SLVWD Board Meeting Summary
December 2, 2021
Mark Dolson
Highlights:
Board Officer and Committee Appointments.
Revenue Stabilization.
Next Board meeting is at 6:30 PM on December 7.
Preliminaries
President Mahood reported that the Board voted unanimously to give the District Manager a satisfactory assessment in the just-concluded closed session.
Four members of the public were present. There was no non-agenda-related public comment.
President’s Report
President Mahood reported that the Santa Margarita Groundwater Association (SMGWA) voted at its November 17th meeting to accept the final draft of its Groundwater Sustainability Plan (GSP). This plan will now be formally submitted to the State, where it has a good chance of being approved. A grant proposal (to fund recommended projects) will likely be submitted in about a year. Meanwhile, a 5-member Steering Committee has been established.
Unfinished Business
None.
New Business
Election of Officers
President Mahood entertained nominations for Board president and vice president for 2022. Director Smolley nominated President Mahood for a second term, saying that he appreciated the leadership that she has provided over the past year. Director Henry seconded.
Director Fultz spoke against this. He said it has historically been the policy that everyone has an opportunity for leadership. Therefore, while he appreciated the work that all of the Board’s past presidents have done, he said he would like to nominate Jayme Ackemann.
Director Ackemann said she wasn’t comfortable accepting this nomination at this time. She agreed that it was typical for leadership to rotate, and she requested further discussion as to why the Board was considering maintaining the same President.
Director Henry said one of the issues was that all Board members except for President Mahood are eligible to run for election in November of 2022. This is unusual and makes President Mahood uniquely available to devote full attention to leading the Board. She said this had happened in the past and District Manager Rick Rogers confirmed this.
Director Fultz argued that If Boards are trying to model leadership in the community, they really need to be more sensitive to the issue of rotating leadership. He said there have been Board presidents running for election in the past, and that nobody knows which Board members will choose to run for election. He thought that it would be feasible for someone to manage both leadership and campaigning simultaneously. He felt that President Mahood had done a good job and served the District well, but he was philosophically opposed to a second term.
Two members of the public spoke. Jim Mosher said he supported President Mahood’s nomination. He appreciated Director Fultz’s comments, but he felt that this was an unusual situation, and he concurred with Director Henry.
Elaine Fresco said she too supported President Mahood’s nomination. She said she was very impressed with Board meetings during the past year. She felt that President Mahood was professional and well prepared, and that meetings were effective. She said she would like to avoid hearing campaign speeches during Board meetings.
The motion to reappoint President Mahood passed 4-0 with Director Fultz abstaining.
President Mahood said the Board president has traditionally expressed an opinion about the choice of vice president. She expressed a concern about the extraordinary current demands on District Staff and about the amount of Staff effort (from Rick and from Legal Counsel Gina Nicholls) that goes into bringing new Board leaders up to speed. Her preference was therefore that everything remain the same (except for a change in the Board representatives for SMGWA). She therefore nominated Director Henry to a second term as Vice President. Director Smolley seconded.
Director Fultz again took exception. He said this was not the way to develop leadership at the Board level and that it ran counter to both historical and best practices.
Director Ackemann echoed Director Fultz’s concern with respect to not rotating leadership positions, but she argued that the current Board situation was highly unusual (in that four seats were up for election, including two seats currently being filled by appointed Board members).
There were two public comments. Cynthia Dzendzel supported Director Henry’s nomination. She said Director Smolley was making such an important contribution on the engineering front, and Director Ackemann was so valuable on the communications front, that the District could not afford to distract them with additional responsibilities.
Jim Mosher agreed with all of the preceding arguments in support of Director Henry’s nomination.
Director Fultz asked if there had ever been a situation where somebody had been either President or Vice President for three consecutive years (as would now be the case with Director Henry). Rick said he didn’t know, and Director Fultz commented that he found this to be quite unprecedented.
During further public input, Elaine Fresco asked if there had ever been a situation with four Board members up for election, and Rick said he didn’t know this either.
The motion passed 4-0 with Director Fultz abstaining.
Board of Directors Committee Appointments
President Mahood recommended only one change: replacing Director Smolley with Director Ackemann on SMGWA and designating Director Smolley as the alternate. She offered this as a motion, and Director Henry seconded. There were no comments from the Board or the public.
The motion passed 5-0.
Committee Appointments for Public Applicants
President Mahood reported that only eight applications were received, but that all eight candidates were impressive. She recommended that all eight be appointed to their first-choice committees. In addition, she noted that four belated applications were accepted for the Lompico Assessment District Organizing Committee (LADOC). She recommended approving these as well. She moved that the committee memberships be established as follows:
Administration:
Amanda De Jesus (continuing), Mark Dolson (continuing), and Monica Martinez (new)
Budget and Finance:
Jeff Hill (continuing), Olesya Kalinowska (new)
Engineering:
Ken Lande (continuing), Michael Murphy (new)
Environmental:
Alina Layng (continuing)
LADCO:
Norman Hagen, Mary Ann LoBalbo, Jamie Newton, and Toni Norton (all continuing)
Director Ackemann seconded. There were no comments.
The motion passed 5-0.
Local Agency Investment Fund Signature Change Resolution
Rick Rogers introduced this as a pretty straightforward bit of housekeeping. The issue was that signature authority needed to be updated to reflect the departure of former Finance Manager Stephanie Hill. President Mahood moved that the Board adopt the proposed resolution updating the signature authority to include Rick Rogers and (Acting Finance Manager) Kendra Reed for the Local Agency Investment Fund. Director Fultz seconded. There was no further discussion.
The motion passed 5-0.
Discrimination, Harassment, and Retaliation Prevention Policy for 2022
Rick Rogers explained that the Board was being asked to routinely reapprove the state-mandated policy established in November of 2020 so that training of Staff members could proceed.
Director Smolley moved that the Board approve the resolution adopting the policy as presented. Director Fultz seconded. There was no further discussion.
The motion passed 5-0.
Revenue Stabilization
Acting Finance Manager Kendra Reed explained that the District’s current rate schedule (approved in 2017) included a provision for revised revenue-stabilizing rates to potentially take effect if cumulative consumption during a water year declined more than 10% compared to the average for the prior three years. This trigger threshold was designed to ensure that the District’s target revenue stream could be maintained in the face of reduced consumption due to conservation or unusual weather patterns. It authorized the Board to temporarily adjust rates during periods of low water consumption. As part of this process, the District Manager was required to provide the Board with an analysis explaining the reason for the sales gap and with a proposal for expense reductions that might be employed to avoid the need for revised rates.
Kendra reported that neighboring water districts had experienced similar declines in water use, and this was presumably in response to persistent drought messaging (which promoted water conservation) and cooler weather this past summer (which reduced outdoor water use). It is also possible that re-opening of businesses and schools in response to partial lifting of Covid pandemic mandates may have decreased home usage.
She further reported that the projected impact, if water consumption continued at lower levels for the remainder of the fiscal year, would be a corresponding reduction in revenue totaling $613,000. Staff analysis suggested that $181,000 of this could be covered by savings resulting from the fact that three budgeted Staff positions have so far remained unfilled. In addition, delaying certain capital expenditures (water meter replacement and vehicle and equipment purchases) could account for another $288,000. This leaves $147,000 which would need to come from current reserves. Directing the District Manager to pursue this course of action would enable the Board to stop the Revenue Stabilization Rates from taking effect.
Director Henry, who serves on the Budget and Finance Committee, provided some further elaboration. She said the committee directed the District Manager to seek ways of reducing expenses, and he responded effectively. She also mentioned that the District will be receiving about $380,000 from the State in January to be applied to delinquent accounts. In addition, the District expects to collect about $50,000 from very old delinquent accounts via property tax.
Director Smolley asked whether the State was offering any grants for reducing wasted water. Rick said the District was looking into this. He said they would like a grant to pay for the labor cost of replacing old (and leak-prone) meters with the newer Badger meters.
Director Ackemann said she approved of the proposed course of action (avoiding a change in rates). She had some detailed questions relating to variations in water consumption, and she wondered whether the stabilization trigger should employ more time-averaging. President Mahood explained that the trigger already incorporated substantial time-averaging. She added that, aside from July and August, 2020 was not that unusual. The loss of 125 households (due to the CZU Fire) played only a small part in the reduced 2021 consumption (which is why the data from neighboring Districts remains relevant).
Director Fultz stressed that the proposed solution did not result from any actual reduction in ongoing operating expenses. Also, it would only be truly revenue neutral if the $430,000 mentioned by Director Henry were not already in the budget. Nobody could confirm that this was the case, and Director Smolley proposed that this question be answered definitively at a future meeting. [Note: the $430,000 in question was already budgeted for, so the projected $435,000 not already covered via savings on unfilled positions is, in fact, not being offset by unanticipated revenue.]
President Mahood said she was glad the District was not implementing rate stabilization at this time, but she was prepared for this issue to resurface. She proposed that in place of the Staff recommended resolution (which specified the exact dollar amount to be transferred from the reserve account), the Board could simply direct the District Manager not to implement rate stabilization at this time. She made this into a motion, and Director Fultz seconded. There was no further discussion.
The motion passed 5-0.
Consent Agenda
No action was requested.
District Reports
Director Fultz said he thought it would be helpful if some of the monthly status reports were to break out dollar amounts related to the CZU Fire. This would avoid the misleading appearance that revenue has increased. He also wanted to know if the refunding loan was now fully paid. Kendra confirmed this, and Bob applauded this news. He also described the table that Kenda put together tracking CZU expenditures and (future) FEMA reimbursements as a fabulous tool.
Director Smolley requested a brief summary of the Environmental Committee discussion the day before regarding the Conjunctive Use Plan. Environmental Programs Manager Carly Blanchard said that a comprehensive package would be brought to the Environmental Committee in January of 2022.
Director Smolley asked if there were any significant corrective actions resulting from the November Health Department inspection. Director of Operations James Furtado said there were only some small deficiencies.
Director Smolley requested a summary of progress on Badger meter replacements. James said he would add this to his report.
The meeting was adjourned at 8:10 PM.