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HomeMy WebLinkAbout1971-02-11; Municipal Water District; MinutesMINUTES'OF CITY OF CARLSBAD-CARLSBAD MUNICIPAL WATER DISTRICT JOINT COMMITTFE CONFERENCE HELD ON FEBRUARY 11, i971, AT 8:00 A.M., AT DISTRICT ADMINISTRATION CENTER, 5780 EL CAMINO REAL, CARLSBAD, CALIFORNIA: The metting was called to order at 8:10 A.M. with Director Carmichael serving as Chairman of the Committee. In attendance were the [ollowing Committee Members representing the two respective agencies: Glenn McCoiTias, Vice Mayor Wi Uiam CarmichaeJ , Director Robert Watson, Chairman of Water Paul S. Swirsky, Legal Counsel Improvement Committee Lewis Moe, City Attorney James M. Gaiser, Auditor Jack Arnold, City Manager jack Y. Kubota, General Manager Wilda F. Simpson, Secretary The Chairman opened the meeting and announced that the Committee would be following the agenda prepared by the staff, with Jack Kubota serving as Secretary Pro Tem., and suggested that tiie discussions be conducted on an informal basis. He then called upon District Legal Counsel Paul Swirsky, to brief the group on the basic purposes oi this study and areas of investigation needed to develop a proposed operating agreement. Mr. Swirsky explained that the meeting was called primarily to try to develop the tasks at hand and to assign individual responsibilities for getting the information that everybody needs. It was also planned to review the draft- outline of the study to be conducted by the District. In the absence of an official written communication from the City of Carisbad on the appointment of the Committee, City Manager Arnold reported that the City Council did accept the District's suggestion on the study -jn<.i is agreeable lo the Committee and staft working with ihe District on this ba.si s . Vice-Mayor McComas, in outlining the City's position, stated that they ciw.t to listen primarily and assumed on the basis of the District's correspondciicc th-u there was a proposal to be considered, in what detail, they weren't sure. They were under the assumption that the CMWD wa.? prepared to come up with a proposal as to how this arrangement would work, how the bonded indebtedness wouli'- bc trons>- ferced, if it were to be transferred, and what wo are talking about in lunding, budgets, personnel, etc. Mr. Swirsky explained that there is no opeian'ng agree- ment in detail at this time and that the reason ior establishing the nine points in the study outline was to help in evaluating the operation and cumpLlirig ^.h^' information needed to work up a detailed agreement. The only thing that the Water District has done up to this point was to appoint the original Committee which met and discussed the possibility of working out .i type of operating agreement based on an evaluation of both operating systems, with no buying and selling oC asse ts, e tc . Director Carmichael pointed out that the District has the authority to perform other community services such as fire protection, sewer service and retuse collec- tion, but the position of the Board and staff has been that the local governments are doing such a fine job in those fields thot the District should not get in- volved and, therefore, is only concern<'d with water service. Ile also btwught up the anticipated increase in water coats, starting in 1973, wlvn the fiircted water is brought in from Northern California, which will require both the District and the City to increase their rates to tlu.- consumer. The possibility that there should be a uniform water rate throughout the District was .i I so mentioned. Robert Watson.stated that his understdnding is that the proposal would involve the CMWD retailing all of the service.'^ neci.-ssary to bring water to the consumer. It would take over all the day-to-day tasks, setting of meters, reading of meters, installation of lines, etc., which are involved in rhe tntiro operation of the water system. This would leave thvi City of Carlsbad with just its own monetary concerns as it deals with bonds ami monthly accuunring betwec-n th'^ City and CMWD, and beyond that point all of the rest of the services to bring water to the consumer would be handled by one entity, the CMWD. Director Carmichael explained that the District would plan to assume all of the personnel in the Water Department and go on as is. Legal Counsel Swirsky explained that this study would be comparable with the study done by the City of Carlsbad on the Leucadia annexation proposal and the Committee does not want to get into any unit cost comparisons on the financial transactions, personnel, billing operation, etc. Mr. Watson described the dilemma the City is facing as water needs are increasing and costs are rising and as they are passed on down and rates are increased to the City, the City must in turn raise its rates to the individual consumers. He explained that the City is presently selling 1.2 Million Dollars in bonds, and in order to sexrvice those bonds and carry on its system and needs of that system even beyond those improvements, the City will require additional funds. While the City is refurbishing some very badly needed portions of the system under this bond program, it still is in a position where it has many, many needs in terms of im- proving its system. The City finds itself without areas of new business or any source for additional revenue, he pointed out, and is ultimately going to find itself in a position of raising the rates again, possibly one, two or three times to cover the cost of doing business. When this happens, he stated, we are going to find the citizens in the high density area of the City in a very demanding position and they will want to have answers on the costs of operation. It was his feeling that such a proposal is very timely and would allow the two agencies to explore a way to combine the two entities and perhaps bring about over-all considerable savings. He mentioned the District's surcharge, which he assumed would be eliminated. District Manager Kubota made the observation that benefits derived from combining the two operations would be more from an efficiency standpoint than savings. As an example, he cited the increase in construction costs that the City Water Dept. will bear because of the one year delay in the design of the improvement project plans by their Consulting Engineers. In discussing the day-to-day operation, he noted that the District's plant facility assets exceed the City by twice and the District has only three men in the field, whereas the City services several thousand meters, compared to approximately 500 by the District. City Manager Arnold called attention to the difference in the age of the two systems. He also inquired if this was to be an "in house" study when you examine the two operations ultimately to try to decide which is the most efficient way to operate. Legal Counsel Swirsky explained that the Attorney's Committee from the two agencies worked on the matter for over a year and had a complete exchange of information. Two specific items came out of those discussions; (1) as a solution to the problem •the answer that came up was one agency to operate the entire system; and (2) when it was found that they couldn't come to a solution, they then attempted to work out the jurisdictional picture, which has not been completely done. In trying to solve this matter, the District Committee had decided to try to work out an operating agreement, or using a more understandable term, a lease, with the City as "Lessor" and the District as "Lessee", and on certain terms and conditions. Legal Counsel Swirsky then reviewed the draft-outline of the study to be conductee by the District as follows: (1) Financial Integrity of Department -- This involves Lessor (City) receiving sufficient funds to take care of its obligations and will require a review of the outstanding bonds and a determination of what the current obligations are. (2) Operation of System (As One Unit)-- Under this item would come the investigation of the personnel that are now doing the operating. (3) Personnel -- This would include positions, duties, salaries and fringe benefits. (4) Equipment -- An inventory of the equipment now utilized by the Water Department in order to ascertain which would have to be purchased or assumed. (5) Inventory -- Actual inventory.of supplies that would be taken over. Items not directly concerned with water consumption would not be taken over, such as Calavera Lake, the San Luis Well Fields, etc. (6) Repairs and Maintenance -- Work to be performed under agreement. (7) Capital Improvements -- Offer would be on the premise that the planned capital improvements would be built. (8) Water Billing — Information on equipment and billing of water and sewer accounts (9) General Accountii&ig Accounting procedures which will be involved under agreement. City Manager Arnold pointed out that this type of contractual agreement would be the same aa the Lakewood flan type of operation. He suggested that perhaps the two systems should be evaluated on the better method of operation and unit costs develop- ed in the various areas for comparisons of operating costs. Director Carmichael stressed the importance of future planning and pointed out that the District now has plans underway for additional pipeline capacity and the possible purchase of additional land for the expansion of the Squires Dam facility. After further discussion, it was decided it would be too time consuming for the Committee to delve into all the operational aspects of the water system and costs and that individual Coimnittee Members should be assigned the tasks of investigating the various items in the study outline and obtaining the basic information needed. After this information has been compiled, the District will prepare a concrete proposal that can be considered by the City Council. District Manager Kubota pointed out that from the standpoint of time, the Committee wants to move as quickly as possible as the program to be offered will influence the budget preparation and plans for both agencies. Mr. Arnold indicated that this would present no problem with the City budget as something of this nature could be handled with an addendum. District Auditor James Gaiser and District Manager Kubota will prepare a detailed listing on the information that will be required by the District for this study and all requests for information will be coordinated through the City Manager's office. Public information regarding the Committee's activities will be released through Legal Counsel Paul Swirsky, and any inquiries will be referred to him. City Attorney Lewis Moe pointed out that the Committee might be subjectto the Brown Act on these meetings and that he will look Into the matter to be sure it is not in violation. Mr. Watson asked if there might be any problems in a proposal of this type as it might relate to annexations and the Local Agency Formation Commission. Legal Counsel Swirsky explained that LAFCO's only role is when there are conflicts, and such an operating agreement would eliminate any issue being raised by LAFCO on the matter of water service. Several other questions concerning the terms of this type of agreement were brought up by Mr. Watson, including the period of time the agreement would cover, whether the City would participate in a percentage of profits (or losses), etc. Legal Counsel Swirsky explained that these matters would have to be negotiated be^een the two agencies. The next regular scheduled meeting of the Committee was tentatively set for March 18, 1971, at 8:00 A.M., at the District Administration Center. Copies of the minutes of all meetings and other informational material will be sent out to all Committee Members. Chairman Carmichael adjourned the meeting at 9:27 A.M. Respectfully submitted,