HomeMy WebLinkAbout1999-11 DRAFT
MINUTES OF STEERING COMMITTEE MEETING
Wednesday, November 17, 1999
A meeting of the Steering Committee of the Orange County Sanitation District was
held on Wednesday, November 17, 1999 at 4 p.m., in the District's Administrative
Office.
(1) The roll was called and a quorum declared present, as follows:
STEERING COMMITTEE MEMBERS:
Directors Present: OTHERS PRESENT:
Jan Debay, Chair of the Board Thomas L. Woodruff, General Counsel
Peer Swan, Vice Chair Ryal Wheeler
Pat McGuigan, Chairman, OMTS Committee
Norm Eckenrode, Chairman, PDC Committee
Tom Sallarelli, Chairman, FAHR Committee STAFF PRESENT:
John Collins, Past Chairman of the Board Don McIntyre, General Manager
Blake Anderson, Asst. General Manager
Directors Absent: Jean Tappan, Committee Secretary
Jim Silva, County Supervisor Greg Mathews, Asst. to the General Manager
Mike Peterman, Director of Human Resources
Gary Streed, Director of Finance
Michelle Tuchman, Director of Communications
2 APPOINTMENT OF CHAIR PRO TEM
( ) IN THE OFFS
ORANGE COON'� ;.:
No appointment was necessary.
DEC 1 1999
(3) PUBLIC COMMENTS P
There were no comments by any member of the public.
(4) RECEIVE, FILE AND APPROVE MINUTES OF PREVIOUS MEETING
The minutes of the October 27, 1999 Steering Committee meeting were approved as drafted.
Minutes of the Steering Committee
Page 2
November 17, 1999
(5) REPORT OF THE COMMITTEE CHAIR
The Committee Chair did not make a report.
(6) REPORT OF THE GENERAL MANAGER
The General Manager asked Blake Anderson and Tom Woodruff to update the members on the
recent ruling re the Orange County bankruptcy. The District should receive about 95 cents back for
every dollar invested in the pool, and the remaining funds should be available in about four weeks.
Blake Anderson mentioned that there may be a legislative bill introduced by State Senator Pulanco on
behalf of the Los Angeles County Sanitation District that would prevent counties from banning
ordinances on biosolids land applications.
(7) REPORT OF GENERAL COUNSEL
General Counsel Tom Woodruff reported that in the Directors Board meeting folders is a memo with
additional information on the bankruptcy. He also discussed several items that are on the Board's
agenda for closed session, as well as recently submitted construction claims.
(8) DISCUSSION ITEMS (Items A-B)
A. Recommend adopting a Financial Plan to consolidate bookkeeping and rate-
setting practices for the District as follows:
1. Combine the assets and liabilities for the separate Revenue Areas Into
one Revenue Area.
2. Adopt one Financial Plan.
3. Adopt one user fee rate for Revenue Areas 1-13.
4. Continue to fund Revenue Area 14 by contract with the Irvine Ranch
Water District.
The rate consolidation issue was discussed at length. The main concern was
how to address the area formerly known as Revenue Area 7, which is a very old
system and has been identified as needing extensive repair/rehabilitation. IRWD
has expressed an interest in taking over these lines by changing its boundary for
sewering to include this section of Irvinelrustin, which is already receives water
service from IRWD. The portion in Santa Ana would be included within Santa
Ana's revenue area. The impacts of removing this area from the District service
area on the overall rates in the other revenue areas will be researched and
presented to the Steering Committee at the December Steering Committee
meeting. The issue of of RA 7 reserves would also have to be considered, as well
as considering rate consolidation for all revenue areas except 7 and 14.
B. The agenda items scheduled to be presented to the working committees at their
December meetings were reviewed with no changes.
Minutes of the Steering Committee
Page 3
November 17, 1999
(9) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There was no other business discussed.
(10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A
SUBSEQUENT MEETING
There were none.
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND/OR STAFF REPORT
There were none.
(12) CONSIDERATION OF UPCOMING MEETINGS
The next Steering Committee meeting is scheduled for Wednesday, December 15, 1999 at 5 p.m.
The next Board Meeting is scheduled for Wednesday, December 15, 1999 at 7 p.m.
(13) CLOSED SESSION
The Committee convened at 5:25 p.m. in Closed Session, pursuant to Government Code Section
54957.6, to discuss the issue of succession planning. Minutes of the Closed Session are on file
with the Board Secretary. The minutes of the Joint Board will report on the actions when they
are approved.
Al 5:55 p.m., the Committee reconvened in regular session.
(14) ADJOURNMENT
The Chair declared the meeting adjourned at 5:55 p.m.
Submitted by:
n Tappan
ering Committee Secretary
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STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
Pursuant to California Government Code Section 54954.2, 1 hereby certify that the Notice
and the Agenda for the Steering Committee meeting held on Wednesday, November 17, 1999, was
duly posted for public inspection in the main lobby of the District's offices on Wednesday,
November 10, 1999.
IN WITNESS WHEREOF, I have hereunto set my hand this 17th day of November, 1999.
Penny Kyle, Se ry l9� a Board of Directors of
Orange County SanitaT District
-51
Posted: November 10 , 1999, p.m.
By: I
Signature
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ORANGE COUNTY SANITATION DISTRICT
BOARD SECRETARY (2)
phone:
t71419fi2-2411
malling address:
P0. 0.8127
pounce Valley.CA
9272B 8127 NOTICE OF MEETING
screw address:
10844 Ellis Avanua
Fountain valley.❑A STEERING COMMITTEE
92J08-7018
ORANGE COUNTY SANITATION DISTRICT
Member
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• WEDNESDAY, NOVEMBER 17, 1999 - 4 P.M.
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Fullerton DISTRICT'S ADMINISTRATIVE OFFICE
Borden Brava 10844 ELLIS AVENUE
Huntington,tan Beach
lryme FOUNTAIN VALLEY, CALIFORNIA 92708
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An. A regular meeting of the Steering Committee of the Board of Directors of
seal Beach Orange County Sanitation District, will be held at the above location, date
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Sanitary Districts
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STEERING COMMITTEE AND BOARD MEETING DATES
FOR THE NEXT TWELVE MONTHS
Wednesday, November 17', 1999
Wednesday, December 15', 1999
Wednesday, January 26, 2000
Wednesday, February 23, 2000
Wednesday, March 22, 2000
Wednesday, April 26, 2000
Wednesday, May 24, 2000
Wednesday, June 28, 2000
Wednesday, July 26, 2000
Wednesday, August 23, 2000
Wednesday, September 27, 2000
Wednesday, October 25, 2000
`Tentatively rescheduled from regular fourth Wednesday.
STEERING COMMITTEE
(1) Roll Call:
Meeting Date: November 17, 1999 Meeting Time: 4 P.m.
Meeting Adjourned:
Committee Members
Jan Debay, Chair of the Board ............................
John J. Collins, Past Joint Chairman ....................
Peer A. Swan, Vice Chair...................................
Norm Eckenrode, Chair, PDC Committee ..............
Pat McGuigan, Chair, OMTS Committee ...............
Tom Saltarelli, Chair, FAHR Committee ................
Jim Silva, Supervisor........................................_
Others
Thomas L. Woodruff, General Counsel ....................
Staff Present
Donald F. McIntyre, General Manager......................
Blake P. Anderson, Asst. General Manager..............
Mike Petennan, Director of Human Resources.........
Gary Streed, Director of Finance..............................
Michelle Tuchman, Director of Communications......._
Jean Tappan, Secretary...........................................
c: Lenora Crane
AGENDA
REGULAR MEETING OF THE STEERING COMMITTEE
ORANGE COUNTY SANITATION DISTRICT
WEDNESDAY, NOVEMBER 17, 1999 AT 4 P.M.
ADMINISTRATIVE OFFICE
10844 Ellis Avenue
Fountain Valley, California
In accordance with the requirements of California Government Code Section 54954.2, this agenda has
been posted in the main lobby of the District's Administrative Office not less than 72 hours prior to the
meeting date and time above. All written materials relating to each agenda item are available for public
inspection in the oRoe of the Board Secretary.
In the event any matter not listed on this agenda is proposed to be submitted to the Steering Committee for
discussion and/or action, it will be done in compliance with Section 54954.2(b)as an emergency item or
that there is a need to take immediate action which need came to the attention of the District subsequent to
the posting of the agenda, or as set forth on a supplemental agenda posted not less than 72 hours prior to
the meeting date.
(1) ROLL CALL
(2) APPOINTMENT OF CHAIR PRO TEM. IF NECESSARY
(3) PUBLIC COMMENTS
All persons wishing to address the Steering Committee on specific agenda items or matters of
general interest should do so at this time. As determined by the Chairman, speakers may be
deferred until the specific item is taken for discussion and remarks may be limited to five
minutes.
Matters of interest addressed by a member of the public and not listed on this agenda cannot
action taken by the Committee except as authorized by Section 54954.2(b).
(4) APPROVE MINUTES OF PREVIOUS MEETING
Approve draft minutes of the October 27, 1999 Steering Committee meeting.
Y
-2- November 17, 1999 Agenda
(5) REPORT OF COMMITTEE CHAIR
(6) REPORT OF GENERAL MANAGER
(7) REPORT OF GENERAL COUNSEL
(8) DISCUSSION ITEMS (Items A-B)
A. Recommend adopting a Financial Plan to consolidate bookkeeping and rate-
setting practices for the District as follows:
1. Combine the assets and liabilities for the separate Revenue Areas into
one Revenue Area.
2. Adopt one Financial Plan.
3. Adopt one user fee rate for Revenue Areas 1-13.
4. Continue to fund Revenue Area 14 by contract with the Irvine Ranch
Water District.
(Gary Streed)
B. Review Agenda Items Scheduled to Be Presented to Committees in December
(Information item only)
(9) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF
ANY
(10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A
SUBSEQUENT MEETING
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND STAFF REPORT
(12) FUTURE MEETING DATES
The next Steering Committee Meeting is scheduled for 5 p.m., Wednesday, December 15, 1999.
The next Board Meeting is scheduled for 7 p.m., Wednesday, December 15, 1999.
-3- November 17, 1999 Agenda
(13) CLOSED SESSION
During the course of conducting the business set forth on this agenda as a regular meeting of the
Steering Committee, the Chair may convene the Committee in closed session to consider
matters of pending real estate negotiations, pending or potential litigation, or personnel matters,
pursuant to Government Code Sections 54956.8, 54956.9, 54957 or 54957.6, as noted.
Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential
litigation; (c) employment actions or negotiations with employee representatives; or which are
exempt from public disclosure under the California Public Records Act, may be reviewed by the
Directors during a permitted closed session and are not available for public inspection. At such
time as final actions are taken by the Board on any of these subjects, the minutes will reflect all
required disclosures of information.
A. Convene in closed session, if necessary
1. Update on labor negotiations with 501 and OCEA Units (Government
Code Section 54957.6)
2. Confer with General Manager re Successor General Manager
(Government Code Section 54957.6)
B. Reconvene in regular session
C. Consideration of action, if any, on matters considered in closed session.
(14) ADJOURNMENT
jt
N\WP DIRUGENDASEERW COMMr TEE�OVW1117W AGENDA WIN NO AND RCLL CKL SEET.DOC
Notice to Committee Members:
For any questions on the agenda or to place items on the agenda,Committee members should contact the
Committee Chair or the Secretary ten days in advance of the Committee meeting.
Committee Chair. Jan Debay (949)644-3004(Newport Beach City Hall)
Secretary: Jean Tappan (714)593-7101
(714)962-0356(Fax)
E-mal: lfappanOocsd.COm
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DRAFT
MINUTES O�$TEERING COMMITTED MEJIJG
Wednesday, October 27, 1999
A meeting of the Steering Committee of the Orange County Sanitation District was
held on Wednesday, October 27, 1999 at 5 p.m., in the District's Administrative
Office.
(1) The roll was called and a quorum declared present, as follows:
STEERING COMMITTEE MEMBERS:
Directors Present: STAFF PRESENT:
Jan Debay, Chair of the Board Don McIntyre, General Manager
Peer Swan, Vice Chair Blake Anderson, Asst. General Manager
Pat McGuigan, Chairman, OMTS Committee Jean Tappan, Committee Secretary
Norm Eckenrode, Chairman, PDC Committee Bob Ghirelli, Director of Technical Services
Tom Saltarelli, Chairman, FAHR Committee David Ludwin, Director of Engineering
Jim Silva, County Supervisor Mike Peterrnan, Director of Human Resources
John Collins, Past Chair of the Board Gary Streed, Director of Finance
Michelle Tuchman, Director of Communications
Directors Absent: Mike Moore, ECM Manager
None Layne Baroldi, Environmental Regulatory
Specialist
OTHERS PRESENT:
Thomas L. Woodruff, General Counsel
Tom Nixon, Counsel
Don Hughes
Ryal Wheeler
Fred Cardenas
Dave Schlesinger
Augie Caires
Dan McMillan
Jan Goldby
Jim Howell
Ed winamer
Doug Isbell
John Lippitt
(2) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no comments by any member of the public.
v
a
Minutes of the Steering Committee }
Page 2
October 27, 1999
(4) RECEIVE. FILE AND APPROVE MINUTES OF PREVIOUS MEETING
The minutes of the September 22, 1999 Combined Steering and Ad Hoc Committees meeting were
approved as drafted.
(5) REPORT OF THE COMMITTEE CHAIR
Chair Debay welcomed the members of the San Diego Wastewater Management District Advisory
Committee, who spent the day with staff and Directors Eckenrode and Swan to discuss our
administrative and management policies.
Several Directors attended the October 20 Peter Sandman seminar on public outrage, and Director
Swan recommended that Mr. Sandman return to address the League of Cities as well as employees
of IRWD and other agencies. He indicated that IRWD would help pay the costs.
Chair Debay also mentioned that there has been some talk about sewering dry weather flow from the
new development planned near Crystal Cove. So far no one has contacted the District.
(6) REPORT OF THE GENERAL MANAGER
A. The General Manager reported that the November 3 OMTS Committee meeting has
been cancelled. And because of a conflict with a League of Cities meeting on
November 4, the PDC Committee will meet at 5 p.m. at Edison Field.
Next month's Steering Committee agenda will have several major policy issues to
discuss, including succession planning and rate consolidation. Several changes in
executive management personnel (Mike Peterman's early departure in December
rather than January, and Ed Hodges' departure on November 1) make a discussion of
the structure of the organization essential as well.
Director Silva said that he has had several meetings regarding the problems in
Huntington Beach and that the General Manager was in attendance representing the
Sanitation District. Director Silva thanked Mr. McIntyre for his positive approach in
working with the cities and agencies on this difficult issue.
B. Report of the Assistant Manager
Bob Ghirelli, Director of Technical Services, reported on the Huntington Beach Closure
and Urban Flow Diversion activities. Staff is completing a long list of items and
preparing the final report for presentation to the Directors in November. The county
and cities have formed a group to look at upstream sources. The Huntington Beach
special discharge permit is on tonight's Board agenda. Researchers from UCI are
investigating the channel and marshes. NWRI has provided a matching grant of
$75,000 for these studies. A panel of experts is being formed to evaluation the event
and provide recommendations should it occur again. The outfall dye test was
completed and there were no leaks. Questions have arisen, however, on background
levels of the ocean and additional studies may be recommended.
Minutes of the Steering Committee
Page 3
October 27, 1999
Dave Schlesinger indicated that San Diego has also experienced some beach closures
as a result of urban water runoff. The work done around Mission Bay, however, has
eliminated the problem in that area.
Director Silva said that he represents nine cities on the Board of Supervisor: and they
have all discussed the major impacts of beach closures. They are developing an MOU
for funding studies and will be looking for help from other cities.
The Regional Board has sent letters to the cities of Fountain Valley, Huntington Beach,
Newport Beach, Seal Beach and Costa Mesa putting them on notice of the possibility
for violations if storm drain discharges are determined to be the source of
contamination.
(7) REPORT OF GENERAL COUNSEL
General Counsel did not make a report.
(8) DISCUSSION ITEMS (Items A-D)
A. Purchasing Resolution and Delegation of Authority Conflicting Committee Actions
Staff requested direction from the Steering Committee on how to proceed in the
event two of the working committees made differing/conflicting recommendations
on the same issue. The Steering Committee members agreed that both
recommendations should be presented to the Board in an agenda report and the
Board members would decide which recommendation to implement.
B. Land Purchase/Lease in Central Valley— Due Diligence Update
Bob Ghirelli and Layne Baroldi updated the members on the due diligence
activities since the last Steering Committee meeting. A list of deal points has
been developed. A formal recommendation will be presented to the Board at the
November meeting. It was decided that the OMTS Committee would meet jointly
with the FAHR Committee on Wednesday, November 10, to review the issues in
detail before presenting to the Board.
C. Membership of FAHR subcommittee re Refunds for Yorba Linda Properties
Served by Septic Tanks
The FAHR Committee recommended the formation of an ad hoc committee to
consider refunds for property owners currently on septic systems. However, the
members were identified. Chair Debay appointed Tom Saltarelli as chair of the
committee, Peer Swan and Lynn Daucher as members of this Ad Hoc Committee.
Staff and legal counsel will prepare a report outlining options to present to the
Committee.
General Counsel Tom Woodruff said that he has had discussions with County
legal staff on this matter and concern was expressed about the four-year statute
of limitations. Additional legal research is ongoing in order to determine whether
Minutes of the Steering Committee
Page 4
October 27, 1999
D. The Agenda Items scheduled to be presented to Committees in November were
not reviewed.
(9) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There was no other business discussed.
(10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A
SUBSEQUENT MEETING
There were none.
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION ANDIOR STAFF REPORT
There were none.
(12) CONSIDERATION OF UPCOMING MEETINGS
The next Steering Committee meeting is scheduled for Wednesday, November 17, 1999 at 4 p.m.
This meeting will begin one hour earlier to allow additional time for a 6 p.m. closed session discussion
with General Counsel and the full Board on the claim of litigation re Crow-Winthrop [pursuant to
Government Code Section 54956.9(b)(3)(c)].
The next Board Meeting is scheduled for November 17, 1999 at 7 p.m.
(13) CLOSED SESSION
The Committee convened at 6:16 p.m. in Closed Session, pursuant to Government Code
Sections 54957.6 and 54956.9. Confidential Minutes of the Closed Session held by the
Committee have been prepared in accordance with Government Code Section 54957.2 and are
maintained by the Board Secretary in the Official Book of Confidential Minutes of Board and
Committee Closed Meetings. No reportable action was taken re Agenda Items Nos. 13A(1),
12A(2), 13A(3) and 13A(4). The Committee did not consider Agenda Item No. 13A(5), and no
report was given.
At 6:55 p.m., the Committee reconvened in regular session.
Minutes of the Steering Committee
Page 5
October 27, 1999
(14) ADJOURNMENT
The Chair declared the meeting adjourned at 6:56 p.m.
bmilted by:
Tappan/
t ering Committee Secretary
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STEERING COMMITTEE Meeting Date To W.of Dr.
11/17/99 12/15/99
AGENDA REPORT tem N.7 I ern Num b
8. A.
Orange County Sanitation District
FROM: Donald F. McIntyre, General Manager
Originator: Gary G. Streed, Director of Finance
SUBJECT: PROPOSAL FOR FINANCIAL CONSOLIDATION OF REVENUE AREAS
1, 2, 3, 5, 6, 7, 11, 13 AND 14, AND FOR A SINGLE USER FEE RATE
STRUCTURE FOR CURRENT REVENUE AREAS 1-13 (IRWD, RA14,
TO CONTINUE TO BE BILLED ACTUAL COSTS)
GENERAL MANAGER'S RECOMMENDATION
The General Manager recommends adoption of a financial plan to consolidate
bookkeeping and rate-setting practices for the District as follows:
1. Combine the assets and liabilities for the separate Revenue Areas into one Revenue
Area.
2. Adopt one financial plan.
3. Adopt one user fee rate. For Revenue Areas 1-13.
4. Continue to fund Revenue Area 14 by contract with the Irvine Ranch Water District.
SUMMARY
Because of the variance in rates and abilities to pay among the Revenue Areas, the
recent consolidation of the individual Districts into one District, and a shift in our focus to
a regional focus and mission, some Directors and staff have considered a basic change
in the bookkeeping and rate-setting practices for the District. Basically, this change
would combine the assets and liabilities for the separate Revenue Areas into one
Revenue Area and then adopt one financial plan, including one user fee rate.
Revenue Area 14 would continue to be funded by existing contract with the Irvine
Ranch Water District.
There are certain advantages to a one District, one rate policy.
• Bookkeeping and accounting are simplified
• Auditing is simplified
• Issuing long-term financing is simplified
• Staffing and financing costs are reduced
• Establishing sewer service fees is simplified
• The annual sewer service fee would have been decreased substantially for 203,620
EDUs in 1999-2000 (average decrease is $18.08).
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There are also disadvantages and special situations that must be taken into
consideration.
• The annual sewer service fee would have been increased for 651,000 EDUs in
1999-2000 (increase is $1/yr. for 548,700 EDUs and $11/yr. for 102,300 EDUs).
• Revenue Area 13 receives none of the property taxes paid by users.
• Revenue Area 14 is funded by the IRWD and receives no property tax or user fees
directly from property owners.
• Revenue Areas 13 and 14 have very little debt and have paid "cash" for most of their
share of facilities.
• Each of the Revenue Areas has different levels of cash reserves and net assets.
PROJECT/CONTRACT COST SUMMARY
N/A
BUDGETIMPACT
❑ This item has been budgeted.
❑ This item has been budgeted, but there are insufficient funds.
❑ This item has not been budgeted.
® Not applicable (information item)
ADDITIONAL INFORMATION
See attached Staff Report.
ALTERNATIVES
Some Directors have agreed that the annual sewer service user fee in RA 1 is higher
than may be appropriate, but may not yet be willing to consolidate the fees. A potential
alternative is for the other RA's to compensate RA 1 for the assessed value and
property tax lost to regional governmental tax-exempt properties.
In order for the average assessed value per EDU in RA 1 to equal the average,
$3,563,463,200 would need to be added to the RA 1 assessed value. At the equivalent
tax rate in RA 1, that additional value would generate $983,337. Using the assessed
value per capita method, the additional property taxes would be $1,861,197. If RA 1
had additional revenues of this amount, the SFR annual user fee could be reduced from
$110.04 to $84,70.
CEQA FINDINGS
N/A
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Y ATTACHMENTS
1. Staff Report
2. Summary Cash Flow Projection
3. One District-One Rate Cash Flow Projection
4. Chart—Annual SFR Rates Projection
5. Combining Balance Sheet, June 30, 1998
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November 2, 1999
STAFF REPORT
Proposed Rate Structure
In 1947 a blue-ribbon panel recommended the creation of individual Sanitation Districts
to serve all of Orange County. In 1954 County Sanitation Districts of Orange County
Nos. 1, 2, 3, 5, 6, 7 and 11 joined together to own and operate treatment and disposal
facilities. Between 1954 and 1979 these Districts established annual budgets and
property tax rates in order to provide necessary sewage collection treatment and
disposal services. The individual property tax rates were a function of both financial
need and property assessed valuation.
The passage of Proposition 13 in 1978 changed the funding process. No longer were
the Districts able to establish property tax rates sufficient to meet their needs. In fact,
the Districts had no control over property tax rates. Additionally, assessed values were
reduced for many parcels and future assessed value growth was limited.
In 1979, in an effort to develop a permanent tax allocation method to implement
Proposition 13, the State Legislature adopted Assembly Bill 8. Basically, AB 8 allocates
the total "1°% basic levy" collected within the County, adjusted first for redevelopment
agencies, to each of the taxing agencies in the same ratios as those agencies received
property taxes in 1979-80. Since both the ratios and the 1% rate are fixed, the only
property tax variable is assessed value.
Because the various Sanitation Districts had a pay-as-you-go philosophy and differing
capital and operating funding needs in the late 1970's, they had differing property tax
rates. The result of all of this is differing "effective tax rates" in each of the current
Revenue Areas as follows:
RIA 1998-99 AV Effective Tax Rate Tax Allocation
1 $ 8 513 664 662 .00027595 $1 797 414
2 35,082,620,856 .00028162 9,879,842
3 33 838,165 681 .00031991 10,825,321
5 10,871,149,227 .00026484 2,879,152
6 5,934,887,167 .00022281 1,322,326
7 16,034,002,091 .00019568 3,137,591
11 9,021,892,230 .00024819 2,239,175
13 2,796,831,476 NIA NIA
14 14 495 514,969 NIA NIA
OCSD • P.O.Box 8127 . Fountain Valley,CA 92728-8127 • (714) 962-2411
Proposed Rate Structure
Page 2
November 2, 1999
"Supplemental" User Fees
In 1979 the Board of Directors adopted a Revenue Program. Such a program was a
requirement of the Federal Clean Water Act and of the Districts' participation in the
Clean Water Grant program. The Revenue Program provided that property taxes would
continue to be the basic revenue source for the Districts. All industrial users and large
commercial users would pay an additional charge based upon their actual quantity and
strength of sewage discharged to our system. Finally, as property tax and other
revenues became insufficient to fund the costs of operating, maintaining, rehabilitating
and constructing necessary sewerage facilities, a"supplemental" user fee was
authorized for all users.
The need for these supplemental user fees did not arise in each of the Districts at the
same time or in the same magnitude. The following schedule indicates the initiation
date and rate, the current rate, and the projected rate in ten years. The amounts shown
are the annual rates for a single-family residence. different rates are charged for multi-
family and for non-residential users.
District or Projected
Revenue Implementation Initial 1999-2000 2008-09 SFR
Zone Date SFR Rate SFR Rate Rate
1 1984 $26.40 $110.04 $250.00
2 1990 55.00 76.00 102.00
3 1989 30.36 76.00 94.00
5 1982 26.40 87.50 87.50
6 1983 25.40 80.00 86.00
7 1991 40.00 66.00 129.00
11 1988 26.40 90.00 170.00
13 1985 70.00 100.00 100.00
14 NIA N/A WA WA
Because of the variance in rates and abilities to pay among the Revenue Areas, the
recent consolidation of the individual Districts into one District, and a shift in our focus to
a regional focus and mission, some Directors and staff have considered a basic change
in the bookkeeping and rate-setting practices for the District. Basically, this change
would combine the assets and liabilities for the separate Revenue Areas into one
Revenue Area and then adopt one financial plan, including one user fee rate.
Revenue Area 14 would continue to be funded by existing contracts with the Irvine
Ranch Water District.
There are certain advantages to a one District, one rate policy.
• Bookkeeping and accounting are simplified
• Auditing is simplified
Proposed Rate Structure
Page 3
November 2, 1999
• Issuing long-term financing is simplified
• Staffing and financing costs are reduced
• Establishing sewer service fees is simplified
• The annual sewer service fee would be decreased substantially for 203,620 EDUs in
1999-2000 (average decrease is $18.08).
There are also disadvantages and special situations that must be taken into
consideration.
• The annual sewer service fee would be increased for 651,000 EDUs in 1999-2000
(increase is $1/yr. for 548,700 EDUs and $11/yr. for 102,300 EDUs).
• Revenue Area 13 receives none of the property taxes paid by users.
• Revenue Area 14 is funded by the IRWD and receives no property tax or user fees
directly from property owners.
• Revenue Areas 13 and 14 have very little debt and have paid "cash" for most of their
share of facilities.
• Each of the Revenue Areas has different levels of cash reserves and net assets.
Issues
Outstanding Debt
All of the Revenue Areas have issued some certificates of participation (COPS) to pay
for collection and treatment facilities. The annual principal and interest payments are
made from property taxes. User fees are used for some of the COP service in Revenue
Area 1, and for all of it in Revenue Areas 13 and 14.
The outstanding COPS in Revenue Areas 13 and 14 amount to $1,998,245. This debt
could be sold to the District thereby taking it off the books of RA 13 and 14, along with
an equal amount of cash, and putting it on the books of the District. In this manner the
current debt service of the District would continue to be paid from property taxes. Since
Revenue Areas 13 and 14 receive no property taxes and would have no outstanding
COPs, they would not be participating.
Future COPS would be issued by the District, and principal and interest payments would
be made from future user fees.
Cash Reserves and Net Assets
While we all prefer to measure our economic or financial position by considering our
cash and other assets, a more proper measure for the District would be net assets. In
our case, net assets is the sum of our cash reserves and fixed assets, less the sum of
accumulated depreciation, outstanding debt and other liabilities. The distribution of net
assets is shown in the following table:
Proposed Rate Structure
Page 4
November2, 1999
NET ASSETS
Total Per Per$1,000
R/A Net Assets Capita Per MG Per EDU Per Acre AV
1 $35 927 871 $ 159 $3 820 $ 494 $2 983 $ 5.52
2 263,057,403 426 9 5" 984 3,874 7.50
3 265 754,909 371 10.039 945 4.068 7.85
5 65,881,509 1264 19207 2361 5600 6.06
6 43,303,875 403 12089 993 4414 7.30
7 97507794 614 10,817 953 4,362 6.08
11 62:853:871 1 532 11,434 1,232 6,205 6.97
13 21,614,474 1 158 20 238 2 573 947 .I s
14 69,025,873 N/A 29211
NIA 1.187 24.68
Property Taxes
We have previously discussed the differing shares of the property tax basic levy
allocated to the individual Revenue Areas. One additional consideration is the total
amount of the 1% basic levy. This tax levy is a result of Proposition 13, which limited
the total basic property tax within the State to 1% of the assessed value. The base year
assessed value was established as the value in 1975, thus removing four years of
increased value from the tax roll.
The District's service area includes a wide variety of properly development, use, and
value. There are very high value properties and very low value properties. There are
properties with the 1975 value and there are properties developing and selling today.
There are even properties with no assessed value. Whatever the assessed value, the
District receives an average of 2.7% of the 1% basic levy. That is $27 a year for an
assessed value of$100,000.
Revenue Area 1 has the majority of the parcels with no assessed valuation, and which
pay no property taxes. This is because the County seat and several State and Federal
facilities are located in that area. It also has a concentration of some of the older homes
and businesses in the County. The average assessed value in RA 1 is less than half of
the average value per capita in RA 2-13, and only 64% of the average value per EDU.
Clearly RA 1 receives a disproportionately low share of the property tax, while providing
a disproportionately large share of regional services such as courts, jails and county
administration for our service area.
Revenue Area 14
The Irvine Ranch Water District provides local sewer service to all of Revenue Area 14.
There are several agreements and contracts dating back to 1985 that contain the details
of the IRWD connection to the District. In the simplest of terms, the IRWD is billed
Proposed Rate Structure
Page 5
November 2, 1999
directly for the Revenue Area 14 share of operating, maintenance, capital improvement,
and certificate of participation costs. Treatment plant 0&M and capital costs are based
upon actual flows. Neither the alternative nor the proposal is expected to change any of
the provisions of the existing agreements.
It should be noted that the information for Revenue Area 14 in the tables that
summarize the alternative and the proposal is estimated. IRWD bills its customers
directly; the Revenue Area 14 user fee is not collected on the property tax bill. The
number of users and the annual cost per user are estimated based upon the Strategic
Plan estimate of 260 gallons per day per EDU; the actual Revenue Area 14 flow and the
average annual 0&M and capital charges to IRWD. Neither the alternative nor the
proposal includes collecting Revenue Area 14 user fees on the property tax bill.
Alternative Proposal
Some Directors have agreed that the annual sewer service user fee in RA 1 is higher
than may be appropriate, but are not yet willing to consolidate the fees. A potential
alternative is for the other RA's to compensate RA 1 for the assessed value and
property tax lost to regional governmental tax-exempt properties.
In order for the average assessed value per EDU in RA 1 to equal the average,
$3,563,463,200 would need to be added to the RA 1 assessed value. At the equivalent
tax rate in RA 1, that additional value would generate $983,337. Using the assessed
value per capita method, the additional property taxes would be $1,861,197. If RA 1
had additional revenues of this amount, the SFR annual user fee could be reduced from
$110.04 to $134.70 as shown in the following table.
1999-2000 Prop Tax Revised
RAMEDUSFR Rate Reimb/EDU SFR RATE
1 $110.04 $ 25.64 $84.70
2 76.00 2.13 78.13
3 76.00 2.13 78.13
5 87.50 2.13 89.63
6 80.00 2.13 82.13
7 66.00 2,13 68.13
1190.00 2.13 92.13
13 100.00 2.13 102.13
14' 23 800 84.03 2.13 88.18
'RA 14 EDU and Rate are estimated from average daily Bow and$2 million per year contribution.
Proposed Consolidated Rate
While the alternative may satisfy the financial equity considerations surrounding land
use and regional general governmental facilities, it does not resolve the long-term
regional sewerage service issues, nor does it bring the District's financial practices and
policies into alignment with the streamlined governance provided by consolidation. This
Proposed Rate Structure
Page 6
November 2, 1999
can only be accomplished through combining the financial records, plans, assets,
liabilities, revenues and expenditures.
The impact on the individual ratepayer is minimal if the Financial Plan is redeveloped to
consider the District as a single entity. The following table shows the changes needed
in the annual SFR service fee in order to develop a regional Financial Plan:
1999-2000 Proposed Consolidated 2008-09
RA EDU SFR Rats Change Rate Cons. Rate
1 72 700 $110.04 $ 33.04 $77.00 $115.00
2 267,400 76.00 1.00 77.00 115.00
3 281300 76.00 1.00 77.00 115.00
5 27,900 87.50 10.50 77.00 115.00
6 43 620 80.00 3.00 77.00 115.00
7 102,300 66.00 11.00 77.00 115.00
11 51000 90.00 13.00 77.00 115.00
13 8,4001 100.00 23.00 77.00 115.00
14' 1 23,8001 84.03 7.03 77.001 115.00
"RA 14 EDU and Rate are estimated from average dairy flow and$2 million per year contribution.
Attachments
Several documents are attached that will help the reader to make comparisons and to
see the "big picture."
A copy of the Summary Cash Flow Projection from the 1999-2000 Budget shows the
ending cash and reserves for all of the Revenue Areas for each year to 2008-09, line
16, and the weighted average SFR user fee, line 17.
This schedule has been revised as if all of the Revenue Areas had been combined and
titled, One District-One Rate Cash Flow Projection. The pertinent balances and rates
are on the same lines. This schedule eliminates any intra-District payments such as
loans, and the annual joint works equity purchase and sale.
A two page Combining Balance Sheet schedule from the June 30, 1998 financial
statements is enclosed. This schedule shows the assets, liabilities and fund equity of
each of the Revenue Areas and the combined total for all of the Revenue Areas, or the
District. The proposal would eliminate the accounting and accounts by Revenue Area,
shown as"District No. X"for 1998, and would result in the single column of accounts
shown as I99B." The balances shown as "Due From Other Districts" and "Due to
Other Districts" would be offset or eliminated.
A chart showing the annual SFR rates projected in the budget for each year to 2008-09
is also included. Plotted across these columns are two line graphs. The first, the red
Proposed Rate Structure
.9 Page 7
November 2, 1999
line, is the weighted average of the currently projected rates. The second, the green
line represents the proposed single rate for the entire District, except current Revenue
Area 14 whose share will continue to be paid in accordance with existing agreements by
the Irvine Ranch Water District.
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IIW1999 2:19 PM
Orange County Sanitation District
One District, One Rate Cash Flow Projections
Proposed Prelminery PraBminary pre8m01ary Preliminary Prewinary Preliminary Preeminary PreBminary Prelminary 10 Year
Re Dew 1999-00 2 01 2001-02 02-03 03=04 REIM 45M W47 01=00 0840 Tyrol
Revenues:
1 General Usm Fees 65,1105,740 68,597,600 12,2N,980 15,N8,960 T9,673,840 83.845.955 68,043,220 92,704,420 96,516,200 101,231,050 824,644,365
2 PermiOed User Fees 6,206,000 6,362,000 6.523,000 6,68I,W0 6,855,000 7,026000 7,202,000 7.382,000 7.5N,000 7,155,001) 69.584,000
3 Patient,Tess 32,881,000 33,518,000 31,18].(IN 34,8720W 35,569.000 36.280.000 31,007,000 37.748.000 36.503.000 39,273,000 359,818,000
4 New COP Issues 157,000,000 - 1N,WD.OW - 173,000.000 - 140,000.010 - 102.000,000 - 7W.000,000
5 Inleresl Revenues 26,712,000 28.294,000 26,BW,m 25,257,W0 24.431,000 25,581.000 26,645,000 27,974,000 27,461,000 Win.= 266,144,000
6 CoWedion Fees 5.187,0N 5,301,000 5,415,000 5,529,000 5.643,00(1 5,757.000 5.871.000 5.985,000 6.099,000 6,213.000 S7,OW,000
I Other Revenues(Ind IRWD) 61,331,000 1,289,000 4,292,000 4,797,000 4,301,00D 4.305,000 3,809,000 3,813.0W 3,817.000 3,1117,000 95.571,000
0 Revemre6 N5,102.740 143,361,600 337,563,a80 153,100,960 329,472,840 162,114,9N 308,771,720 115,806,420 281.982,200 185,018,050 2,432741,365
Requremens.
9 Opm6 Mt.E, 53,356,500 54,1T9,000 55,11N.000 56,930.0W 50,025,000 59.116,000 60.210.000 61.300.000 62,411,000 63.517.000 585.516.500
10 Capital Ou9aim.Ind Gms 92,400,000 1W.678.000 159,718.000 148,340.000 1N.253000 Y2.682,000 62.653.000 75,886,000 78,785,000 80,939,000 1,027,301,000
11 COPend GOServrce 41,890,00D 48.867.000 57,160,000 N.Wo,OW T3,9B20W 81,987,000 88,388,000, 94,759,W0 99,631,000 104,365,0011 756.840,000
12 Oleer Requirements 1,122,W0 1,122,W0 1,122.OW 1,122,000 1,122,0W 1.122W0 1,122,000 1.122.000 1.122000 1,122,000 11,220,000
13 Requirements 188,560,500 255,446,00 273,8511,0W 222.N1,OW 238.392,000 214,807,000 212.383.000 233,055,000 241,949,000 249,983,001) 2.380,880,50D
14 Reven.RenArements 166,634.240 (112.084.400) 63.70T,8W (119.2W.040) 91.0110,840 (52112.Ms) 96,394,720 (57,448,580) 40,013,200 (131.944,950) 51,860,81115
Accumulated Funds'.
15 Beginsurs of Year 378,400,000 544,934,240 432,849,640 496,557,T211 377,277.6110 463,358,520 416,246,475 512.641.195 4W,192.615 495,205,815 378.40D,W0
16 End of Year 544,934,240 432,849.840 496,557,720 377,277,680 468,3N,SW 416,246.475 512,641,195 455,192.616 495.205,815 430,280,865 1 430,260,865
Sewer Service User Fees:
17 Avg SFR Annual U.Fee $77.00 $80.00 Wait 988.00 $9200 $96.50 3101.01) $106.00 WON $115.00
18 Perdenta,Cemge (2,01%) 3.90% 5.00% 4,76% 4,55% 4.89% 4N% 4,95% 3I'M 4.55%
19 Equivalent Dwelling Units 854,620 N7,470 860,320 863.170 Neon N8,870 871,720 874.570 817,4W 880.270
W SFR Connection Fee $1,eW $1,860 $1.900 31,940 $1,980 $2,020 $2.0110 82,100 $2,140 $2.180
COP Commide RalOs
21 Senior Lien,Min 1.25 5.98 2.99 2.T3 2.44 2.24 2.14 2.09 2.07 2.03 2,01
22 Junior Lien,Min 1.00 1W 1.51) 1.36 1,21 1.10 1.05 1.03 1.01 0.0 0,98
23 Sr Mi Nonel Bonds.1,25 5.N 2.99 273 2,44 2,24 2.14 209 2.07 203 2.01
24 Jr Additional Bonds,Ica 5.16 2.00 LTt 1.41 1.20 1.10 1.05 1.02 0.98 0.96
G:leacel.dneWn12101FY 19994g1Revenue Area 99-00 Bnd MAs One Did,One rate
liming 218 PM
Orange County Sanitation District
Summary Cash Flow Projections, Revenue Areas 1 -14
Pmpeal Preliminary Preliminary Preliminary Preliminary Prelimirwry Preliminery Prelminary Preliminary Prelminary 10 Year
Ref Desuandon ree Q 2OW01_ 2001-02 02-03 03-M 09.05 05-06 M07 07.08 BBB TToJ_I
Revenues:
1 General User Fees saoss,000 71,848,000 75,515,000 79,105,000 82.987.000 67,046,000 91,136,000 95,219.000 99,4e1,000 103,826.000 864,238,00D
2 PemiBed User Fees 6,206.000 6,362,000 6,523,000 6.887.00) 6,855,000 7,026.000 1,2112,M 1,382,000 7.566.000 7.755.000 69,SW,000
3 Floral Texas 32,651,000 33,518,000 34,187,000 34,872,000 35,669,000 36,280.000 37,001000 37,748,000 38,503,000 39,273,000 359,818,000
4 New COP Issues 157.000,000 - 18g000,000 - 173,000.000 - 140.0001000 - 1D2,001),000 760,000,000
5 Interest Revenues 26,778,000 28,472.000 21,1N,000 25,670,000 25,061,000 28,425,000 21,948,000 29,314,000 29,043,000 28,674,000 274,429.000
6 Connection Fee. 5,187,000 5,301,000 5,4/5.000 5,529,000 5,643,000 5,757.000 6,871,000 5,9851000 e.ona 0 8,213,000 57,000,000
7 Other Revenues 81.331,000 3,289,000 6.292.000 4,797,000 4,301,000 4,305.000 3,809.000 3,813,000 3,817.000 3.617.000 119.571,000
6 Rewnues 377.458,000 148,790,000 343,078,000 156,060.000 333,416,000 106,639,000 31Z973.0W 179,461,000 286,489.000 189,450,000 2,494,820,000
Requirements:
9 Oper B Mt.Eire 53,355,500 54,779,000 55,856.000 56,938,000 58,025,00D 59.116,000 80,210,000 61.3osew 62411,000 63.517.000 655,616,600
10 Capital Outlays.Ind GMS 92.400.000 150.676,000 159.718,000 148,340,000 105,253,00) 72683,000 62.663.000 75.866.000 78,785,000 80.939.000 1.027,304,000
11 COPand GO Service 41,690,000 48,867,000 57.160,000 65,981,000 73,992,000 81,987,000 68,368.000 94,759.000 99,831,000 104,385,000 756,840,000
12 Other Requirements 21,122000 5,122,000 5,122,000 1.122000 1.Izi.o 0 1,12$000 1.122.000 1,122,000 1,12&000 1,122.000 39,220.000
13 Requirements 200,550,500 259.446.000 277,856,000 272,381,000 238.392,000 214,867,000 212,383,000 233,055000 241,949,000 249.953,000 2,408,880,500
14 Revenues-Requirsments 168,889.500 (110,655.000) 65,220,000 (115,751,000) 95,024,000 (48,048.000) 10Q590,000 (53.594.000) 44,540,000 (60.505,000) 85.739.500
A reulated Funds:
15 Beginning of Year 378.40.000 547,289,500 436,633.500 501.853,$00 386,132.500 481,156,500 433.10e.300 533.698.500 460.104.500 524,644,500 378,400,000
16 End of Year 547,289,500 436,833,500 501.853.500 386.132,500 481,15e500 433,106,500 533,698,500 480.104,500 524.844,500 4"139.500 464139,500
Sewer Service User Fens.
17 Avg SFR Annual User Fee $79.89 $8379 $8778 $91.64 $95.83 $100.18 $104.55 $10850 $113,36 $117.95
16 Percentage Change 1.40% 5.16% 476% 440% 4.57% 4.54% 4.36% 4.14% 4.11% 405%
19 EquivalentO Ilinq Units 854.620 857,470 860,320 863,170 866,020 868.870 871,720 874,570 877.420 880,270
20 SFR CMnsidan Fee $1820 $1,880 $1.900 $1,940 $1.980 $2rN $2.060 $2,100 $2,140 $2.180
COP consensus From
21 Senior We,Min 1.25 a." 3.20 291 2.64 2.34 2.24 2.19 2.15 2A2 2.09
22 Junior Iles,Min 1.00 3.55 1.60 1.46 1.25 1.15 1.10 1.07 1.05 1.03 102
23 Sr Ataillonel Bonds,1.26 an 3.20 291 2.54 2.34 2.24 2.19 2.15 212 209
24 Jr Addi imtal BerWa,1.00 a." 2.21 1.90 1.51 1.30 1.20 1.14 1.10 1.01 1.04
G'.%exwl.dhnfinV10UFY 1999-001Revenue Area 99 00 Budget As Budget All Dist Cash Flo
Projected SFR User Fees
$250
$200 � -
(D $150
c _
Q $100
$50
$0
1999-00 2000-01 2001-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09
O 1 O 2 =3 0 5 tM 6 =7 = 11 = 13 —One Rate -}Wtd Avg
I iOWN Mb CM CM 7 23'+4-M
STEERING COMMITTEE Meetlng To lid.of Dir.
u117oee
AGENDA REPORT Ibem Numbe lam Number
S . R
Orange County Sanitation District
FROM: Donald F. McIntyre, General Manager
Originator. Jean Tappan, Committee Secretary
SUBJECT: December Agenda Items for Consideration by Working Committees
GENERAL MANAGER'S RECOMMENDATION
Review with staff the tentative agenda items scheduled for review by the Working
Committees in December.
SUMMARY
Staff routinely prepares for the Steering Committee a list of items scheduled for
presentation to the Working Committees and the Boards at their next monthly meetings.
This allows the Steering Committee the opportunity to review these items early enough
to make reassignments in the review or approval process.
The following items are scheduled for consideration by the Committees in December:
OMTS Committee: 1. Consider Central Generation Overhaul Charges
2. Consider Belt Filter Press Retrofit Unit Trial
3. Provide update on District Assessment and Reinvention Team
(DART) activities
4. Discuss Plant 2 Earthquake Damage Contingency Plans
5. Consider Hazardous Energy Control Report
6. Presentation on Benchmarking Report
7. Presentation on Ocean Monitoring Program
6. Report on Startup of Air Quality Information Management
System (AQIMS)
PDC Committee: 1. Approve Budget Amendment for Job No. J-35, Area
Classification Implementation Plan
2. Approve Budget Amendment, Plans and Specifications, and
Award Construction Contract, Job No. J-63, Improvements to
Central Generation Starting Air Systems at Plant Nos. 1 and 2
3. Approve Professional Services Agreement for"Hot Spots"
SSES Work, Job No. J-73-1, Inflow/Infiltration Reduction
4. Approve Addendum No. 3 to the Professional Services
Agreement for Job No. P1-37, Primary Clarifiers and Related
Facilities
5. Approve Budget Amendment and Plans and Specifications for
Job No. J-66, New Outfall Flow Meter
6. Approve Sole Source Mechanical Equipment and Approve
Plans and Specifications, Job No. J-52, Grit Auger
Replacement
7. Approve Budget for Contract No. 3-25, Orange Western
Subtrunk Relief Sewer
8. Ratify Change Order No. 3 and Approve Closeout Agreement
and Notice of Completion for Contract No. 7-7-1,
Improvements to Main Street Pump Station
9. Approve Plans and Specifications and Award Construction
Contract for Job No. J-75, New Engineering Trailers at Plant 1
10. Status Report on Job No. 132-60, Solids Storage and Truck
Loading Facility at Plant 2
FAHR Committee: 1. Quarterly Investment Program Report
2. Consider 2000-01 Budget Assumptions and Fiscal Policies
3. Initiate Selection of Financial Auditors
PROJECT/CONTRACT COST SUMMARY
N/A
BUDGETIMPACT
❑ This item has been budgeted. (Line item: )
❑ This item has been budgeted, but there are insufficient funds.
❑ This item has not been budgeted.
® Not applicable (information item)
ADDITIONAL INFORMATION
NA
ALTERNATIVES
NA
CEQA FINDINGS
Not a project.
�r
ATTACHMENTS
NA
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