Policy Board of Directors
August 26, 2024
Special Meeting
1:00PM
Central Coast Community Energy
70 Garden Court, Suite 300
Monterey, CA 93940
REMOTE LOCATION VIA TELECONFERENCE
Any interested parties or community members may attend, and participate in, the meeting at the following addresses where Board members may also join the meeting from:
County of Santa Cruz
701 Ocean Street,
701 Community Room
Santa Cruz, CA 95060
City of Gonzales
City Hall
147 Fourth Street, Conference Room
Gonzales, CA 93926
County of San Benito
550 Cagney Road
San Juan Bautista, CA 95045
City of Paso Robles
Wastewater Treatment Plant
3200 Sulpher Springs Road
Paso Robles, CA 93446
City of San Luis Obispo
City Hall
990 Palm Street, Council Chambers
San Luis Obispo, CA 93401
City of Santa Maria
City Hall
110 East Cook Street, Council Chambers
Santa Maria, CA 93454
Count of Santa Barbara
County Administration Building
105 E. Anapamu Street, Suite 108
Santa Barbara, CA 93101
Public may participate through ZOOM. For ZOOM participation please join by computer audio at:
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Or join by phone:
+1 669 900 6833 or +1 669 219 2599
Enter this Webinar ID Number: 835 0708 7702 when prompted. Please note there is no Participant Code, you will press # again after the recording prompts you.
You will be placed in the meeting as an attendee. To make a public comment:
If joined by computer, please press the button to raise your hand If joined by phone, please push *9 on your keypad
If you have anything that you wish to be distributed to the Board, please provide 15 copies to a member of 3CE staff or the Board Clerk, who will distribute the information to the Board members and staff.
The public may comment on the consent agenda and matters not listed on the agenda but within the Board's jurisdiction at the opening of the meeting. The Board may not take action at this meeting on any item not listed on the agenda other than to refer the matter to staff or set it for a future meeting. The public may comment on a specific item listed on this agenda when the Board considers that item. Speakers are limited to 3 minutes each.
In addition, members of the public may request and receive copies without undue delay of any documents that are distributed to the Board, unless there is a specific exemption under the Public Records Act that prevents the disclosure of the record. (Cal. Gov’t Code Section 54957.5) In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board in advance of a meeting and that relate to an agenda item will be made available at 3CE’s offices located at 70 Garden Court, Suite 300, Monterey, CA 93940 during normal business hours and are also available on the 3CE website located at: https://3cenergy.org/meetings-agendas/ REASONABLE ACCOMMODATIONS: In compliance with the Americans with Disabilities Act, any individuals who desire to request a reasonable accommodation or modification to observe or participate in the meeting may make such a request by sending an email to: [email protected] Copies of documents may be made in alternative formats, upon request. Requests for accommodations should be made no later than two (2) business days prior to the meeting to allow time for 3CE to address the request.
DISCLOSURE OF CAMPAIGN CONTRIBUTIONS: Pursuant to Government Code section 84308, members of the Board are disqualified and not able to participate in any agenda item involving contracts (other than competitively bid, labor, or personal employment contracts), franchises, discretionary land use permits and other entitlements if the Board member received more than $250 in campaign contributions from the applicant or contractor, an agent of the applicant or contractor, or any financially interested participant who actively supports or opposes the decision on the agenda item since January 1, 2023. Members of the Board who have received, and applicants, contractors or their agents who have made, campaign contributions totaling more than $250 to a Board member during the proceeding or for 12 months after a final decision is rendered in that proceeding, are required to disclose that fact for the official record of the subject proceeding.
Disclosures must include the amount of the campaign contribution and identify the recipient Board member and may be made either in writing to the Clerk of the Board prior to the subject hearing or by verbal disclosure at the time of the hearing.
Welcome & Roll Call
Pledge of Allegiance
REGULAR AGENDA
1. Consider and provide staff direction regarding the Operations Board recommendation and/or additional alternative proposals addressing improvements to 3CE governance, including potential changes impacting Board composition
Adjournment
Staff Report Item 1
TO: 3CE Policy Board of Directors
FROM: Robert M. Shaw, CEO
SUBJECT: Consider and provide staff direction regarding the Operations Board recommendation and/or additional alternative proposals addressing improvements to 3CE governance, including potential changes impacting Board composition
DATE: August 26, 2024
RECOMMENDATION:
It is recommended that the Policy Board consider and provide staff direction regarding the Operations Board recommendation and/or additional alternative proposals addressing improvements to 3CE governance, including potential changes impacting Board composition.
BACKGROUND:
Agency Expansion Timeline
3CE, originally Monterey Bay Community Power, was formed in 2017 as a 19-member, tri county joint action agency governed by a Policy Board and Operations Board of 11 members each.
1 The cities of San Luis Obispo and Morro Bay joined in 2018 as the 20th and 21st members, sharing a twelfth board seat.
1 Members included: Counties of Santa Cruz, Monterey, and San Benito, as well as the cities of Scotts Valley, Santa Cruz, Capitola, Watsonville, San Juan Bautista, Hollister, Marina, Seaside, Sand City, Monterey, Pacific Grove, Carmel-by-the-Sea, Salinas, Soledad, Greenfield, Gonzalez.
In 2019, 11 more jurisdictions joined, raising the number of members to 32 and the number of board seats to 17.2 The shared Morro Bay/San Luis Obispo seat was expanded to include Paso Robles, and the shared Marina/Seaside/Sand City seat was expanded to include Del Rey Oaks.
The City of Buellton joined in 2020 raising the number of members to 33 but retaining the board size, as Buellton was absorbed into the Solvang/Guadalupe shared seat. The City of Atascadero joined in 2022, raising the number of members to 34 and increasing the Boards to 18 seats with the cities of Paso Robles and Atascadero reconsolidated into their own shared seat. The County of San Luis Obispo joined in 2023, raising the number of members to 35 and the number of seats to 19.
Staff does not anticipate further expansion of 3CE.3
2020 Governance Recommendations
In 2020, the Policy Board of Directors formed a Governance Subcommittee, chaired by Policy Board Director Bruce McPherson (Santa Cruz County), to consider questions of improved governance. The Committee reviewed governing structures of similarly sized CCAs, evaluated reduced and reconstituted boards, and considered process improvements designed to enhance broader membership participation in 3CE.
Ultimately, the Committee and Policy Board elected to retain 3CE’s two board governance structure and regional seat allocation methodology, rejecting a 1:1 jurisdiction to seat allocation with weighted votes.
The Policy Board, however, did adopt certain recommendations from the 2020 Governance Committee including, the creation of Limited Memberships; establishment of a Joint Annual Meeting; providing annual member agency presentations; providing guidance to shared seat members regarding rotations; developing a new member onboarding packet; and other minor administrative changes.
2 Additional members included: County of Santa Barbara and cities of Del Rey Oaks, Paso Robels, Pismo Beach, Grover Beach, Arroyo Grande, Santa Maria, Guadalupe, Solvang, Carpinteria, Goleta. 3 Barring the unanticipated and unlikely circumstance that a smaller Community Choice Aggregation agency within our existing footprint seeks to consolidate. Expansion outside of the five counties is not recommended.
Operations Board Ad Hoc Governance Committee
During last year’s administrative review process, opportunities to improve 3CE’s governance structure were identified as a topic for future consideration. Specifically, board turnover and size were named as obstacles to board members’ ability to “dig in” on complex topics including long term strategic planning. As a result, the Board set a fiscal year 2023-2024 agency goal to develop governance recommendations for their evaluation.
During the May 8, 2024, regular meeting of the Operations Board, CEO Shaw requested Chair Goldstein (City of Capitola) empanel an Ad Hoc Committee4comprised of a diverse set of Operations Board members. The Committee met several times to develop and consider recommendations for improved governance, including board structure, to achieve greater communication, engagement, and oversight of 3CE, with the goal of ensuring future stability, operational effectiveness, and long-term success for the Agency. The Ad Hoc Committee was comprised of Operations Board Chair Goldstein, Vice Chair Mona Miyasato (County of Santa Barbara), Directors Carlos Palacios (County of Santa Cruz), Rene Mendez (City of Salinas), and Megan Hunter (City of Soledad). The Ad Hoc Committee also sought input from former Director Matthew Bronson (City of Grover Beach).
The Committee ultimately formulated several recommendations for policy improvements and recommended reducing each Board to eleven members subject to a new allocation method.
August 14, 2024 Operations Board Meeting
On August 14, 2024, the Operations Board met to review the Ad Hoc Committee’s recommendation and to decide whether they would support forwarding it to the Policy Board.
The Operations Board amended the Ad Hoc recommendation to remove a “right of refusal” for cities larger than 100,000 and to allow shared-seat cities to make selections by agreement (rather than the City Selection Committee). Among other things, the amended recommendation (discussed in more detail below) limited the board membership to eleven
4 As used here, the term Ad Hoc Committee is used in its colloquial sense and not as an official action of the Operations Board. Often when people refer to an “Ad Hoc Committee” that is formed by action of a legislative body, they are officially known as advisory committees, and are defined in the Brown Act as: “…advisory committees, composed solely of the members of the legislative body that are less than a quorum of the legislative body are not legislative bodies, except that standing committees of a legislative body, irrespective of their composition, which have a continuing subject matter jurisdiction, or a meeting schedule fixed by charter, ordinance, resolution, or formal action of a legislative body are legislative bodies for purposes of this chapter.” Gov. Code 54952(b).
seats. The Operations Board supported moving the amended recommendation to the Policy Board by a vote of 11 to 4 with 4 members absent.
To preserve the Policy Board’s option to act at its next regularly scheduled meeting, staff provided the required notice of potential changes to the Joint Powers Agreement to all 35 member agencies on August 16, 2024. Simultaneously, staff solicited additional feedback and options for the Policy Board’s consideration, in an effort to identify alternative solutions and processes capable of achieving a broader consensus than the Operations Board recommendation achieved.
DISCUSSION/ANALYSIS:
A. General Recommendations for Improved Communication and Engagement Included in the Operations Board recommendation are implementable measures to enhance communication, reduce the impact of board turnover, and improve board effectiveness. Staff believes these measures should be considered, regardless of any board changes, as a means to improve operations and communication.
Develop a 3CE Code of Conduct: A code of conduct can establish clear standards, obligations, and expectations for the Boards’ and staff’s commitment to each other, the agency, and non-seated member agency jurisdictions. For example, a code of conduct could establish a seated board member’s obligation to keep non-seated jurisdictions informed and solicit input on important matters.
Develop Formal Board Procedures: Board procedures can provide stability in decision making and processes, ensuring the Boards operate consistently, regardless of member turnover or leadership changes. The procedures can also facilitate better communication among both seated and non-seated jurisdictions. Creating a clear procedure, for example, for non-seated jurisdictions to raise items for the Board’s consideration can support broader agency engagement.
Improved Onboarding: 3CE onboarding continues to improve and staff is actively working to create a more robust onboarding, which can be offered at different times of the year, which will help new members better understand the agency, their role, and key areas of focus.
Greater Regional Communication: We re-craft staff positions to better support and communicate with all member agencies. Potential regional open-house and informational events could provide a relaxed setting where members can learn about focus areas, programs, and initiatives directly from staff.
B. Board Size Reduction Recommendation and Alternatives In its deliberations, the Operations Board considered the Ad Hoc Committee’s identified benefits of smaller boards, which included:
1. Greater ownership and accountability among seated board members. Smaller boards encourage greater participation while reducing the potential for deferment.
2. Enhanced communication through closer working relationships and opportunity for more meaningful discussion regarding complex and often nuanced topics.
3. More efficient Board meetings with greater opportunity to evaluate detailed staff proposals. Smaller boards can enable focused discussions and lead to more efficient meetings.
4. Increased opportunities for involvement in leadership positions on committees, engagement with the other board members, and individualized dialogue with staff.
These enumerated benefits were responsive to the broader feedback received from both Boards, namely that turnover and board size made it difficult to plan, engage, and thoroughly analyze complex topics.
The Operations Board further considered the guiding principles behind the Ad Hoc Committee’s recommendation that any proposed board structure must:
1. Support 3CE’s unique and exceptionally fast paced business and operational needs.
2. Ensure stability and continuity of the Boards to allow for longer-term strategic engagement.
3. Board representation should reflect population size.
4. Board selection should be transparent and representative.
The Ad Hoc Committee discussed (and rejected) two separate 9-member board alternatives.
One option would not have provided for rotation to the cities of San Juan Bautista or Hollister.
The other did not allocate seats to the significant population centers of Salinas or Santa Maria.
B.1 Eleven Seat Board Recommendation (Operations Board) The Operations Board recommendation, based largely on that of the Ad Hoc Committee, evaluated the original 3CE structure as outlined in the Joint Powers Agreement (two Boards capped at 11 members each), the current structure (two Boards with 19 members each), the communication and engagement of both seated and non-seated member agencies, allocation of shared seats, and the pace and complexity of 3CE’s operations.
Following valuable discussion and debate among the Directors, the Operations Board voted to recommend that the Policy Board consider reducing both the Operations and Policy Boards to 11 seats as set forth below.
1. Effective February 1, 2025, reinstate JPA limit on Operations and Policy Boards to 11 directors each and restructure the seat allocation methodology as follows:
a. Four individual non-rotating seats allocated as follows: one per County to Santa Barbara County, San Luis Obispo County, Monterey County, and Santa Cruz County.
b. Large city jurisdictions with a population of greater than 100,000 (currently, Santa Maria and Salinas) allocated each an individual non-rotating seat. c. Four rotating shared seats allocated as follows: one per county to the cities within the counties of Santa Barbara, San Luis Obispo, Monterey, and Santa Cruz.
Such seats shall have a term of two years and be appointed by agreement of the parties or through the City Selection Committee within the appropriate County. 5 d. One seat shared among the County of San Benito and the cities of Hollister, and San Juan Bautista. The seat shall rotate as determined through agreement of the parties every two years.
5 City Selection Committee is routinely established pursuant to California Government Code section 50270 for the purpose of appointing city representatives to boards, commissions, and agencies as required by law.
Pros of an 11 Seat Board:
1. Supports the guidelines and goals considered by the Ad Hoc and Operations Board.
2. Can support more direct engagement on issues and with staff.
Cons of an 11 Seat Board:
1. May underrepresent smaller cities.
2. May require jurisdictions to work beyond the regional parties they typically engage.
B.2 Fourteen Seat Board Recommendation
In the week that followed the Operations Board meeting, numerous discussions throughout 3CE’s service area brought forth an alternative proposal for a 14-seat board structure.
The 14-seat board proposal builds on the Operations Board recommendation by allocating three additional shared seats to the small cities within the counties of Monterey, San Luis Obispo, and Santa Cruz. After considering the aggregate populations of small cities (< 100K) within each of the member counties, it was determined that Monterey, San Luis Obispo, and Santa Cruz counites had an average small city population of roughly 150,000, whereas San Benito and Santa Barbara’s average small city population was roughly 55,000.
Proponents of the 14-seat proposal address the potential for voting ties by requiring a 9 of 14 majority to pass important or significant items.
Pros of a 14 Seat Board:
1. Supports the guidelines and goals considered by the Ad Hoc and Operations Board.
2. Can support more direct engagement on issues and with staff.
3. Better represents small city populations and supports regional partnerships in some counties.
Cons of a 14 Seat Board:
1. The 9 of 14 majority required to pass budget, rates, or other financial items could have a negative rating impact on the agency, which in turn could significantly impact contracting and capital terms.
2. Does not support regional comity matters in all counties.
B.3 Consider Reduction of Operations Board Only
A second alternative proposal is to leave the Policy Board at 19 members and reduce only the Operations Board to 11 members and re-evaluate the structure of the Policy Board at a future date.
The Operations Board, comprised of the region’s professional public sector managers, meets more times a year (regularly ten compared to the Policy Board’s three). Increasing the
efficiency and productivity of these meetings can promote more effective operational decision-making.
Pros of reducing only the Operations Board
1. May promote goals considered by the Ad Hoc and Operations Board with respect to the Operations Board.
2. Can allow members to evaluate the impact of board reduction recommendations as part of a future broader evaluation of board structure.
Cons of reducing only the Operations Board
1. Does not fully address broader concerns regarding high turnover preventing longer-range strategic planning and member engagement.
C. Additional Items for Consideration
The Policy Board may want to consider two additional proposals that arose during this process.
First, extending the rotation term for shared seats from two to three years for the Operations Board members. This extension would give Operations Board members more time to engage and “come up to speed” on 3CE issues. The election cycle may make it infeasible to extend this recommendation to the Policy Board shared seats.
Next, imposing a requirement for geographic diversity between primary and alternate seats and/or between Operations and Policy Board appointments to have more jurisdictions directly engaged with 3CE. Currently, the practice is split between shared seats. Seven shared seats appoint Operations and Policy Board members from the same jurisdiction. Three shared seats appoint their Operations and Policy Board members from different jurisdictions.
D. Alternatives for Direction
Staff seeks Policy Board direction regarding the broader governance discussion and the proposals summarized in sections A and B above. Direction may include one or a combination of the following:
D.1: Direct staff to take steps to implement the general recommendations set forth in section A above.
D.2: Direct staff to prepare necessary amendments to the 3CE Joint Powers Agreement and/or Operating Rules to implement:
1. Either the 11 or 14 seat Operations and Policy Board recommendations set forth in section B.1 and B.2 above.
2. A reduction to the Operations Board only as set forth in section B.3 above.
3. Changes in rotational terms or geographic diversity as set forth in section C above.
The Policy Board may consider adopting changes to the JPA, subject to any modifications, at its September 19, 2024, regular meeting. Approval of such amendments requires two-thirds affirmative vote of the present Directors of the Policy Board.
D.3: Direct staff to prepare necessary amendments to the 3CE Joint Powers Agreement and Operating Rules to reduce the Operations Board ONLY to either the 11 or 14 seat Operations recommendations set forth in section B above. Approval of such amendments requires two-thirds affirmative vote of the present Directors of the Policy Board.
D.4: Direct staff to further study one or more of the alternatives discussed herein, or other alternatives developed during the August 26, 2024 special meeting.
D.5: Direct staff to table the issue and leave the governance structure unchanged.
CONCLUSION:
Governance is an important component of a large and complex business operation such as 3CE.
The Policy Board’s careful consideration and weighing of benefits and drawbacks regarding changes to the board composition structure is a critical part of maturing as an agency and is an ongoing business concern. The Board’s consensus and direction will guide staff’s actions to ensure the lasting success of 3CE and its continued benefit to all 35 member agencies.
ATTACHMENTS: Member Population and Load Distribution
Central Coast Community Energy
Member Agencies by Load and Population
Town Or Territory Percent
Load
2020
Census Pop.
SALINAS 8.07% 163,540
UNINC MONTEREY CO 14.39% 118,854
SEASIDE 1.32% 31,317
MONTEREY 2.96% 30,228
SOLEDAD 0.77% 24,932
MARINA 1.28% 22,350
GREENFIELD 0.73% 18,938
PACIFIC GROVE 0.81% 15,101
GONZALES 0.85% 8,649
CARMEL-BY-THE-SEA 0.47% 3,213
DEL REY OAKS 0.09% 1,592
SAND CITY 0.15% 322
UNINC SANTA CRUZ CO 7.47% 133,138
SANTA CRUZ 3.19% 62,969
WATSONVILLE 2.86% 52,596
SCOTTS VALLEY 1.17% 12,226
CAPITOLA 0.73% 9,940
UNINC SANTA BARBARA CO 12.55% 272,948
SANTA MARIA 5.86% 109,697
GOLETA 3.27% 32,965
CARPINTERIA 0.85% 13,263
GUADALUPE 0.46% 8,060
SOLVANG 0.50% 6,124
BUELLTON 0.51% 5,160
UNINC SAN LUIS OBISPO CO 11.42% 124,093
SAN LUIS OBISPO 3.87% 47,106
El PASO DE ROBLES 2.32% 31,493
ATASCADERO 2.86% 29,776
ARROYO GRANDE 0.97% 18,436
GROVER BEACH 0.58% 12,706
MORRO BAY 0.69% 10,759
PISMO BEACH 0.88% 8,074
HOLLISTER 2.22% 41,685
UNINC SAN BENITO CO 2.77% 20,436
SAN JUAN BAUTISTA 0.10% 2,086
ALL TOTAL 100% 1,504,772