Watson & Gershon and he would like to give other legal firms the opportunity to make a presentation.

Mr. Brown said he is looking forward going to Sacramento. He will rely on Thane Young a lot.

Mr. Bowman said he would like the district to review its ad in the local paper, Desert Valley Star, because "they are anything but cooperative with the city. This past one, it borderlines on The Globe or The National Enquirer, the way things are reported. This last one talks about our mayor and Rick Daniels, putting his hand on her back and caressing her back. If you haven't read it, it's appalling. And I think it's appalling that we're advertising..." Mr. Furbee interrupted to say he agrees. Mr. Bowman continued, "I think as a district it's too much of a political paper for us to be spending our money on. I would rather see a more generic paper, such as the Desert Sun or maybe none at all. Maybe more flyers in our inserts, if we want to get the public message out there." He said yellow journalism is out there and abundant and the district needs to be careful. He wants to stay on good terms with the city. He said that the newspaper in question is "marijuana advertisers, marijuana grow places, and that's pretty much it."

Ms. Wright asked for an update on the solar project. Mr. Wallum said some owls have to be moved first.

Filed under Desert Hot Springs | permalink | February 12, 2012 at 07:51 PM

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