Hot Topics Autumn 2023

FSLVW considers the two most pressing issues for the San Lorenzo Valley Water District (SLWD) this autumn to be Staffing and Financial Stability.

In parallel, we continue to see Infrastructure Projects consuming a great deal of Staff attention and District funds.

Meanwhile, consolidation (with Bracken Brae and Forest Springs) and Regional Water Planning (both via the Santa Margarita Groundwater Agency and via the District’s pursuit of State approval for its Conjunctive Use Plan) are slowly moving forward.

 

Staffing

In our assessment, staffing challenges have recently emerged as the District’s most critical concern.  Not only have SLVWD employees been called upon to work countless extra hours in recent years, but the District is continuing to lose senior personnel, and it has struggled at times to fill these positions.  In some cases, the District has eventually filled positions via promotions, but it can take time for people to ramp up to new levels of responsibility.  The net effect is that, even in the absence of further turnover, the District will be operating in 2024 with a relatively new management team (key members of which are still to be determined):

  • District Manager Rick Rogers has been carrying an excessive load for years now, and the District was unsuccessful in 2022 in recruiting a high-level Project Manager to assist him.  Earlier this year, Rick announced his intention to retire in 2024, and the District engaged a recruiting firm to assist in finding a suitable replacement.  In September, though, Rick unexpectedly advanced his retirement date to November 4th, citing health concerns.  The District is therefore currently working in parallel to recruit an interim General Manager.

  • Finance Manager Stephanie Hill left the District in mid-2021 to assume a position with Santa Clara County.  After an unsuccessful search, Kendra Reed was promoted to take her place.  Kendra did an impressive job of growing into her new responsibilities, but she unexpectedly gave two-week notice of her resignation in early October of 2023, citing mental health concerns.  The District has hired a temporary contract Finance Manager through Regional Government Services, Heather Ippoliti, who has decades of experience working at this level.

  • District Engineer Josh Wolff passed away unexpectedly in early June of 2023.  The District hired Garrett Roffe to replace him, but Garrett is still relatively new to this role.

  • Environmental Program Manager and Administrative Analyst Carly Blanchard was effectively asked to fill two full-time positions through much of 2022.  The District hired an Environmental Planner to assist her in early 2023, but he left shortly thereafter for a better opportunity elsewhere. That unfilled position is still being advertised.

  • Water Quality and Treatment Manager Nate Gillespie left the District in mid-2022 for a position with Soquel Creek Water District (and subsequently left to take a position as Director of Operations at Scotts Valley Water District).  In January of 2023, Jesse Guiver was promoted to replace him.

An even more pressing concern involves the possibility of further attrition.  At the October 5th SLVWD Board Meeting, it was revealed that the accelerated departures of District Manager Rick Rogers and Finance Manager Kendra Reed were a direct consequence of their repeated negative experiences at the hands of a single Board member (Director Fultz).  An agenda item at the October 19th SLVWD Board Meeting centered around the concern that other Staff members could be at risk for similar sudden departures if the behavior of this Board member remained unchecked.  FSLVW is closely monitoring this situation.

Update (11/28/23): The District has hired Brian Frus as Interim General Manager for a six-month period beginning November 20, 2023. Brian is also a candidate in the continuing search for a permanent General Manager. There continue to be multiple indications that Staff remains overloaded and is also suffering from lack of continuity in key positions.

 

Financial Stability

The District is continuing to work with the firm Raftelis to develop a plan for a revised rate structure that will enable it to meet its estimated revenue needs for 2024 through 2028.  There is universal agreement that a substantial increase in rates is essential, but there is still potential for members of our community to resist whatever final plan the Board approves (probably in late 2023).  If the community were to ultimately reject the proposed new rate structure (i.e., if over half the 8000 or so ratepayers were to formally object), the District would be faced with an unprecedented crisis.  For this reason, FSLVW is committed to doing all that we can to ensure that our community is adequately and accurately informed about the various considerations that determine our water rates.

At the SLVWD Board Meeting on October 5th, the Board approved an estimate of the District’s upcoming revenue needs that will enable Raftelis to move on to the question of what new rate structure will most equitably generate this revenue.   The District has yet to determine how it will replace the cross-country raw-water pipeline destroyed in the CZU Fire, but the Board decided to assume the least expensive replacement option for now, since Staff currently lacks the bandwidth to tackle the more ambitious option.  (The District’s final decision could still differ from this, but the District will then have to independently seek any necessary additional funding).  Another critical assumption in the approved revenue estimate was that operating expenses would increase at a rate of 4.5% per year.  This led to projected required revenue increases of 10% in the first two years and 7% in the remaining three years and to an anticipated $19 million in assumed debt.

Director Fultz cast the lone opposing vote because he argued that the projected 4.5% annual increase in operating expenses was unrealistically low.  He predicted that, unless the District adopted a greater rate increase, the District’s operating margins would suffer accordingly.

For more details and broader context on this issue, please see our report in “Hot Topics Summer 2023.”  FSLVW is also developing a detailed FAQ for release in November.

Update (11/28/23): The Board is planning to vote at its December 7th meeting on a proposed new five-year rate structure. A system of tiered rates has been designed so as to minimize the impact on low-income and middle-income homeowners with only a modest need for water by linking the rate to the amount of water consumed. There will also be very little impact on the school district and on mobile home parks. In contrast, homeowners who use large volumes of water (typically in summer months) will see substantial increases in their water rates.

NOTE: The Friends of San Lorenzo Valley Water advocated at the November 16th Board Meeting for a significant increase in the monthly discount (currently set at $15) provided by the District’s Ratepayer Assistance Program (RAP).

 

Infrastructure

SLVWD is continuing to make progress on its many ongoing infrastructure projects.  In several cases, the District has faced challenges in addressing the concerns of affected local residents.  This may be, at least in part, a reflection of continuing staff overload.  In one particular case, the issue appears to lie with the company that the District has hired to perform the work.

For more details and broader context on the District’s infrastructure maintenance and replacement, please see our report in “Hot Topics Summer 2023.”

Update (11/28/23): The Board voted at its November 2nd meeting to proceed with next steps for replacing the 1.3 mile raw-water Peavine Pipeline (destroyed in the August 2020 CZU Fire) with a similar above-ground pipeline. A new cost estimate put the price tag at $2 million (roughly 90% of which will be covered by FEMA) as compared to an estimate of at least $10 million for a below-ground pipeline (which would likely be reimbursed at a significantly lower percentage by FEMA and which would involve far more complexity and environmental disruption).

Consolidation

SLVWD is continuing to make progress on the infrastructure improvements needed to support the forthcoming consolidation with Bracken Brae and Forest Springs.

For more background on this issue, please see our report in “Hot Topics Summer 2023.”

Update (11/28/23): The Board voted 3-1 at its November 16th meeting to require Staff to include the Budget and Finance Committee in any further discussions with the court-appointed Receiver for Big Basin Water Company (BBWC) about SLVWD support for BBWC operations. The Receiver and the County have been pushing SLVWD to become more involved, but the Board raised concerns about the potential for SLVWD to be under-compensated. It also remains unclear whether BBWC customers will align themselves in favor of a long-term solution based on consolidation with SLVWD.

 

Regional Water Management

Things have been relatively quiet on this front in the past few months.  It is worth noting the recent news, though, that Heidi Luckenbach, current Deputy Director/Engineering Manager, will take over as the City of Santa Cruz’s new Water Director on the retirement of Rosemary Menard in February 2024.

For more background on this issue, please see our report in “Hot Topics Summer 2023.”