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The Board of Directors of Brooktrails Township Community Services District met in regular session April 8, 2006 at 9:00 a.m. at the Brooktrails Community Center.
A. PLEDGE OF ALLEGIANCE
B. ROLL CALL
Roll call showed the following Directors present: Williams, Ziady, Orth, Horrick and Skezas. Also present were General Manager Chapman and Finance Assistant Joanne Cavallari. District Counsel Neary was off. Finance Committee member Chuck Harden was present.
REPORT ON CLOSED SESSION
None
C. ADDITIONS/ADJUSTMENTS TO THE AGENDA
None
D. MINUTES OF PREVIOUS MEETINGS
None
E. SPECIAL PRESENTATION
None
F. PUBLIC HEARING
None
G. PUBLIC COMMENTS
None
H. CONSENT CALENDAR
None
I. ACTION AGENDA
1. Examination of proposed FY 2006-07 budget.
General Manager Chapman, through page-by-page transparencies, presented the proposed FY 2006-07 budget to the Board of Directors. He discussed the philosophy of budgeting, beliefs such as pinning down the starting fund balances of each fund with the aid of the auditor; the importance of the June 30, 2006 forecast (FY 2005-06) for purposes of understanding cash flow projections; and then the process for formulating the proposed FY 2006-07 budget. He highlighted some of the special impacts to the budget, such as: (1) the state's stopping of the ERAF shift ($232,000.00 over two years) from our General Fund; (2) City of Willits' indecision at this point regarding whether they were going to use a "ponding system" or "mechanized system" for the sewer plant. He further pointed out (1) the completion of our Clearwell/Backwash Ponds project of approximately $1.1 million; (2) the rubber spillway project; (3) the employee wage/fringe base increase of $58,000.00, partly because of adding 680 more hours between the Fire Department and Water Department; and lastly (4) explained that the Golf Fund was folded into the General Fund.
The General Manager then explained that while he was not asking for a sewer rate increase this year, he was asking for a $2.80 increase in the water base rate. He was also asking to increase the pricing on the four billing tiers for the first time in two years. On rates and fees, he explained that we were also seeking a few increases in particular water line items such as new account fee (from $6.70 to $10.00) and reconnection fee (from $17.87 to $30.00). These fees have not been adjusted for probably a decade. He also mentioned that our Golf pro, Ron Runberg, proposed to raise the annual golf rates, but not daily rates. The new golf annual fee for singles would go from $390.00 to $425.00; each additional person from $270.00 to $315.00; each junior golfer from $90.00 to $100.00.
Mr. Chapman then explained the Combined Statement, a financial tool that he uses the most to see the big picture of the organization. This statement combines everything -- the fund balance starting point of each fund, all of the revenue and expense items, followed by equity transfers (typically from the General Fund to other funds, and almost always leading eventually to the Water Enterprise Fund which is owed money from other funds). He closed this portion by briefly explaining the purpose of the GASB34 Statement of Activities, a requirement under new law.
Mr. Chapman and the Board spent the next hour discussing most of the 17 projects listed in the budget, in particular the rubber spillway project. Mr. Chapman had not yet received the expected cost from the engineers, but he suspected that the cost could be between $1.0 and $1.5 million. What made this project difficult was that it was spread out over two budget years, Phase I consisting of engineering plans, environmental report reviews, and obtaining financing. Phase II was scheduled for the FY 2007-08 budget with a construction target date of August 2007. Director Orth commented that the District could alleviate the bond obligation for the parcels affected by the Lake Emily raise.
Various small projects were discussed such as five new SCADA units in water; three SCADA units in sewer; a sewer project on the main line located on the golf course; an altitude valve near the airport (about which Director Orth wanted more information); a new tank liner for tank # 14; state grants for the Thimbleberry bridge; Ohl Redwood Park restroom; and future large generators needed at the water plant. The one new project item added to the list was raising Lake Ada Rose 10 feet.
The General Manager then went through individual departments. He began by explaining the General Fund, and in particular, the equity transfers from this fund to other funds. He explained that this year a $10,000.00 transfer was eventually going to reach the Water Enterprise Fund ($5,000.00 through Golf and $5,000.00 through Fire). Additionally, another $7,400.00 was going to be transferred, as required by our agreement made two years ago with the Golf pro, to help subsidize operational items such as insurance. He concluded that next year, $71,300.00 was going to be transferred out of the General Fund to help support other funds. Of that amount, $50,000.00 was going to be transferred into the Water Enterprise Fund in an effort to reduce the debt owed from other funds such as the Golf Fund and the Fire Fund.
Director Ziady suggested that an extra $10,000.00 be added for extended legal services because of all of the proposed water projects. Director Orth suggested increasing the contingency in all funds because of the price of energy commodities.
Considerable time was given to the Recreation budget. Director Ziady commented that this cost fund essentially had no revenue, and she thought that the $5,000.00 given from the Franchise Fund was to do projects. She felt that if we were going to have a fund for recreation we needed to give it enough to balance it. Mr. Chapman agreed to place $5,000.00 into Recreational Outlay, and later President Skezas suggested that we apply the entire $23,000.00 Solid Waste franchise fee to Recreation. Upon consensus of the Board of Directors, the General Manager said he would do so.
A brief discussion was held about the Golf course subsidy. Director Ziady planted the seed that any future franchise fees be invested into the recreation department. Mr. Chapman also explained the various transfers from the General Fund to Golf, and eventually routed to the Water Enterprise Fund. This year the water department would receive $5,000.00 in transfers, next year $30,000.00. Additionally, Golf would be subsidized $11,300.00 for FY 2006-07.
The discussion turned to water and Phase I of the rubber spillway project for FY 2006-07, with the estimated $75,000.00 engineering line item from Water Capital Facility Fund, and the $100,000.00 engineering line item from the Water Enterprise Fund. Director Ziady asked that management ask legal counsel about the viability of using the Water Capital Facility Fund; there was considerable discussion as to whether those funds could only be used for new construction after 1,500 homes, or whether they could be used for expansion based on the Herman Report of 780 homes. The General Manager said it was his belief that the $75,000.00 from the Water Capital Facility Fund could be used because it was to the benefit of existing users. Joanne Cavallari commented that it was the existing users that had paid connection fees into the Capital Facility Fund, and stated her understanding that the money could be used to expand the system to ensure that sufficient water is available to serve them (i.e., increase capacity from the 780 SFRs to the present 1,500). However, the General Manager did apologize to the Board for possibly creating confusion about the issue -- because these capacity charges are, more often than not, typically anticipated for new future construction. Mr. Chapman said he would consult with District Counsel about this item and report back to the Board. Another discussion occurred about whether we could use the Water Capital Facility Fund for the Proposition 218 vote, the consensus being that we think so.
The discussion then turned to other rubber spillway costs such as the CEQA report, dam permits, and preliminary engineering costs. Mr. Chapman reported that the recent drilling costs at the dam increased from $35,000.00 to $52,000.00. President Skezas asked if we intended to have USDA Rural Development reimburse part of the cash outlay costs associated with the proposed rubber spillway project. Mr. Chapman responded that he would like to do so.
Other small purchases scheduled next year for Capital Outlay were discussed, including more SCADA systems, an altitude valve, and well # 5. The manager also current forecast projects such as the expected well # 4, the new tank # 5 liner, the Spring Creek pressure reducing station, etc.
Director Ziady suggested that a 5th and 6th water tier be added for customers that use heavy amounts of water. Some discussion revolved around the proposed $2.80 base rate increase, but the manager was asked to check with Chris Neary regarding use of the Water Capital Facility Fund for relieving some of the brunt of the $2.80 anticipated rate increase.
Regarding the sewer department, President Skezas commented about the total revenue line being less than the forecast. Mr. Chapman said he would have to investigate it because his inquiry was valid. The discussion turned to the City of Willits. The manager explained that according to City Manager Ross Walker, they have not made a firm decision about switching from a 250-acre ponding system to a 125- acre mechanized system. Mr. Chapman pointed out that the forecast for the City contract line would be reduced from $238,000.00 to $178,000.00. He also addressed the $125,000.00 reserve cash flow transfer forecast. It was agreed to keep the sewer rates the same.
In the Fire Department the discussion was primarily about capital outlays, such as the emergency chair at $2,000.00 and the $4,000.00 air compressor. Other conversation targeted the equity transfers from the General Fund to the Fire Fund to the Water Enterprise Fund ($5,000.00 this year; $20,000.00 next year). Director Ziady voiced concern about the abatement of small greenbelt parcels surrounded by homes, and whether the money should come form the Recreation or Fire fund. Director Orth pointed out that public land was actually CDF responsibility.
Discussion then turned to LAFCO and Director Orth gave some justification for increased LAFCO fees ($10,700.00) -- LAFCO being required to hire some more help to audit 50 districts within Mendocino County. General Manager Chapman said he would like to send a protest letter to LAFCO -- not that he had objections to their mission, but rather how the cost burden was being apportioned, with both Brooktrails and Ukiah taking a disproportionate hit. Brooktrails was paying 1/6th the amount the County was paying, but the County's revenue was 87 times greater. The concept of LAFCO from the State legislature (in the beginning) was to be based on revenue apportionment. He also pointed out that the projected Brooktrails $10,700.00 payment due July 1, 2007 was about $1,500.00 more than the City of Willits, which has four times the amount of revenue in comparison. The consensus of the Board was to make a protest.
J. ADDITIONS TO FUTURE AGENDAS
None
K. SPECIAL REPORTS
Directors: Director Horrick said because he worked at the County he could pick up the County Board of Supervisors agenda every two weeks.
District Counsel: None
General Manager Chapman: None
L. PUBLIC COMMENTS
None
M. ADJOURNMENT
Director Orth moved to adjourn and President Skezas declared the meeting of April 8, 2006 closed at 11:45 a.m.
GEORGE C. SKEZAS
President
MICHAEL V. CHAPMAN
Secretary to the Board of Directors
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