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HomeMy WebLinkAbout06-13-2012 Administration Committee Agenda Wednesday, June 13, 2012 ,-�., 5:30 P.M. Orange County Sanitation District .1 Administration Building Regular Meeting of the Board Room Administration Committee 10844 Ellis Avenue r E K„ Fountain Valley, CA 714 593-7130 AGENDA PLEDGE OF ALLEGIANCE: DECLARATION OF QUORUM: PUBLIC COMMENTS: If you wish to speak, please complete a Speaker's Form and give it to the Clerk of the Board. Speakers are requested to limit comments to three minutes. REPORTS: The Committee Chair and the General Manager may present verbal reports on miscellaneous matters of general interest to the Committee Members. These reports are for information only and require no action by the Committee. REPORT OF DIRECTOR OF FINANCE AND ADMINISTRATIVE SERVICES: CONSENT CALENDAR: 1. Approve Minutes of the May 9, 2012 Administration Committee Meeting. 2. Recommend to the Board of Directors to: Adopt Resolution No. OCSD 12-XX, Establishing the Annual Appropriations Limit for Fiscal Year 2012-13, for the Sanitation District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code. 3. Recommend to the Board of Directors to: Adopt the most favorable quotes available from the Sanitation District's insurance broker; final quotes to be presented at the Committee Meeting. e8/13/12 Administration Committee Agenda Page 1 of 3 ACTION ITEMS: 4. Recommend to the Board of Directors to: Adopt Resolution No. OCSD 12-XX, Establishing Use Charges for the FY 2012- 13 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority (SAWPA). 5. Recommend to the Board of Directors to: Approve proposed Operating, Capital, Debt/COP Service and Self-Insurance Budgets for FY 2012-13 and 2013-14 as follows: 2012-13 2013-14 Net Operations, Maintenance &Working Capital $151,606,620 $155,761,100 Worker's Compensation Self Insurance 679,500 700,000 General Liability and Property Self-Insurance 1,391,200 1,512,200 Net Capital Improvement Program 137,255,000 174,421,000 Debt/COP Service 82,615,000 97,576,000 Intra-District Joint Equity Purchase/Sale(l) 4,250,000 - TOTAL $377 797.320 $429.970.300 n)Cash to Revenue Area 14 (RA14) in exchange for capital assets to Consolidated Revenue Area 15 (RA15). OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: The next Administration Committee meeting is scheduled for Wednesday, July 11, 2012, at 5:30 p.m. 06/13/12 Administration Commidee Agenda Page 2 of 3 Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation Dishlct Clerk of the Board's office at (714) 593-7130 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2, this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors, are available for public inspection in the office of the Clerk of the Board. NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting,items must be submitted to the Clerk of the Board 14 days before the meeting. Maria E.Ayala Clerk of the Board (714)593-7130 mayala(olocsd.com For any questions on the agenda, Committee members may contact staff at: Geneal Manager Jim Ruth (714)593-7110 iruth(cDocsd.com Assistant General Manager Bob Ghtrelli (714)593-7400 rghirelliaocsd.com Assistant General Manager Jim Herberg (714)593-7300 iherbera(@ocsd.com Director of Finance and Lorenzo Tyner (714)593-7550 ItvnerB)ocsd.cem Administrative Services Director of Human Resources Jeff Reed (714)593-7144 ireed(cbocsd.com O6/13/12 Administration Committee Agenda Page 3 of 3 ADMINISTRATION COMMITTEE Meeting Date To Bd.of Dir. 06/13/12 06/z71 2 AGENDA REPORT ItemNumber Iem Number z Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: GANN APPROPRIATIONS LIMIT FOR FISCAL YEAR 2012-13 GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 12-XX, establishing the Annual Appropriations Limit for Fiscal Year 2012-13, for the Sanitation District in accordance with the Provisions of Division 9 of Title 1 of the California Government Code. SUMMARY This routine annual action adopts a Resolution establishing the spending limit for "proceeds of taxes" in accordance with Article XIII B of the Constitution of the State of California (Section 7910 of the Government Code). The Sanitation District's annual appropriations are well below the limit. In 1979, Proposition 4 (the Gann Initiative) was approved adding Article XIII B to the State Constitution. The provisions of this article place limits on the amount of revenue that can be appropriated by all entities of government. This initiative was designed to constrain government expenditures by placing an annual limit on jurisdictions' revenue and appropriation growth. The Appropriation Limit is based on actual appropriations during the 1978-1979 fiscal year, as increased each year using specified population and inflationary growth factors. This annual allowance growth is linked to changes in population and cost of living. The passage of Proposition 111 in June 1990 amended Article XIII B, making changes in the base year upon which the appropriations limit is based, establishing new cost of living factors and new population factors for use by local governments, and increasing appropriations not subject to the limit (primarily qualified capital outlay projects). The financial constraints of Article XIII B apply to the State, all cities, counties, special districts and all other political subdivisions. PRIOR COMMITTEE/BOARD ACTIONS N/A Page 1 ADDITIONAL INFORMATION N/A ATTACHMENTS 1. Resolution No. OCSD 12-XX Page 2 RESOLUTION NO. OCSD 12-XX ESTABLISHING THE ANNUAL APPROPRIATIONS LIMIT FOR FISCAL YEAR 2012-13 FOR THE ORANGE COUNTY SANITATION DISTRICT IN ACCORDANCE WITH THE PROVISIONS OF DIVISION 9 OF TITLE 1 OF THE CALIFORNIA GOVERNMENT CODE A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT ESTABLISHING THE ANNUAL APPROPRIATIONS LIMIT FOR FISCAL YEAR 2012-13 FOR THE DISTRICT IN ACCORDANCE WITH THE PROVISIONS OF DIVISION 9 OF TITLE 1 OF THE CALIFORNIA GOVERNMENT CODE WHEREAS, Article XIII B of the Constitution of the State of California as proposed by the Initiative Measure approved by the people at the special statewide election held on November 6, 1979, provides that the total annual appropriations liml of each local government agency shall not exceed the appropriations limit of such entity for the prior year, adjusted for changes in the cost of living and population, except as otherwise specifically provided for in said Article; and, WHEREAS, the State Legislature added Division 9 (commencing with Section 7900) to Title 1 of the Government Code of the State of California to implement Article XIII B of the California Constitution; and, WHEREAS, Section 7910 of the Government Code provides that each yearthe governing body of each local jurisdiction shall, by resolution, establish its appropriations limit for the following fiscal year pursuant to Article XIII B at a regularlyscheduled meeting or a noticed special meeting and that fifteen (15) days prior b such meeting, documentation used in the determination of the appropriations limit shall be available to the public; and, WHEREAS, Section 7902 (a) of the Government Code sets forth the method for determining the appropriations limit for each local jurisdction for the 2012-13 fiscal year; and, WHEREAS, the Board of Directors wishes to establish the appropriations limit for fiscal year 2012-13 for the District. -1- NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District DOES HEREBY FIND, RESOLVE AND ORDER: Section 1: That it is hereby found and determined that the documentation used in the determination of the appropriations limit for the Orange County Sanitation District, for fiscal year 2012-13, was available to the public in the Finance Department of said District at least fifteen (15) days prior to this date. Section 2: That the appropriations limit for fiscal year2012-13 for the Orange County Sanitation District, as established in accordance with Section 7902(b) of the Californe Government Code is $85,835,000 which sum is within the maximum authorized spending limitation for fiscal year 2012-13. Section 3: That the Board of Directors of the Orange County Sanitation District, has determined that the percent change in California per capita personal income from the preceding year would be the cost of living factor to be used and the weighted average population change of the cities within the District would be the population factor to be used in calculating the Orange County Sanitation District's appropriations limit for the Fiscal Year 2012-13. Section 4: The determination of the appropriation limit is based upon the best and most complete information available at this time. The District reserves the right to review and re establish a new and different limit in the event that it subsequently determines that a modification of the limitation amount is appropriate. PASSED AND ADOPTED at a regular meeting held June 27, 2012. Chair ATTEST: Clerk of the Board -2- ADMINISTRATION COMMITTEE Meeting Date Told.0120ir. 06/13/12 06/27/12 AGENDA REPORT Item Nu Item Number 3 Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance &Administrative Services SUBJECT: RENEWAL QUOTES FOR THE DISTRICT'S MAJOR OPERATIONAL INSURANCE PROGRAMS FOR FY 2012-13 GENERAL MANAGER'S RECOMMENDATION Adopt the most favorable quotes available from the Sanitation District's insurance broker; final quotes to be presented at the Committee Meeting. SUMMARY Historically, the Administration Committee has asked for status updates regarding the renewals of major insurance policies each year. The Risk Management Division and the Sanitation District's operational insurance broker begin the process of renewal each January, and final quotes are typically received in June shortly before the beginning of the new fiscal year. Not-to-exceed numbers for the renewal of the following four major insurances for the operations: 1) Excess General Liability Insurance $367,000 2) Excess Workers' Compensation .002732 rate 3) All-Risk Property and Flood insurance $524,000 4) Boiler & Machinery insurance $18,571 PRIOR COMMITTEE/BOARD ACTIONS June 2011 - The Board approved renewal of the above four policies for the period July 1, 2011 through June 30, 2012. Page 1 of 4 ADDITIONAL INFORMATION 1) Excess General Liability Insurance Program The Sanitation District's Excess General Liability Insurance Program is currently provided through the California Municipal Excess Liability Program (CAMEL) and its sister program, the Alliant National Municipal Liability Program (ANML). The Sanitation District has participated in the CAMEL program since FY 1996-97. This program currently provides the Sanitation District with a $30 million policy of comprehensive coverage for municipal liability, bodily injury and property damage, and personal injury. The program was structured to also include Employment Practices, and Public Officials Errors & Omissions coverage. The $30 million coverage has a self-insured deductible of $250,000 per occurrence and $500,000 deductible for employment practices claims. Since 1997, the Employment Practices portion of coverage has been enhanced from a $2 million sub-limit to the full $30 million policy limit. The actual insurance coverage currently consists of two separate layers. The first layer is the "Basic" $10 million program with self-insured retention of$250,000. The second layer consists of $20 million of coverage in excess of the first layer of $10 million. The premium for 2011-12 was $333,609, a decrease of about 4% from the previous year. With news reports full of articles about insurance costs being on the rise, staff recommends approving a "not-to-exceed" increase of 10% ($367,000 total), which is still below the approximately $400,000 paid in each of the years 2003-06. 2) Excess Workers' Compensation Insurance The Excess Workers' Compensation insurance coverage is with the California State Association of Counties Excess Insurance Authority (CSAC EIA). The Sanitation District has participated in this program or its predecessor since 2003. Excess Workers' Compensation Program currently provides so-called "Statutory" (unlimited) coverage with a self-insured retention (SIR), or deductible, of$750,000. The use of Excess Workers' Compensation Insurance dates back to the late 1980's. At that time, the Fiscal Policy Committee approved an SIR, or deductible, of $250,OOO, for such coverage. Due to the hardening of the workers' compensation market, this deductible was raised to $500,000 beginning in FY 2002-03 through a policy with Employers Reinsurance Corporation (ERC) that provided coverage at the time of $25 million with a self-insured retention (SIR), or deductible of$500,000. Page 2 of 4 Some additional risk may be associated with the CSAC EIA joint powers authority in that a premium surcharge can be assessed to individual members if an unusually large number of losses were to occur outside of the actuarial evaluation estimates. However, historically the CSAC EIA premiums for excess workers compensation have been so much less than competing quotes available to the Sanitation District that if even there were a surcharge, the cost might still continue to be cheaper. The renewal of the Excess Workers' Compensation Insurance for the period July 1, 2011 through June 30, 2012 was at a rate of .00249 (approximately a 10% reduction compared to the previous year's rate of .002763) partly due to the Sanitation District's decision to increase its self-insured retention. This premium rate generated an estimated premium of $153,742 based on the estimated 2011-12 payroll. Since the premium itself is based on final payroll, the Sanitation District will not know the exact final premium until the 2011-12 year is over. With news reports full of articles about insurance costs being on the rise, staff recommends approving a "not-to-exceed" increase of approximately 11% in the rate (an increase to a rate of .002732), bringing the Sanitation District back to approximately the rate paid in 2010-11. 3) All-Risk Property and Flood Insurance All-Risk Property and Flood Insurance Program (Property Insurance) provides for comprehensive coverage for most of the Sanitation District's real and personal property regarding virtually all perils including fire, flood, and business interruption. The Sanitation District previously carried earthquake insurance as part of its Property Insurance, but in the last few years earthquake insurance has been impossible to obtain or not cost-effective. Currently, the Sanitation District has earthquake insurance only in connection with some of its buildings under construction. Current Property Insurance limits are $1 billion for most perils other than flood and earthquakes, and $300 million for flood, with many sub-limits for various situations. In order to reach $1 billion in limits, the broker had to arrange for nearly a dozen different layers of insurers. The SIR is $250,000 per occurrence for most types of losses. Since the late 1990's, the Property Insurance has been with a nationwide joint purchase property insurance program called Public Entity Property Insurance Program (PEPIP), one of the world's largest property programs. It is important to note that this joint purchase property insurance program offers the purchasing power of numerous large public entities without the pooling or sharing of coverage or losses. Page 3 M 4 The renewal of All-Risk Property and Flood Insurance for the period July 1, 2011 through June 30, 2012 was at a premium of $449,441, approximately a 3% increase from the previous year, after a decrease of 5.8 percent the year before. With news reports full of articles about insurance costs being on the rise, staff recommends approving a "not-to-exceed" increase of approximately 16% ($524,000 total), which also includes coverage for over $60,000,000 of additional property value. The actual rate increase is 11.65% while the increase in additional property value is 4.29%. Since the Sanitation District paid over $600,000 annually for this insurance prior to 2007, this year's increase is still well below that amount. 4) Boiler & Machinery Insurance The Boiler & Machinery insurance program provides comprehensive coverage for loss caused by machinery breakdown and explosion of steam boilers or other covered process equipment, including damage to the equipment itself and damage to other property caused by covered accident. The current Boiler & Machinery insurance program provides coverage ($100 million per occurrence/ with deductibles ranging from $25,000 to $350,000) for losses caused by covered machinery breakdown (e.g., motors, steam turbines, digesters, co-gen engines). Damages to the equipment, as well as damages to other property and improvements caused by the machinery breakdown, are covered by the boiler & machinery insurance. This program augments the Sanitation District's all-risk property insurance that covers perils such as fire and flood. The renewal of the Boiler & Machinery Insurance Program for the period July 1, 2011 through June 30, 2012 was at $16,188, an increase of approximately 4%, after a decrease of about 9 percent the year before. With new reports full of articles about insurance costs being on the rise, staff recommends approving a "not-to-exceed" increase of approximately 15% ($18,571) which includes 4% additional property value along with the rate increase. This year's increase is still well below the amount paid in 2006 (over$25,000). CEQA N/A BUDGET/DELEGATION OF AUTHORITY COMPLIANCE N/A Page 4 of 4 ADMINISTRATION COMMITTEE MeeOng Date TOBd.of Dir. 06/13/12 06/27/12 AGENDA REPORT Item Number Them Number a Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: RATE CHARGES FOR SANTA ANA WATERSHED PROJECT (SAWPA) GENERAL MANAGER'S RECOMMENDATION Adopt Resolution No. OCSD 12-XX, Establishing Use Charges for the FY 2012-13 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority (SAWPA). SUMMARY Currently, OCSD invoices Santa Ana Watershed Project Authority on a quarterly basis for the wastewater discharge we receive from the (Santa Ana River Interceptor) SARI line. Annually, the rates for flow, biochemical oxygen demand (BOD), and total suspended solids (TSS) are calculated based upon the fiscal year budget for treatment and disposal costs and the 1996 Wastewater Treatment and Disposal agreement. The rates calculated for each constituent for FY 2012-13 for wastewater discharge are: FLOW $164.81 BOD $252.79 TSS $375.23 The FY 2012-13 rates are a 12.55% increase over the FY 2011-12 rates, due to a 12.55% increase in the treatment and disposal costs in the proposed FY 2012-13 Budget. These rates are separate from the rates charged for additional capacity purchases by SAWPA. PRIOR COMMITTEEIBOARD ACTIONS June 2011 —The Board adopted Resolution No OCSD 11-08 Establishing Use Charges for the FY 2011-12 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. June 2010 —The Board adopted Resolution No OCSD 10-09 Establishing Use Charges for the FY 2010-11 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. June 2009 — The Board adopted Resolution No OCSD 09-08 Establishing Use Charges for the FY 2009-10 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. Page 1 June 2008 —The Board adopted Resolution No OCSD 08-09 Establishing Use Charges for the FY 2008-09 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. June 2007 — The Board adopted Resolution No OCSD 07-15 Establishing Use Charges for the FY 2007-08 Pursuant to the Wastewater Treatment and Disposal Agreement with the Santa Ana Watershed Project Authority. ADDITIONAL INFORMATION None. CEQA N/A BUDGET/ DELEGATION OF AUTHORITY COMPLIANCE N/A JDR:LT:MW:AB/jmf Page 2 RESOLUTION NO. OCSD 12-XX ESTABLISHING USE CHARGES FOR THE 2012-13 FISCAL YEAR PURSUANT TO THE WASTEWATER TREATMENT AND DISPOSAL AGREEMENT WITH THE SANTA ANA WATERSHED PROJECT AUTHORITY ("SAWPA") A RESOLUTION OF THE BOARD OF DIRECTORS OF ORANGE COUNTY SANITATION DISTRICT ESTABLISHING USE CHARGES FOR THE 2012-13 FISCAL YEAR PURSUANT TO THE WASTEWATER TREATMENT AND DISPOSAL AGREEMENT WITH THE SANTA ANA WATERSHED PROJECT AUTHORITY ("SAWPA") WHEREAS, the Board of Directors has approved the Wastewater Treatment and Disposal Agreement with the SANTA ANA WATERSHED PROJECT AUTHORITY ("SAWPA"); and, WHEREAS, said agreement provides for payment of Disposal Costs for the measured and sampled flow of Wastewater discharged from SAWPA's SARI Service Area to Districts' facilities; and, WHEREAS, said agreement provides for adjustment of said Disposal Costs on an annual basis. NOW, THEREFORE, The Board of Directors of the Orange County Sanitation District DOES HEREBY RESOLVE, DETERMINE, AND ORDER: Section 1. That pursuant to Section 04 of the Wastewater Treatment and Disposal Agreement, the 2012-13 fiscal year charges for Disposal Costs are hereby established as follows: For Flow: $ 164.81 per million gallons of flow For Biochemical Oxygen Demand: $ 252.79 per thousand pounds For Total Suspended Solids: $ 375.23 per thousand pounds PASSED AND ADOPTED at a regular meeting held June 27, 2012. Chair ATTEST: Clerk of the Board 1 ADMINISTRATION COMMITTEE Meeting Date To Bd.of Dir. 06/13/12 06/27/12 AGENDA REPORT Item Number Item Number s Orange County Sanitation District FROM: James D. Ruth, General Manager Originator: Lorenzo Tyner, Director of Finance and Administrative Services SUBJECT: BUDGET APPROVAL GENERAL MANAGER'S RECOMMENDATION Approve proposed Operating, Capital, Debt/COP Service and Self-Insurance Budgets for FY 2012-13 and 2013-14 as follows: 2012-13 2013-14 Net Operations, Maintenance &Working Capital $151,606,620 $155,761,100 Worker's Compensation Self Insurance 679,500 700,000 General Liability and Property Self-Insurance 1,391,200 1,512,200 Net Capital Improvement Program 137,255,000 174,421,000 Debt/CCP Service 82,615,000 97,576,000 Intra-District Joint Equity Purchase/Sale('[ 4,250,000 - TOTAL 5377.797.320 $429 970.300 ItlCash to Revenue Area 14(RA14) in exchange for capital assets to Consolidated Revenue Area 15 (RA15). SUMMARY The FY 2012-13 and 2013-14 Proposed Budget is enclosed for the Committee's consideration. The Budget has been presented to the Operations Committee at the regular June meeting in order to allow each Standing Committee an opportunity to review the proposal prior to the June Board meeting. Although each Committee has had an opportunity to review the proposal, it remains the responsibility of the Administration Committee to recommend approval. The Administration Committee is requested to recommend the Board of Directors approve this budget. Page 1 PRIOR COMMITTEE/BOARD ACTIONS N/A ADDITIONAL INFORMATION None. CEQA N/A BUDGET/ DELEGATION OF AUTHORITY COMPLIANCE N/A ATTACHMENTS 1. Proposed FY 2012-13 and 2013-14 Budget JDR:LT:MW:jmf Page 2