Special Board Agenda
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MEETING TIME & DATE LOCATION Special Meeting of the 10:00 a.m. Board Room Central Basin Thursday 1st Floor Municipal Water District April 21, 2016 6252 Telegraph Road, Commerce, CA 90040 Board of Directors Board Workshop Agenda 1. Roll Call Invocation Pledge of Allegiance Certification by the Board Secretary to the Board of Directors that the Agenda was posted in Accordance with the Brown Act 2. Public Comment and Presentations – (This time has been set aside for persons in the audience to make comments or inquiries on matters within the general subject matter jurisdiction of the Board of Directors (the “Board”) that are not listed on this agenda. Although no person is required to provide their name and address as a condition to attending a Board meeting, persons who wish to address the Board are asked to state their name and address. Each speaker will be limited to three (3) continuous minutes. Speakers may not lend any portion of their speaking time to other persons or borrow additional time from other persons. Except as otherwise provided under the Brown Act (Gov. Code section 54950 et seq.), the Board may not deliberate or take action upon any matter not listed on this posted agenda but may order that any such matter be placed on the agenda for a subsequent meeting. The Board may also direct staff to investigate certain matters for consideration at a future meeting. NOTE: At the discretion of the Board, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the Board. WORKSHOP 3. Proposed Operating Budget & Capital Improvement Projects/Grant Projects Budget Fiscal Year 2016-2017 COMMENTS 4. General Counsel’s Report 5. General Manager’s Report on District Activities 6. Director’s Report on Meeting and Conference Attendance 7. Director’s Comments and Future Agenda Items ADJOURNMENT. NEXT REGULAR BOARD MEETING: MONDAY, APRIL 25, 2016 10:00 A.M. Y:\CENTRALBASINBOARD\CENTRALBASINAGENDAS\2016\SPCB042116 Agendas and complete Agenda Packets (including staff reports and exhibits related to each item) are posted on the Central Basin Municipal Water District's ("District") Internet Web Site (www.centralbasin.org). These are also available for public review prior to a meeting in the Board Secretary's Office. Any public writings distributed to at least a majority of the Board regarding any items on this special meeting agenda will also be made available at the Board Secretary's Office at the District's headquarters located at 6252 Telegraph Road, Commerce, California, 90040-2512 – during normal business hours. In addition, the District may also post such documents on the District's Web Site at www.centralbasin.org. In accordance with the Americans with Disabilities Act of 1990, if you require a disability-related modification/accommodation to attend or participate in this meeting, including auxiliary aids or services please call the Board Secretary's Office at (323) 201-5527 at least 48 hours prior to the meeting. Enforcement of Decorum: While members of the public are free to level criticism of District policies and the action(s) or proposed action(s) of the Board or its members, members of the public may not engage in behavior that is disruptive to the orderly conduct of the proceedings, including, but not limited to, conduct that prevents other members of the public from being heard when it is their opportunity to speak or which prevents members of the audience from hearing or seeing the proceedings. Members of the public may not threaten any person with physical harm or act in a manner that may reasonably be interpreted as an imminent threat of physical harm.) Central Basin Municipal Water District Commerce, California Proposed Operating Budget & Capital Improvement Projects/ Grant Projects Budget Fiscal Year 2016-2017 Central Basin Municipal Water District Fiscal Year 2016-2017 Proposed Operating Budget and Capital Improvements/Grant Projects Budget Table of Contents General Manager’s Budget Message ........................................................................................ 1 Summary of Revenues, Expenses and Changes in Unrestricted Net Position ........................ 27 Fiscal Year 2016-2017 Proposed Operating Budget ............................................................... 30 Fiscal Year 2016-2017 Net Revenue Analysis & Debt Coverage Ratios .................................. 34 Fiscal Year 2016-2017 Proposed Capital Improvement Projects and Grant Projects ............ 39 Authorized Positions, Salary Ranges & Organization Chart .................................................... 43 Fiscal Year 2016-2017 Water Rates & Charges ....................................................................... 49 Schedule of Insurance in Force ............................................................................................... 51 Fiscal Year 2016-2017 Outstanding Debt Service Requirements ........................................... 54 Preliminary Five-Year Capital Improvement Projects Plan ..................................................... 57 Cover Art Credit ...................................................................................................................... 67 General Manager’s Budget Message Honorable Board of Directors, On behalf of our employees and the Senior Management team, I am pleased to present Central Basin Municipal Water District’s Proposed Fiscal Year 2016‐2017 Operating and Capital Improvement Program Budgets. Fiscal Year 2017 will mark the third year of targeted organizational effort to build on success. We have confronted the problems, and the difficult, transitional period spanning Fiscal Years 2012 and 2014 is behind us. The District now operates strategically and from a foundation of professional stability. We have strengthened partnerships with our purveyor community. Our bottom line is solid. All this and more have elicited praise from those that scrutinize our governance and financial performance: our purveyors, various credit rating agencies, a creditor bank, and regional media. And an audit of our organization by the State of California recognized significant areas of progress. This budget reflects the programs, projects and activities that will continue to advance the District into a sustained leadership role as a California special government district and wholesale water provider. Philosophical Factors Influencing Budget Preparation Fiscal Year 2017 will see the coming together of several related strategies designed to strengthen Central Basin’s financial future. We have now built a durable foundation upon a revitalized policy environment and full staffing levels in every area of District functioning. From this place, we have already satisfied every fiscal recommendation made by the California State Auditor. But this isn’t enough. We are completing the District’s first long‐range financial forecast. We are well into the process of re‐financing a threatening debt obligation. Through good‐faith and proven performance, we have secured the recommendation from US Bank, the provider of our Letter of Credit, to continue this critical financial relationship for another two years. And our debt coverage ratios demonstrate growth and resiliency. Projected sales of potable, replenishment and recycled water in FY 2017 suggest water demand adequate to allow us to build on this foundation. The Proposed Operating Budget seeks to shape the District’s longer‐range future by adding and 11 11 1 shifting resources to the technical backbone of our corporate functioning: Water Resources and Engineering. We have accomplished this responsibly by reducing or holding the line on spending in all other District departments, with three exceptions. First, within the Board Services Budget, we are obligated to fund the November 2016 Board of Directors election in the amount of $655,000. Second, within the Human Resources Budget, we are obligated to budget for the increasing costs of employment practices insurance for our elected Directors in the amount of $198,000. Third, within our Building Services Budget, the costs for utilities, licensing and insurance must be met. Shape shifting is also evident in what we are putting on the table in our Proposed Capital Improvement Projects and Grants Projects Budget. Expanding and building upon our recycled water infrastructure is almost a non‐negotiable at this point. Additional recycled water sales are a necessity for the long‐term water reliability of the service area and the financial health of the organization within the larger context of fluctuating patterns of water use and consumption. We must invest now in order to see the financial benefit; it takes money to make money. We have, throughout all the processes of budget assembly, closely evaluated our planning against our debt coverage ratios as we seek to build upon our improving reputation in the credit community. Operational Factors Influencing Budget Preparation Trends in Potable Water Sales ‐‐ The California drought, now entering its fifth year, is the subject of nationwide attention and an evolving point of evaluation by credit rating agencies. In their most recent reviews of the District, Standard & Poor’s and Moody’s expressed similar concerns about the District’s future revenue uncertainty and potential impacts to debt service coverage ratios (brought about by conservation‐induced decline in water sales) as a consequence. Although our FY 2016 potable sales evidence a 12% decline this year, we interpret the