MINUTES
Special Meeting March 7, 2013

(These minutes are not intended to be a verbatim transcription of the proceedings and discussion associated with the business on the Commission’s agenda; rather, what follows is a summary of the order of business and general nature of testimony, Commission deliberation, and action taken.)

CALL TO ORDER/ROLL CALL
Chairman Baugh called the meeting to order at 9:00 am at the Redding City Council Chambers in Redding, CA. Commissioners Day, Haynes, Jones, Kehoe, Mathena and Morgan were present. Executive Officer Amy Mickelson, Attorney Jim Underwood and Clerk/Analyst Marissa Jackson were present as staff. Alternate Commissioners Fust and Russell were present as members of the audience.

PLEDGE OF ALLEGIANCE
Commissioner Morgan led the Pledge of Allegiance.

PUBLIC COMMENT
Public comment was opened at 9:02 am. Jan Lopez presented and read a letter regarding sphere of influence (SOI) updates. She proposed that the Commission reverse the existing exemption policies.

Jim Reed, Fall River Mills attorney, stated that a group of concerned taxpayers has asked him to sue LAFCO due to incomplete municipal service review (MSR) and sphere of influence studies.

Terry Briggs, Fall River Mills resident, advised that the meeting was futile and that only nine MSRs and no SOIs had been completed since 2006. He reminded the Commission of the date of its last audit and shared his disagreement with the bill for Fall River Valley CSD. Public comment was closed at 9:14 am.

CONSENT CALENDAR
By motion made (Mathena) and seconded, the consent calendar was approved. Commissioner Haynes abstained from voting on the minutes due to her absence at the previous meeting.

CONDUCTING AUTHORITY PROCEDINGS
Ms. Mickelson reported that on February 7, 2013, the Commission approved the ACID Spring Gulch Reorganization (LAFCO File #11-02). As it was not a 100% consent proposal, LAFCO must convene a Conducting Authority hearing to receive any written protest against the reorganization. To date, no protest has been received.
The public comment hearing was opened and closed at 9:16 am. As there was no protest submitted, the annexation will progress unhindered.

BUDGET AND FISCAL AFFAIRS
Ms. Mickelson reported that the LAFCO 2012-13 Budget is on track to end the year slightly over budgeted expenditures, mainly due to direct costs associated with paid projects, as well as the unreimbursed Fall River Valley CSD direct costs. Even with the unpaid Fall River Valley CSD invoices ($12,400), the Commission should anticipate ending the current Fiscal Year with a positive fund balance, due to the increase in paid proposals. The proposed budget does reflect a 3% increase to cost-of-share participants and is supported by a majority of the budget committee (Commissioners Haynes was not in favor, Commissioners Mathena and Morgan were). This would be the first increase to the cities, districts and the County in five years.

Staff recommended the following: that the Audit Reserve Account be partially funded at $2,500 this year and years to follow in order to have funding available for future audits or audit committee review; an increase to the Legal Counsel line item for the upcoming fiscal year due to anticipated legal activity; a new line item for Legal Reserves; and then funding the Legal Reserves line item at $2,500 and Legal Counsel at $2,500 to allow any remaining legal reserves to be carried over annually.

A copy of the proposed budget was circulated to all Cost-of-Share participants and agenda recipients and was published on the website. No comments were submitted.

Commissioner Haynes indicated that in her opinion certain line items in the budget could be reduced to avoid an increase to cost-of-share participants and would like to have a future discussion regarding employee benefits. Commissioner Baugh also would not like to see an increase in the budget and suggested Commissioner Travel/Transportation be eliminated for the year. Commissioner Mathena stated that if a small, manageable increase is not made a large one will occur in the future. Commissioner Morgan stated a small increase is necessary due to costs in Legal Counsel, Publications and Audit, coupled with the possibility of lawsuits.

Commissioner Baugh requested audit dates and asked how LAFCO and its membership would be affected financially by a possible lawsuit. Ms. Mickelson confirmed that the date of the last audit was 2008-09 and current audit findings are expected in the near future. She further advised that in the event of a lawsuit, any costs not covered would have to be assumed by cost share participants.

Public comment on the draft budget was opened at 9:36 am. Jan Lopez submitted and read a letter regarding the draft budget stating that Yuba LAFCO has a comparable budget ($192,000) and has done studies for 83 agencies. She made several proposals directing staff to complete studies, reverse policies, set up a committee, hold monthly meetings, et cetera.

Barbara Briggs, Fall River Valley CSD Vice Chair (but speaking as a rate payer) indicated the budget can be cut by contracting employees and that someone with familiar with financial matters should review costs. Public comment was closed at 9:45 am.

After discussion it was determined that the matter would be referred to the budget committee and be brought back at the April 4, 2013 meeting.

Ms. Mickelson reported that the Fall River Valley CSD invoice was placed on this agenda for follow-up and that the District has yet to answer any of the specific questions answered regarding the invoice. She requested direction from the Commission regarding further action. Commissioner Jones asked whether this was a typical invoice for an SOI/MSR. Ms. Mickelson stated this was a very atypical proposal brought forward by the District and was not LAFCO driven. Staff attempted on multiple occasions to propose more realistic options, all of which were declined by the District. The majority of the costs were due to the scope of the project; the District’s unwillingness to comply with LAFCO requests and substantial hours of staff time spent trying to locate information. Additionally, the issue was allowed to proceed to hearing based on the general manager’s promise to pay the bill. The Executive Officer noted that LAFCO has paid nearly $7,000 in direct costs on behalf of FRVCSD. As those costs are now being borne by every cost-share-participant, those agencies could seek legal action against LAFCO to recover those funds.

David Hall, voluntary temporary manager of Fall River Valley CSD, stated that the district is not trying to get out of paying the bill, but does not understand all of the charges. He questioned mapping costs as maps were provided and felt they should have been given an opportunity to correct them, although he did not know what type of maps were submitted. He questioned publication fees and staff time allotted and would like charges to be reviewed by the Board. Commissioner Baugh asked Mr. Hall if he had a suggestion for an amount owed, he did not. He added that the threat of a lawsuit is not coming from the district.

Commissioner Mathena questioned if the consultants and legal counsel hired by the District had been paid. Mr. Hall stated they had not.

Commissioner Kehoe left the meeting at 10:20 am.

Jan Lopez, speaking as the District’s consultant, says the district submitted an application and maps using GIS coordinates and was not notified that there was a problem with the maps. She stated the issue was brought before the Commission in November and denied, but should not have been heard until the MSR was adopted. Commissioner Baugh asked Ms. Lopez whether or not the maps contained assessor parcel numbers, names and addresses for notification purposes, she replied that they did not.

Barbara Briggs, Vice Chair of Fall River Valley CSD, clarified that Mr. Reed did not speak on behalf of the district. She states that the district had requested clarification on the bill as to what items were attributable to the SOI and does agree that they do owe something. Her belief was that items billed prior to the application submittal are MRS related. She wants a detailed breakdown as to what is SOI review, SOI expansion and MSR review so they can determine what they owe.

Michelle Bonnewell, Pittville resident, spoke to the charge of $500 for legal counsel regarding the confrontation at the September 2012 meeting and stated the District should not incur that cost. She stated the CSD had gone to great expense to move the project forward.

Diana Rogers, Fall River Valley CSD ratepayer, regrets that they do not have money to pay the bill and agrees they owe at least part of it. She reported that during a meeting, a board member said that she had been instructed by consultants not to pay the bill and the board has chosen not to make the bill available to the public. She added that a financial adviser is currently reviewing district finances as there are others they owe and no one she has spoken to would be in favor of a lawsuit, nor is the CSD board behind that effort.

Commissioner Jones suggested the District pay the undisputed portion of the invoice and then the disputed amount can be addressed. Commissioner Mathena indicated the finance or budget committee would be willing to review charges and meet with the District or come back before the Commission. Commissioner Day requested an itemized explanation from the District; Commissioners Haynes and Morgan agreed.

Terry Briggs, Fall River Valley CSD ratepayer, questioned the MSR time frame and whether or not he should ask another EO what acceptable costs are. Commissioner Baugh confirmed with Attorney Underwood that it would not be proper to negotiate an agency’s bill with a member of the public.

David Hall advised that he would put the matter on his agenda so the board could pay the undisputed portion of the bill. It was determined that the budget committee (Morgan, Mathena and Haynes) would serve as an ad hoc committee to discuss the remainder of the bill.

OTHER BUSINESS
Ms. Mickelson gave a brief GIS (Geographic Information System) presentation regarding what it is and how it is used and shared by LAFCO.

COMMISSIONER ANNOUNCEMENTS
There were no commission announcements.

STAFF ANNOUNCEMENTS
It was noted that the next LAFCO meeting would be held on Thursday, April 4, 2013 at 9:00 am at City of Anderson Council Chambers.

CLOSED SESSION
The Commission adjourned to Closed Session, pursuant to Government Code Section 54956.9(b), regarding Potential Litigation (1 Case).

REPORT FROM CLOSED SESSION
Attorney Underwood stated that there were no reportable actions.

ADJOURNMENT
There being no further business, Chairman Baugh adjourned the meeting at 11:07 am.

ATTEST:

Marissa Jackson
Clerk to the Commission