SLVWD 11.4.21

SLVWD Board Meeting Summary

November 4, 2021

Mark Dolson

Highlights:

Water Master Plan.
Remote Meeting Authorization.
Possible Consolidation with Big Basin.
Mitigation Agreement with PG&E.
Draft Conjunctive Use Plan.
Multiple User Variances Renewals.
Director of Business and Finance Services Recruitment.
Next Board meeting is at 6:30 PM on November 10.

Preliminaries

There was nothing to report from the just-concluded closed session.

42 members of the public were in attendance. Larry Ford said he wanted to thank Board members, staff, and community members who are enduring a really complicated and challenging 2021. He also congratulated everyone for surviving another fire season.

President’s Report

There was nothing to report.

Unfinished Business

Water Master Plan

In 2019, the District contracted with Akel Engineering to develop a Master Plan and Capital Improvement Plan for the District’s existing infrastructure. District Engineer Josh Wolff introduced Tony Akel who presented the plan. Tony described the Water System Master Plan as a document that identifies water system improvements and quantifies and prioritizes these with estimated costs. This provides the District with an analysis-based guiding document for capital improvement projects for planning and budgeting. Tony briefly reviewed ten key tasks in the development of the plan:

1. Characterize land use. (The District spans 5677 acres; future expansion is predicted to increase this by only 108 acres.)

2. Characterize water demands. (The District produced 1.57 million gallons of water per day, down from 2.1 in 2013; the maximum monthly production ranged between 2.89 million gallons per day in July 2013 and 1.93 million gallons per day in August 2015.)

3. Inventory existing water facilities. How does water flow? (The District has 190 miles of pipelines, 35 pressure zones, 55 tanks (with a 9.26 million gallon capacity), 33 booster stations, 40 pressure reducing valves, and 7 surface water diversions, divided into a North System and a South System. The largest pipelines are 12", but there are many undersized pipes.

4. Develop a GIS-based hydraulic model. (This was a major investment.)

5. Calibrate the hydraulic model. (This utilized data from 13 temporary pressure loggers (in late 2019), 29 storage reservoirs, 6 sources of supply, and 7 booster stations.)

6. Evaluate existing system. (Pipelines should meet fire flow requirements (would like 1000 gallons for two hours in residential settings, but many are below 500); service connections should meet pressure requirements; storage tanks should meet storage requirements; booster stations should meet pumping criteria.)

7. Recommend improvements to mitigate existing deficiencies. (The current system is significantly undersized. Risk assessment looks at the product of Likelihood of Failure and Consequence of Failure. There is also an energy efficiency and reliability analysis.)

8. Recommend improvements to service growth.

9. Develop Capital Improvement Program. (Estimated spending requirement over the next 20 years works out to between $3.3 and $4.2 million per year from 2021-2026 and between $2.1 and $2.8 million per year from 2027-2041. This is roughly ¾ pipeline improvements and ¼ reservoir improvements; booster station and valve improvements are comparatively minimal. Maybe 10% of this total is attributed to Disadvantaged Communities.)

10. Complete and adopt Master Plan Report.

President Mahood described this as a cornucopia of information. She announced that there will be a special Board meeting Wednesday November 10th at 6:30 PM to formally present this plan to the public (in conformance with state requirements). She emphasized that the Board’s immediate goal was simply to decide whether to accept the Master Plan as presented. She therefore urged that comments and questions should be focused on the technical adequacy of the plan. More wide-ranging questions related to implementation should be deferred. District Manager Rick Rogers added that the Board should also note any points that it would like Tony to expand on in next week’s public presentation.

Director Smolley asked if the plan fully met state planning requirements, when the deadline was for submitting it, and what enforcement requirements there would be. Tony replied that there were no requirements, no deadline, and no enforcement. The Urban Water Management Plan had a July 1st deadline, but the Master Plan is purely for budgetary management and planning purposes. He described it as a road map that should be valid for the next few years and that the District can update as it sees fit. Lastly, Director Smolley asked about Tony’s estimate of the maximum daily demand, given that the District doesn’t directly monitor this. Tony said the factor of 1.5 times the average daily demand was reasonable and consistent with state guidelines. This factor matters because pipelines are designed to meet peak requirements, but Tony said there was currently no basis for using a different estimate.

Director Ackemann asked if the report could identify synergies that would save the District money. Josh said Staff have used the hydraulic model to determine the most advantageous pipeline replacement and pressure zone changes for the new Lyon 12-inch pipeline between the Lyon Water Treatment Plant and Boulder Creek. The model has also been used to create a schedule of all fire hydrants within the District with quantification of available flow and pressure at each.

Director Fultz said he found the new Master Plan incredibly exciting, and he thanked everyone involved in its development. He said he had been looking for this kind of information for almost a decade, and he noted that many of the reported numbers matched well with his own back-of-the-envelope estimates. He said he was hopeful that the Board would promptly begin a wide-ranging conversation about how the plan fits into the District’s financing strategy. He described this as a defining moment for the District.

Director Henry said all her questions have to do with money, particularly since things in recent years are costing more and more. Also, the District can’t spend all its money on capital improvement. She asked Tony if he had any suggestions about figuring out where this money could come from. Tony said that finance planning is the next step, and he recommended that the District engage with a financial consultant to help with this.

Director Fultz said he thought the District had tools available to set policies that will determine how it can manage financing, independent of what it learns from financial consultants.

Two members of the public provided input. Jim Mosher thanked the Board for all its hard work. He wondered whether the hydraulic model allowed for simulating potential savings based on conservation resulting from reducing the demand of heavy users. Tony agreed that demand has been decreasing and that continuing decreases might lead to some future revisions. However, he said that fire flow requirements will not change, and the system is very undersized for these.

Nicole Launder Berridge asked if the Master Plan was available on the website. Josh said it was on an engineering page:

https://www.slvwd.com/sites/g/files/vyhlif1176/f/uploads/2021_slvwd_master_plan_final_report.pdf

Nicole asked if any pipes had been identified as having problematic composition (e.g., lead). Tony said the Master Plan did not look at connections to individual residences. Nicole also asked for clarification regarding fire-flow requirements on cul-de-sacs with small pipes but adequate pressure. Tony said he had seen 6” pipe accepted in this scenario but not 4”.

President Mahood moved that the Board accept the Master Plan and Capital Improvement Plan as prepared by Akel Engineering. Director Fultz seconded. The motion passed 5-0.

Remote Meeting Authorization Under AB 361

District Counsel Gina Nicholls reminded the Board that in order to continue conducting remote meetings, it must reaffirm certain key findings every 30 days. The Board adopted a suitable resolution approximately one month ago, and it now needed to re-adopt this same resolution certifying that a state of emergency continues to exist and that public health recommendations continue to be in effect.

President Mahood moved to adopt the resolution. Director Henry seconded. There was no public comment. The motion passed 5-0.

New Business

Possible Consolidation with Big Basin Water Company (BBWC)

District Manager Rick Rogers introduced this agenda item. On October 26, 2021, owners of the Big Basin Water Company (BBWC) requested in writing that the San Lorenzo Valley Water District explore possible consolidation with BBWC. The District has been providing emergency assistance on a limited basis to BBWC and its water customers since the CZU Wildfire seriously damaged BBWC’s water system. Most recently, on October 20, 2021, the District dispatched a repair crew to facilitate repairs in the BBWC water system after a mainline break caused a system outage.

The proposed motion for the Board to approve was carefully drafted to protect the interests of the District throughout the proposed joint exploration of a potential consolidation. It explicitly did not authorize additional expenses for consulting work such as engineering studies or reports that would be needed for a water system consolidation. It specified an emergency operating agreement in which BBWC would agree to cover costs incurred by the District (less the amount of grant funding obtained by the District to help cover such costs) with a view toward minimizing costs absorbed by the District during the consolidation process and any costs imposed on Big Basin residents, including any assessments or water surcharges imposed as part of a consolidation. It also required BBWC to agree to include the District in any negotiations involving the proposed sale of BBWC assets, and to cooperate in good faith with the District to ensure that any such sale includes appropriate protections for the integrity of the water system, including without limitation easements (including easements in the Company’s watershed) to protect water quality, water rights, and access to water facilities.

Rick noted that SLVWD is not in a position to operate BBWC’s waste management system, but the County has indicated its willingness to assume responsibility for this. County and state officials (along with many BBWC customers) have expressed support for consolidation.

Supervisor Bruce McPherson was present, and he said he knew that many BBW customers appreciated SLVWD’s consideration and assistance. His office has been in close contact with SLVWD and the state in efforts to work out a resolution, and he assured the Board that the County stands ready to provide resources to work alongside SLVWD on a potential consolidation. He said he believed this will benefit both BBWC customers and the sustainability of water for the whole valley.

Director Ackemann said SLVWD sees it as its responsibility to support all valley community members because a safe, healthy, reliable water supply is critical to basic quality of life. She emphasized, though, that existing ratepayers should not absorb the new costs that BBWC is currently responsible for. She also wondered whether a consolidation would decrease the rebuilding required of BBWC. Rick said the process is intended to find funding outside the District via grants, agencies, and BBWC customers. There is a lot of grant money available right now for drought response and for consolidation of smaller agencies into larger ones. Some legal work needs to be done first. He added that all the state requirements that have been placed on BBWC will be assumed by whoever takes over. Director Fultz asked about the need for another treatment plant, and Rick said the District would do an engineering analysis.

Director Fultz said his personal policy is that the District should do everything it can to support its neighbors during times of crisis. He was glad that the District has been responsive (both in providing assistance and in considering this request). He was also glad to hear that the District was looking for external funds, and he added that the District had learned things from previous consolidations. He noted that the District will soon be conducting a rate study, and he wondered whether it would be possible to include the possibility of consolidation. Rick said he would recommend this to the Finance Committee when they put the RFP together for the rate study.

Director Fultz said he thought the District needed to be very attentive to community concerns about a possible consolidation. Rick agreed saying that the number one question he hears from BBWC customers is that they want to know what is going on. Consolidation will only move forward with their support, so working with them is the District’s top priority. He was sure there would be pockets of concern.

Director Henry thanked Supervisor McPherson for promising to help. She also stressed the importance of getting people in Big Basin to understand that they need to put their support behind this. They need to know how much this is going to cost them (and they also need to know that the cost will only increase over time).

Director Smolley asked to hear Supervisor McPherson’s statement on the County’s ability to provide up-front funding in the next 60 days. Bruce said any such funding will have to come from state and federal sources. He said Assemblymember Mark Stone and State Senator John Laird are well aware of this situation, and he thought the District was in good position to get funding in the near term. Director Smolley asked if BBWC had any financial resources to cover any of the up-front costs. Rick said it was too soon to answer this; the District will sit down with BBWC once the Board approves moving forward.

Director Smolley also expressed concern over the lack of response from BBWC to the State re: April, 2021 and September, 2021 citations. He asked whether the District would become implicated and who is handling this. Rick said once the state knows that the Board is moving forward with consolidation, they would dial back on any citations (though they won't back off on water quantity and quality). He said the District will absolutely need money, and he said local leaders have been extraordinarily helpful (including Joe Serrano at the Santa Cruz office of the Local Agency Formation Commission (LAFCO)).

President Mahood said she was in favor of moving forward as she felt that, with the stipulations provided in the motion before the Board, the District was now adequately protected financially. She opened the floor for public input (limited to two minutes per speaker).

Mark Lee (Ben Lomond) said Rick’s proposal was excellent and should be approved.

Jeff Hill (Scotts Valley, also a member of the Budget and Finance Committee) suggested plugging the BBWC system into the Master Plan operational model to see how well it integrates. President Mahood agreed and said it made sense to include Forest Springs and Bracken Brae as well. She said the Engineering Committee will take this up, and will check with Akel Engineering to see what this additional work would cost.

Nancy Macy (Boulder Creek) cheered this development saying that so many BBWC customers are so concerned and grateful for SLVWD assistance. She admired Rick's careful and thoughtful recommendation and strongly supported it.

Julie Jennings (Big Basin) said she was a little concerned to hear "annexation" and to hear some Directors say they don’t want to use their current SLVWD funds on BBWC customers. She hoped that BBWC customers would then not be paying for the SLVWD Capital Improvement Program (to keep things fair).

Mike (Big Basin) said he lost his house in the CZU fire and was rebuilding but wanted to make sure that he wasn’t saddled with extra requirements in the potential transition between two different water providers (e.g., he is currently being required to provide 10,000 gallons of storage because BBWC cannot provide adequate fire flows). He also expressed interest in participating in any forthcoming working group on consolidation. President Mahood recommended that he email Rick Rogers, and Rick suggested that he also coordinate with Dave Reed at the County re: fire-flow for rebuilding.

Ann Thryft (Big Basin) said the current problems with BBWC are extreme, and consolidation seems like the only remaining option. She hoped the District would decide to move forward and said she would be happy to be on a steering committee.

Carl Desoto and his wife Sonya said they have been concerned with the lack of basic communication by BBWC. They don’t know whether water will be on or off at any moment, and they often find out about unsafe water via NextDoor. Their situation is dire, and they totally support consolidation. They asked how they will be communicated with during the consolidation. Rick said that the District is willing to work on this, but it won’t be possible to answer this question until the District takes the next step with the Moores (i.e., both sides signing an operating agreement under the conditions listed in the motion). He said that previous consolidations have had Steering Committees associated with them.

Dan Hughes (Big Basin) said everything he had heard about the merger so far had been very encouraging. He said the Santa Cruz Sentinel article on November 3rd had accurately described current issues and concerns. He wondered how customer support for the merger could be conveyed, given that there will be a contingent that is opposed. Rick said Jim Moore is supporting the merger, and this should help with old-timers. There will also be a LAFCO process. The District will set up a meeting with BBWC customers and Joe Serrano of LAFCO. Formal annexation will take about 18 months and is required because BBWC is outside SLVWD’s sphere of influence. President Mahood added that there will be plenty of public input as part of the LAFCO process.

Bruce Holloway (Boulder Creek) said that since the County is suing the District, Bruce McPherson is technically an adversarial party. He said his understanding was that the approximate cost for one house to acquire SLVWD service is $20,000 and that Olympia paid about $1 million for 50 houses. He hoped the State would provide substantial support. (Note: The current charge for connection of 5/8” single family dwelling to the SLVWD system is $10,577. Rick Rogers suggested that this fee would be waived given that BBWC customers would be contributing an as-yet-undetermined amount through an assessment.)

Jim Mosher (Felton) said he supported helping our neighbors and appreciated the efforts of Bruce and Rick to move this forward. As an SLVWD ratepayer, he wanted to hear directly from BBWC ratepayers, and he urged them to be more active in building consensus in Big Basin for the consolidation. He noted that SLVWD ratepayers, unlike BBWC ratepayers, are effectively owners as well. In Felton, he said, $11 million was raised for the merger with SLVWD (and customers of the prior system are still paying $600/year on that debt).

Allison Breeze (Boulder Creek) requested a response to the cost estimates referenced by the two preceding speakers. She said BBWC customers need to be aware of such figures very early. Rick agreed that this will be the top question on people’s minds. He said BBWC water rates are currently only 1/3 of SLVWD rates at present, but he didn’t want to suggest a number without an adequate basis for it. He said the District’s first priority would be to do engineering studies and to understand funding opportunities in order to come up with cost estimates. He said there would undoubtedly be some costs to homeowners.

Director Fultz asked whether BBWC was eligible for FEMA recovery support. Rick said he was being told that they are not. However, he thought SLVWD might possibly be able to exert political pressure to push for a late claim.

Director Fultz said BBWC ratepayers will ultimately have no other option than to fund the fire-recovery repairs themselves. He estimated main pipeline costs at $300 per foot and said he thought grant funding would be a necessity. He said SLVWD policy has been that everyone in the District helps to pay for the District’s main pipelines.

Director Smolley moved to direct the District Manager to proceed with exploring possible water system consolidation with BBWC subject to the constraints cited in the proposed motion. Director Fultz seconded. There was no further public comment. The motion passed 5-0.

Mitigation Agreement with PG&E

Environmental Programs Manager Carly Blanchard introduced this agenda item. The District was approached by PG&E in 2020 about completing a mitigation project through planting native riparian trees on one acre of riparian habitat along Zayante Creek on the District’s Olympia Watershed property. PG&E contracted with Ecologist Jodi McGraw to create a conceptual restoration plan for the approval by the State Water Resource Control Board. The plan involves removing invasive plants and then selectively planting trees and understory plants.

This is an excellent opportunity for restoration at no cost to the District and for developing a productive collaboration with PG&E. Not only will the District’s riparian habitat be improved but PG&E would agree to remove French Broom on other parts of the property. Cost estimates for invasive removal and maintenance on approximately five acres of land were determined by Jodi McGraw to be around $100,000 over five years.

Director Smolley said the Environmental Committee agrees with moving ahead on this. Directors Henry and Ackemann concurred. Director Fultz praised PG&E for being willing to enter into a public/private partnership, and he praised former Director Rick Moran for establishing the District’s policy of not using glyphosate to help control invasive species.

Speaking as a member of the public, Rick Moran read a statement of support, praising Jodi McGraw, Carly Blanchard, and the absence of pesticides.

Director Henry moved to authorize the District to enter into an agreement with PG&E as proposed. Director Ackemann seconded. The motion passed 5-0.

Draft Conjunctive Use Plan

Environmental Programs Manager Carly Blanchard introduced this agenda item. The San Lorenzo River Watershed Conjunctive Use Plan (CUP) has been developed jointly by the San Lorenzo Valley Water District (SLVWD or District) and the County of Santa Cruz (County) to identify opportunities for improving the reliability of the District’s surface and groundwater supplies through conjunctively managing these supplies while also increasing stream baseflows for fish in the San Lorenzo River watershed. The CUP was developed under a State of California grant (completed in June 2021) administered by the County. The grant’s deliverables included a CEQA Initial Study – Mitigated Negative Declaration (IS-MND), which was released for public review from July 28 through August 31, 2021. Given the level of concerns raised by the City of Santa Cruz Water District, the California Department of Fish & Wildlife, and the National Marine Fisheries Service, District staff and legal counsel are now recommending a more thorough CEQA analysis, through an Environmental Impact Report (EIR).

In addition to preparing an EIR that will help the District respond to public comments received on the IS-MND, the District will consider revisions to the CUP to better suit its operational needs. Immediate next steps include evaluating concerns raised during the public review period about the CUP IS-MND. Once direction is determined and concerns are properly addressed, the District will proceed with submitting water right petitions through the SWRCB. Staff’s goal is to file all associated water rights petitions with SWRCB in 2022.

Director Smolley said he fully supported moving ahead with the EIR, but he wanted the Environmental Committee to discuss the strategic implications. Director Fultz agreed. He said the District was trying to get to a point where it can use water from any source at any destination and thereby be more sensitive to the environmental habitat. He was disappointed that the District would now have to wait another year and spend another $150,000 to achieve this.

Director Henry asked for comment from Rick and from District Counsel Gina Nicholls. Gina recommended directing Staff to proceed with environmental review of the CUP, beginning with working with Rincon to develop a proposal that the Environmental Committee can provide input on.

President Mahood agreed with making this a two-step process. She said the Board clearly wanted to move ahead with the decision about the EIR tonight, if only to signal clearly to other interested agencies the District’s intent, but it first wanted to direct the District Manager to enter into a contract with Rincon (within his established purchasing limits) to outline proposed projects and alternatives for the Environmental Committee to assess. Rather than seeking a finished product from Rincon at this time, she wanted the Environmental Committee to be involved early in developing an updated list of projects to be assessed in the EIR.

Director Smolley noted that he would also like to know what the cost would be for the separate salmonid model and technical report prepared by a contract biologist, which Rincon will need for its review.

In response to a suggestion by President Mahood, Director Smolley moved to direct District Staff to proceed with environmental review of the Conjunctive Use Plan by preparing an EIR. Director Henry seconded. The motion passed 5-0.

Director Smolley then moved that Staff solicit a proposal for the additional biological analysis that would need to be done to support this EIR going forward. President Mahood seconded. The motion passed 5-0.

Lastly, Director Smolley moved to direct Staff to enter into a contract with Rincon, within the limits of the District Manager's purchasing authority, outlining proposed projects and alternatives for presentation to the Environmental Committee with the goal of arriving at an updated list of projects that will be assessed in the EIR. Director Fultz seconded. The motion passed 5-0.

Multiple Users Variance Renewals

District Manager Rick Rogers described this as an annual housekeeping agenda item. Staff recommended that the Board adopt a resolution approving a one-year variance for 30 specified parcels where the second home is unoccupied so that these ratepayers would not be subject to the higher multiple-user basic monthly fee. President Mahood made a motion to this effect. Director Fultz seconded. The motion passed 5-0.

Director of Business and Finance Services Recruitment

District Manager Rick Rogers introduced this agenda item. The District started recruiting for a new Director of Finance and Business Services in late July. The District has continually posted job offerings on a variety of local media sites and has so far received only a small number of applications, none of which meet the job requirements. Other agencies have reported similar recent recruiting problems. Rick reported that the Acting Director of Finance and Business Services was doing an excellent job, but the workload with FEMA and capital projects has overloaded Staff. He therefore wanted authorization to utilize an Executive Search Firm to help fill the position (though he said he wasn’t yet ready to resort to this). The estimated cost for an Executive Recruiter is estimated to be around $30,000, and the process is estimated to take approximately 16 weeks to complete.

Director Henry asked Rick to elaborate on his statement that he was still exploring other options. Rick said there was potential for in-house promotions, but this still needed further Staff discussion. Director Henry also asked about progress in filling the other high-level opening: Project Manager. Rick said it was proving extremely difficult to find a suitable candidate, but the Finance Manager position was his highest priority.

Director Fultz said he understood that this is part of a wider issue in the current job market. He asked if the Executive Recruiter would work on a contingency or for a fixed fee. Rick said it would have to be contingent, and Director Fultz asked that this specification be included in the motion. Rick agreed.

Director Fultz moved that the Board authorize the District Manager to procure the services of an executive search firm on a contingency basis. Director Smolley seconded. The motion passed 5-0.

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