Bolinas Community Public Utility
A Meeting of the Finance Committee
Of The Board Of Directors
March 5, 2013 270 Elm Road, Bolinas
1. Call to Order.
Directors Amoroso and Kimball present; General Manager
Jennifer Blackman also present.
3. Reserve Fund Balances, Debt Schedule, Investments
The Committee reviewed the district’s current debt schedule
and fund balances. The debt schedule reflects that several loans were
repaid in full in recent years (using proceeds from the sale of the district’s
Pine Gulch Creek property to the National Park Service) and further reflects
that the district will retire approximately $50,000 in annual debt costs
in 2014. However, the district will incur approximately $30,000 in
new annual debt as a result of the Terrace Avenue Water Main Relocation Project.
Director Kimball asked about the status of the district’s repayment of the
bonds that financed the district’s solar arrays at the water and sewer treatment
plants. Staff answered that because of the power savings and the 5-years
of rebates received (on a monthly basis) from PG&E, the district is able
to repay the bonds from that combination of funds, as was projected by Director
Smith when this project was developed.
The Committee then reviewed the district’s reserves on deposit with the County
of Marin; these reserves are earmarked for the water system, sewer system,
septic/drainage contingencies, beach groin, hazardous tree work, and the
solar bond repayments and total approximately $563,000. The water system
account in particular has been drawn down in recent years to help fund various
improvements to the district’s water system, including the Horseshoe Hill
Water Main Extension Project and the Wharf Road Saddle Service Replacement
Project. Director Amoroso expressed concern about the draw-down of
reserve funds and suggested the Committee should explore rebuilding those
reserve funds. Staff noted that the district will realize $20,000 less
in annual debt repayment costs, as just discussed, and perhaps that “savings”
should be diverted to replenish the water reserves.
The Committee then examined the district’s balance of funds from the proceeds
of the sale of its Pine Gulch Creek property to the National Park Service.
These funds are invested in short-term CDs and in money market accounts with
the Bank of Marin and total approximately $950,000. Proceeds
from these funds have been used to retire debt, to fund water and sewer system
capital projects, to pay for the remodel of the BCPUD office building, and
to pay for the geotechnical evaluation of the bluff at Surfer’s Overlook.
4. Draft Fiscal Year 2013-14 Budget
General Manager Jennifer Blackman presented an overview
of the district’s tiered water rate structure; at the most recent regular
Board meeting, Board members had expressed interest in evaluating whether
the rates should be increased at the lower tier levels. She noted that
the two lowest tiers are $1.00 per hundred cubic feet (up to 1500 cubic feet
per quarter) and $1.50 per hundred cubic feet (from 1600 – 2100 cubic feet).
Staff projected potential revenue amounts if the district were to increase
both of these rates by $1.00. Assuming ALL customers use at least 2100
cubic feet per quarter (which is not the case, but for purposes of discussion),
then the district annual revenues would increase by approximately $49,000.
However, staff knows that district customers do not ALL use this amount of
water; thus, using water consumption data from the 2012 calendar year, staff
projects that if the district were to raise rates at the lowest tiers as
just described, in fact the annual revenue increase would be closer to $23,000.
Director Kimball expressed concern about a 100% increase in rates at the
lowest level; although the dollar amount is not high, it is a significant
increase. She suggests that staff check with the Stinson and Inverness
districts and evaluate how the metered water rates compare; in addition,
staff should research how long the current rates at the two lowest tiers
have been in effect.
The Committee then reviewed a revised version of the draft
budget for fiscal year 2013-14, which incorporates the revisions agreed-up
at the February 5, 2013 Finance Committee meeting as well as an updated cost-of-living
assumption (2.2% based on 2012 BLS information) and current wage rates.
Staff noted that the current draft budget has a revenue shortfall of approximately
$80,000 as a result of the various revisions. Discussion ensued
and the Committee noted that if the full Board agrees that an increase of
the tiered rates at the lower levels is appropriate, it will be possible
to project another $20,000 in increased water sales revenues.
Staff offered to reexamine the operations and maintenance costs in the draft
budget and explore whether expense reductions are possible; staff further
noted that the projected $14,000 needed for new equipment for the water treatment
plant may be able to be incorporated into the overall line item in the budget
for the plant. The Committee suggested that staff consider replacing
the water line in the Cedar right-of-way as a two-phase project, so that
the full $45,000 cost can be split across two fiscal years. Similarly,
the Committee suggested staff consider phasing the improvements needed at
the sewer lab building (tenting and re-siding for $11,500) over two fiscal
years. Finally, the Committee asked staff to explore whether a used
truck might be available, rather than the new Ford 250 currently in the budget,
and provide an updated cost.
Finally, the Committee asked staff to talk with the Bank
of Marin about the current interest paid on its investments in the CDARs
program and ask for the “best offer” if the district is willing to invest
$500,000 of its current CDs in longer-term investments.
The next meeting of the Finance Committee is scheduled for April 9, 2013
at 10:00 a.m.
4. Community Expression.