Water Commission (now under Utilities Commission)

CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES Frank Martinez, President Robert Shannon, Secretary Arthur Levine, Vice President Gloria Cordero, Commissioner Naomi Rainey, Commissioner Christopher J. Garner, General Manager Richard Anthony, Deputy City Attorney SPECIAL MEETING FINISHED AGENDA & DRAFT MINUTES BOARD OF WATER COMMISSION BUDGET WORKSHOP #2 VIA TELECONFERENCE PURSUANT TO EXECUTIVE ORDER N-25-29 ISSUED BY GOVERNOR NEWSOM CALL TO ORDER The Board of Water special meeting was held via teleconference pursuant to Executive Order N-29-20 issued by Governor Gavin Newsom. ROLL CALL Executive Assistant, Sandra Fox took the roll call and confirmed a quorum. Also present: Christopher J. Garner, General Manager; B. Anatole Falagan, Assistant General Manager; Tai Tseng, Assistant General Manager - Operations; Sandra Fox, Executive Assistant to the Board. Commissioners Gloria Cordero, Naomi Rainey, Robert Shannon, Art Levine and Present: Frank Martinez 1. 21-094WA Review of Water Department Proposed Budget for Fiscal Year 2021-2022 BUREAU: Business - Finance President Martinez introduced agenda item 1. and called on Mr. Walker for Page 1 of 7 CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES a staff report and review of a presentation with the Board entitled: Review of Water Department Proposed Budget for Fiscal Year 2021-2022. Commissioner Shannon requested that Mr. Walker explain a bit more in depth regarding reserve levels. Mr. Walker and Mr. Falagan responded. Commissioner Shannon made additional comments regarding reserves. Mr. Walker reviewed Structural Deficit Rate options for the Sewer Fund with the Board: Projected Sewer Structural Deficit - $4,800,000 He reviewed the following rate scenarios: 1% sewer rate increase = $170,000 in revenue Scenario 1 - increase sewer rates by 1% Scenario 2 - increase sewer rates by 8% Scenario 3 - increase sewer rates by 10% Mr. Walker reviewed FY 22 Water Fund projected ending reserves. Mr. Walker reviewed Structural Deficit Rate options for the Water Fund with the Board: Projected Water Structural Deficit - $6,800,000 He reviewed the following rate scenarios: 1% water rate increase = $1,100,000 in revenue Scenario 1 - increase water rates by 4% Scenario 2 - increase water rates by 6% Scenario 3 - increase water rates by 8% Mr. Walker reviewed the proposed rate increase effects on typical water bills. Page 2 of 7 CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES He reviewed FY 22 rate comparisons with comparable cities. Commissioner Shannon commented on the comparable rate data for other California cities. Mr. Falagan responded. Mr. Walker reviewed the following next steps in the budget process with the Board: Budget Workshop #3 - schedule in June if needed Budget & Rate adoption - target date - June 24, 2021 Mail out Prop 218 Notice (if needed) Schedule Prop 218 Hearing (if needed) Mr. Walker completed his staff report. President Martinez called for any Commissioner questions or comments. Commissioner Levine asked if the department would be taking extra steps to publicize the Prop 218 hearing. Mr. Garner responded. Commissioner Shannon expressed the need for the department to spend money on capital improvement projects to increase groundwater capacity is critical. He advised the department needs to publicize this need to emphasize that whatever rate increases the Board approved is due largely in part to increase groundwater potential. Commissioner Shannon noted to some extent that how the Board proceeds may be affected by the progress of the outstanding litigation. He called for an update to be scheduled (sooner than later) on the pending litigation. Deputy City Attorney Anthony advised a closed session could be scheduled for this update. Commissioner Shannon advised that whatever rate increase the Board agreed upon, the Board had the opportunity to enact a significant rate increase and have the public understand these difficult, unusual circumstances required aggressive action because of the deficits that Page 3 of 7 CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES occurred at no fault of the Board or the department. President Martinez advised he agreed with Commissioner Shannon's comments. Especially regarding the long-term affect of these decisions to ensure water and sewer needs of the growing city. Mr. Garner advised the Board that a video is being developed to demonstrate where the capital improvement dollars are being spent. He noted this should be completed prior to the Prop 218 hearing. Mr. Garner advised that staff would recommend a 10% sewer rate increase, especially since no rate increases had occurred in three years. He also advised that staff would recommend a 6% or 8% rate increase on the water side. Commissioner Cordero advised she agreed with the comments made by Commissioner Shannon and President Martinez. Mr. Garner advised it was important to the point out to the public that internal costs had been cut before the Board considered any rate increases. President Martinez commented on the potential for funds to come from the state and the federal government. He advised it would be helpful to see a slide regarding these potential monies and how they might affect the budget. Mr. Garner advised he expected about $1 million in funding to be received to recover the bad debt accrued through non-payment of utility bills. Mr. Garner commented on a meeting he had recently attended where the strict regulations and restrictions for receipt of these monies had been discussed. Commissioner Shannon commented on the city's decision on spending of these monies. He suggested that the department go after funding for the water department through their lobbying firms. Mr. Garner advised that Mr. Falagan and staff had been working with Carpi Clay on obtaining funds as mentioned by Commissioner Shannon. Page 4 of 7 CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES President Martinez called for any other comments or questions from the Commission. He then asked Mr. Garner to provide a recap of the staff suggestions on the proposed rate increases. Commissioner Shannon made comments regarding the potential rate increases. Mr. Garner made general rate increase comments. President Martinez called for any other Commission comments or questions. President Martinez commented on Mr. Walker's two month tenure with the Water Department and complimented him on his first budget for the Water Department. Mr. Garner thanked Mr. Sorensen for his assistance in the transition in the Budget Division. President Martinez also thanked Mr. Sorensen for his assistance. President Martinez asked Mr. Garner to review the next steps for the Board in the budget process. The following was reviewed with the Board: Budget Workshop #3 - schedule in June if needed Budget & Rate adoption - mtarget date - June 24, 2021 Mail out Prop 218 Notice (if needed) Schedule Prop 218 Hearing (if needed) President Martinez recommended that an additional budget workshop be scheduled for the benefit of the public. He recommended that the next budget presentation include staff recommendations to the Board regarding rate increases. Commissioner Shannon made comments on rate increases and how the public may perceive them. President Martinez asked if he needed to call for a motion to schedule another budget workshop. Page 5 of 7 CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES Deputy City Attorney Anthony advised he did not feel a motion or vote was needed, as it sounded like it was the consensus of the Board to hold another budget workshop. President Martinez asked what the date might be for the third workshop. Mr. Walker advised he thought staff intended to include a third workshop in the next regular board meeting schedule which would be June 10, 2021 at 9:00 A.M. or hold another stand-along budget workshop. He asked what the Board preference would be. There was general discussion regarding this topic. Mr. Walker advised that staff could agendize the budget review as the first item on the next regular agenda. It was decided to hold the next budget workshop on June 10, 2021. PUBLIC PARTICIPATION: Members of the public are invited to address the Board on items of interest to the public within the Agency Board jurisdiction. Each speaker will be limited to two minutes unless that time is extended by the Chair. President Martinez called for any public comment. It was confirmed that no written public comment had been received for the May 27, 2021 board meeting. ADJOURNMENT President Martinez adjourned the special meeting at 9:53 A.M. to the June 10, 2021 regular teleconference board meeting. Page 6 of 7 CITY OF LONG BEACH THURSDAY, MAY 20, 2021 WATER COMMISSION VIA TELECONFERENCE, 8:00 AM MINUTES NOTE: If written language translation of the Commission agenda and minutes for non-English speaking persons is desired, please make your request by phone to the Office of the City Clerk at (562) 570-6101, 72 business hours prior to the Commission meeting. Kung nais ang pagsasalin ng nakasulat na wika ng agenda ng Komisyon at ang minutes para sa mga taong hindi nagsasalita ng Ingles, mangyaring isagawa ang iyong hiling sa pamamagitan ng telepono sa Opisina ng Clerk ng Lungsod sa (562) 570-6101, 72 oras ng negosyo bago ang pagpupulong ng Commission. Si desea obtener la traducción escrita en otro idioma de la agenda y actas de la comisión para personas que no hablan inglés, haga su solicitud por teléfono a la Oficina de la Secretaría Municipal al (562) 570-6101, 72 horas hábiles antes de la reunión de la comisión. Page 7 of 7