SLVWD Board Meeting Summary

December 19, 2024

Mark Dolson

Highlights:

  • FEMA Status Update by APTIM

  • Valley Gardens Mitigation Credi

  • Election of Board Officers

  • Board of Directors Committee Assignments

  • Committee Appointments for Public Applicants

  • Rate Assistance Program

  • October Finance Report

  • Camp Krem Easement Resolution

  • Next Board meeting will be at 6:30 PM on January 2, 2025

Preliminaries

All five directors were present.

There was no preceding Closed Session.

There were no changes to the agenda.

There were no public comments.

 

Presentations

Oath of Office

District Secretary Jen Torres administered the oath to Directors Alina Layng and Bryan Largay.  Both were appointed to the Board earlier in 2024 and were elected to full terms this past November.

 

FEMA Status Update by APTIM

APTIM is the consulting firm that is assisting the District in dealing with FEMA.  Brandon Kanatani of APTIM provided a roughly 30-minute briefing on the basic process and the current status of FEMA reimbursements.  He presented summary charts for five separate events:

  • 4301DR.  January 2017 Severe Storms, Flooding and Mudslides.  $424,252.16 has been obligated, and $183,290.00 has been received.

  • 4308DR.  February 2017 Severe Storms, Flooding, Mudslides.  $8,590,029.12 has been obligated, and $256,003.00 has been received.

  • 4558DR.  2020 CZU Fire.  $1,130,389.75 has been obligated, and $1,101,841.51 has been received (but much more has yet to be obligated).

  • 4683DR.  Winter Flood (Dec22-Jan23).  $164,366.69 has been obligated, and $51,314.84 has been received (with more still to be obligated).

  • 4699DR.  Spring Flood (Feb23-Jul23).  $109,761.99 has been obligated.  Nothing has yet been received (with more still to be obligated).

FEMA payments flow to the District through CalOES, which introduces its own additional delays.  APTIM is continuing to follow up with CalOES on payment status.  There are also still some quite substantial projects that are not yet at the FEMA “obligated” stage.

Directors Fultz and Smolley commented that Brandon’s report was helpful, but it failed to address the most important questions for the District: how much has SLVWD already spent (or committed to spend), how much of this has SLVWD received reimbursement for, and what are the best estimates for when the remaining payments will be received?  This information is essential for the District to manage its cash flow.  Brandon said he expected to provide further reconciliation details in February.

Director Smolley also asked about a portion of Brandon’s presentation that talked about FEMA support for hazard mitigation.  He asked Brandon what recommendations APTIM has for the District.  Brandon said SLVWD either needed to adopt the County’s guidelines or adopt its own.  He said he could put together a one-page summary for the Board and Staff.

There were two public comments.  Karen Vitale of Forest Springs asked whether FEMA’s obligated funds were potentially at risk (e.g., due to insufficient FEMA resources).  Brandon said FEMA asks all applicants how much money they anticipate needing the next one or two quarters, and it puts this amount on hold.

An unidentified individual asked if SLVWD gets additional assistance from the State and whether Brandon’s slides showed only the federal obligated amount.  Brandon said these were mixed together, and this information would become available.

 

Unfinished Business

Valley Gardens Mitigation Credit

Environmental Planner Chris Klier introduced this agenda item.  In conjunction with the Valley Gardens development project in Scotts Valley, Robson Homes previously approached the District with an offer to purchase up to 15 acres of Sandhills habitat to partially satisfy requirements for off-site environmental mitigation.  At the Engineering and Environmental Committee meeting on April 16, 2024, the committee endorsed this opportunity and directed Staff to ensure that District costs were covered by the Robson Homes payment.

 At the July 18, 2024, Board of Directors meeting, the Board provided feedback on potential problems with the draft agreement, and Staff subsequently worked with legal counsel to develop an updated version.  Section 3 now requires Robson Homes to pay their pro rata share (still 22%) of actual costs incurred by the District in its efforts to obtain the Expanded Habitat and in processing and obtaining all required governmental permits and approvals.

Chris summarized the current agreement by saying that the District will provide up to 15 acres depending on what Fish and Wildlife determines is necessary.  With no agreement, the District will continue to meet its current requirement to mitigate 40 acres at a cost of $3.05 million.  With the agreement, the District will mitigate 50 acres at a cost of $3.8 million, but the District’s total cost will be just $1.42 million, thus saving $1.63 million.

Director Smolley asked if Robson was purchasing 10.5 acres from the Conservation Bank in addition to the 10.5 acres it was purchasing from the District.  Chris confirmed this.  Director Smolley asked how many acres the District will have left for future mitigation.  Chris said the District has 95 acres of sandhills, 80-85 of which are suitable for this type of mitigation.  Lastly, Director Smolley asked if the District can complete the work within the required 18 months, given the required Fish and Wildlife review process which the District can’t control.  Chris said failure to complete in 18 months would trigger an early payment.   Environmental consultant Jodi McGraw added that there is no statutory timeline, but 18 months was reasonable.  A Robson representative said they could extend beyond 18 months if necessary because they could initially rely on a different mitigation purchase.

Director Fultz asked if the District had done additional mitigation on that property, aside from the Probation Tank.  Chris said it had done a smaller area for PG&E on its Olympia Watershed.  Jodi added that the agreement allows the District to mitigate the Probation Tank and two other tanks.  Fish and Wildlife has indicated that Robson is a low-effect project, so the reporting requirements match this.  The Robson representative added that they had recently signed an agreement with Olympia Quarry for an additional 40 acres.

There was an extended exchange in which Director Fultz worried that Robson could still potentially back out of the agreement after the District executes the required agreement with the Land Trust of Santa Cruz.  Robson’s position was that they would have no incentive to do this.

Director Layng said she saw this as an environmental and financial win.  She thanked everyone involved in developing the agreement (Carly Blanchard, Jodi McGraw, and Chris Klier) and urged a vote in favor.

Director Largay agreed.  He described this as a fantastic opportunity for the District.  He said having a cost-share partner is a windfall, and monetizing acres of pristine sandhills habitat is manna from heaven. He concluded by saying all of his prior concerns had been addressed, and he saw no reason to delay further.

There was one public comment.  Former Director Rick Moran of Ben Lomond complained that the per-acre-payment to the District, though now higher than originally proposed, was still below market price.  He said the Valley Gardens project will destroy 10 acres of sensitive sandhills habitat.  The developers already have an agreement with Zayante, but they still need more acres.  He was concerned that SLVWD was being used as a safety net and would be dropped if Zayante were to come through with more acres.  He said the current agreement allows Robson to terminate at any time, and they should be required to pay a sizable penalty to discourage them from doing this.  Also, he suggested that Director Largay might want to recuse himself based on his connection to the Land Trust of Santa Cruz.

Director Largay said he had consulted legal counsel Christina Pritchard, and she had advised him that there was no conflict of interest.  Mr. Moran argued that he was concerned about the appearance of a conflict, and Director Fultz added that it was important to at least make everyone fully aware of this.

Director Fultz moved to authorize the Interim General Manager to execute an agreement with Robson Homes to provide off-site Sandhills mitigation for a lump sum payment to the District at $5.20 per square foot for approximately 10 ½ acres or other such number of equivalent acres of habitat as required by the United States Fish and Wildlife Service.  Director Smolley seconded this.  The motion passed 5-0.

New Business

Election of Officers

President Hill introduced this agenda item.  He asked for nominations for Board President, and he noted that he himself would not serve another term. 

Director Layng nominated Director Smolley.  Director Smolley said he would accept.  Director Largay seconded.  There were no public comments.  The motion passed 5-0.

Newly installed President Smolley assumed responsibility for leading the meeting.  He nominated Alina Layng to be Vice President.  She accepted, and Director Hill seconded.  There were no public comments.  The motion passed 5-0.

 

Board of Directors Committee Appointments

President Smolley introduced this agenda item.  He commented that committee assignments for directors (including the choice of directors to represent the District on the Board of the Santa Margarita Groundwater Association) had traditionally been addressed at the Board meeting following the appointment of the new Board President.  This being said, he revealed that he was thinking of Directors Fultz and Hill for the Administrative Committee, Directors Largay and Hill for the Budget and Finance Committee, and Directors Layng and himself for the Engineering and Environmental Committee.

Director Fultz said he was declining to serve on the Administrative Committee based on a recent precedent in which Director Largay declined to serve on that same committee.   He said he was far better suited to serve on the Budget and Finance Committee, and he was being repeatedly denied this opportunity.  He followed up by suggesting that the Administration Committee might not even meet, and he didn’t want to be appointed to a non-operational committee.  President Smolley said he expected the Administration Committee to meet (for example, to address the District’s lack of a policy with regard to consolidations).  Director Fultz continued to argue that the mission of the Administration Committee had become ill-defined, but it wasn’t clear exactly how he was proposing to address this.

Director Largay observed that, while it was true that he had declined to serve on the Administration Committee, he had not been compensated with a seat on a different committee.  He proposed that Director Fultz could similarly opt to serve on no committee.  Director Layng volunteered to serve on the Administration Committee, and President Smolley then revised his stated preferences accordingly: Directors Layng and Hill for Administration.

There was one public comment.  An unidentified individual voiced agreement with Director Fultz.

Director Layng moved to approve President Smolley’s proposed committee assignments, and the motion was seconded.  The motion passed 4-0, with Director Fultz abstaining.

Committee Appointments for Public Applicants

President Smolley introduced this agenda item.  He noted that 16 members of the public had applied to serve on Board committees, and this was a far greater number than he had previously experienced.  Consequently, he recommended that Board members develop and submit their recommendations offline unless Board members felt prepared to tackle this immediately.

Director Fultz said his priorities were to accommodate people’s stated preferences and to give preference to new faces.  He said there were some members of the public who have served for many, many years, and it might be time to bring in some new faces.  He also suggested that delaying the appointments might delay the January committee meetings.  President Smolley thought there would still be time for committees to meet in the third week of January.

Director Layng suggested that the Engineering and Environmental Committee might merit more than three public participants.  President Smolley pointed out that larger committees in the past sometimes had trouble getting a quorum.  The Board Policy Manual currently says each committee should have up to three public members.

There were a number of public comments.  The first commenter said it would be nice to know what the Board planned to do, and President Smolley said it planned to review the submitted information.

Jim Mosher of Felton said he was in favor of separating Engineering from Environmental.  He said there were a lot of qualified citizens who want to get involved, and concerns about overlapping discussions (which is what motivated the Board to combine these two committees) could also be raised with regard to the Budget and Finance committee.

Francis Cleveland said he was an Electrical Engineer in the power industry (including renewable energy) and had consulted for many years.  He tended to agree with splitting the Engineering and Environmental Committee.  The expertise of the people can be quite separate.

Mark Dolson of Ben Lomond said Director Fultz was right to see value in new faces, but there were also important benefits to retaining familiar faces who could provide continuity and institutional knowledge.  He added that this was particularly relevant to his application to continue serving on the Administration Committee.

Tim Mitchell said he had lived here since 1988 and would like to get involved and be one of those fresh faces.  He retired in 2023 after 40 years in the tech industry.  He said he didn’t know what happened to his application.  President Smolley asked District Secretary Jen Torres to follow up with Mr. Mitchell.

Ken Landy said he served on the Engineering Committee before the pandemic and was in favor of returning to the separate Engineering and Environmental committees, but he recommended letting a representative from one make a presentation to the other when appropriate.

Director Fultz observed that the motivation for combining the Engineering and Environmental committees was to protect Staff time.  He said he thought it still made sense to split them, but it wasn’t without a cost.  President Smolley said he served on both committees, and he found a lot of repetition.  It was hard to get follow-up from one expertise to the other.  Still, he said, he was not opposed to splitting.  Director Layng said she was originally against the combination, but she now saw the benefits of uniting the two committees.  Still, she would love to see the two of them split again.  Also, she commented that people who have shown up for a long time should be appreciated and valued for their commitment.  Director Largay said he didn’t have a strong opinion about the Engineering and Environmental committee, but he recognized that every committee meeting required hours of Staff preparation.  He said he would wait until the District was fully staffed to increase the number of meetings.  He did want to capitalize, though, on the number of qualified applicants.  He suggested possibly adding substitutes or non-voting members.

President Smolley said he heard interest in possibly splitting the Engineering and Environmental Committee.  For now, the Board Policy Manual says there are to be three members for each committee, so he asked each Board member to select three public members for each of the three committees.  He asked Board members to submit their selections by the end of the day on Monday December 23rd.  Public committee assignments will be made at the Board meeting on January 2nd.

 

Rate Assistance Program

Finance Consultant Heather Ippoliti introduced this agenda item.  The Board was being given the opportunity to approve a resolution to revise the Rate Assistance Program (RAP) to formally include the following changes:

  • The amount of the monthly discount was increased from $15 to $20 this past January.

  • The annual budget for the RAP was increased from $25,000 to $28,000 in November.

  • The definition of “good standing” needs to be updated as the District no longer turns off water for nonpayment.  It was suggested that ratepayers could not participate in the RAP if they had been more than 90 days past due in the preceding 12 months.

  • The “District Manager” title needs to be changed to “General Manager.”

Heather reported that these changes were discussed at the most recent Budget and Finance Committee meeting, but there was no consensus recommendation.

Director Layng had some detailed questions about the budget.  Heather said she was proposing that the Board determine the amount they will fund the program for when the annual budget is adopted.  This will limit the RAP enrollment unless the budget is increased.  There is no mechanism for “rolling over” unspent funds to the next year because this is only a budget, not a dedicated pool of money.

Director Layng specifically objected to proposed language for the updated definition of “good standing.”  She said she couldn’t support a stipulation that the ratepayer could not have incurred a 90-day delinquency in the past 12 months.  Director Hill asked when the 90 days would begin, and Heather said it was 90 days from the payment-due date.

Director Fultz said the Board had received a few comments from the public about “good standing,” and there was a long conversation about this when the policy was first drafted.  He agreed that those people most in need might be most in arrears, but the question was whether there was some way that people could game the system.  He said he didn’t know of a great solution. 

Director Fultz said he would be voting against the proposed revision due to a more fundamental objection to the RAP.  He said the program depended upon non-ratepayer revenue (to avoid Proposition 218 restrictions on how this money can be spent), and these funds were critically needed for helping to pay off loans and other construction-related activities.  He said there was no original expectation that the RAP budget would continue to grow, but there were now people in the community who wanted to make the discount hundreds of dollars in size.  Director Fultz said these kinds of programs tend to get bigger and bigger, and the real solution was affordable rates.  He said that if the State wanted to treat affordable water as a basic human right, it was the State’s responsibility to provide the necessary funds.

President Smolley said he had looked at all the email comments, and he believed that some restriction was needed.  The District isn’t turning off the water – it just won’t compensate ratepayers if they demonstrate a failure to pay.

Director Largay said he agreed that the District should stop offering assistance if someone is more than 90 days past due, but he viewed this as an incentive for the ratepayer to get current.  In contrast, prohibiting re-entry into the RAP for 12 months after such an incident would corrupt this incentive.  He didn’t think people would be motivated by a reward one year later.  He thought the goal should simply be to get them current right now.

Director Layng agreed.  She said she didn’t like telling people they weren’t worthy of re-entry into the RAP for 12 months.

Director Fultz said the District would then have to decide what to do if someone drops out of the RAP due to a 90-day delinquency and then wants to rejoin the RAP at a point when there are no longer any budgeted openings.  Director Largay suggested that such ratepayers should be eligible to reapply but not guaranteed re-entry.  President Smolley agreed.  He asked Heather to make this change and bring this back to the Board on January 2nd.

There were two public comments.  Cynthia Dzendzel of Felton said she had emailed Heather asking for data on the current use of the RAP.  She also wanted to know if it was possible for ratepayers or others to donate to the fund for this program (and whether these donations could support increased enrollment).

Interim General Manager John Kunkel said there were some mechanisms, like Valley Churches United, that already accommodate donations.  He said it was easier to have people donate to a 501c organization and also easier for the District’s bookkeeping.  Director Fultz added that an organization could also set up their own 501c3, and he encouraged this.

Jim Mosher of Felton said he appreciated appreciate the proposed change and the budget increase.  He said he would hope that the budget would be increased again if more people apply, as he saw no danger of this becoming a large expense.  He encouraged the Board to continue to try to help those most in need.

October Finance Report

Finance Consultant Heather Ippoliti introduced this agenda item.  Heather said her most recent report contained financial information as of and for the four months ending October 31, 2024.  The District has a current cash balance of over $12 million, 84% of which is in the form of unrestricted funds.  With 33% of the fiscal year elapsed, the District has received 32% of the budgeted revenue (10% greater than last fiscal year) and spent 38% of the budgeted non-capital expense (14% greater than last fiscal year).  Heather called attention to the news that the District’s bond proceeds have now been entirely spent.  There is still a remaining balance for the Certificate of Participation funds, but she expects this to be spent over time.  The November numbers will be presented at the second meeting in January.

Director Fultz had three questions.  First, he asked if the Board would need to pass a resolution updating the designated projects for the 2019 loan.  Heather said she didn’t think this was necessary or advisable.  She said the Redwood Park Tank is on the list for the $14.5 million bond.  Updating the list would require bank approval, and the District has far exceeded the original three-year time frame, so it would be preferable not to pursue this.

Second, Director Fultz noted that spending was trending higher than budgeted, and he asked if the salaries and benefits variance was projected to continue.  Heather said spending could increase if, for example, a Finance Director were to be hired.

Third, Director Fultz asked about the source of the $7.8 million in anticipated capital funding.  Heather said this included both FEMA and other capital grants.  Director Fultz suggested listing FEMA funding separately in the future.

 

Camp Krem Easement Resolution

Environmental Planner Chris Klier introduced this agenda item.  He explained that Camp Krem in Boulder Creek owns property abutting the District’s Peavine Pipeline, which is being reconstructed to partially restore the District’s surface water supply in the wake of extensive 2020 CZU Fire damage.  As part of the Peavine Pipeline Replacement project, the California Conservation Corps have utilized Camp Krem for camping and built a Pipeline Access Trail on their property.

To receive FEMA reimbursement for the pipeline project, as well as to ensure future District access to the Pipeline Access Trail, the District would like to record an easement with Camp Krem.  The easement will be approximately 0.3 miles long and 20 feet wide and will provide the District access to the Pipeline Access Trail in perpetuity, allowing access to operate, maintain, and repair the pipeline.  Camp Krem will receive $3,000 in compensation for the easement, or 10 cents per square foot, which is a reasonable price given similar recent easement valuations.  The District has a separate access to the Peavine Pipeline, also located on Camp Krem property, however this access is more dangerous to navigate.

All five Directors were satisfied with the proposed agreement.  There was no public comment.  The motion passed 5-0.

 

Consent Agenda

There was one item on the Consent Agenda:

a. Board Minutes from 12.5.24

The Consent Agenda was approved without further discussion.

 

The meeting was adjourned at 9:35 PM.