SLVWD Board Meeting Summary

January 4, 2024

Mark Dolson

Highlights:

  • Comprehensive Financial Report for Fiscal Year 2022-2023

  • Alta Via Pipeline Replacement Project Change Orders

  • Board Committee Assignments for 2024

  • Next Board meeting is at 6:30 PM on January 18, 2024

Preliminaries

All five Directors were present.

There was nothing to report from the Closed Session prior to the meeting.

There were three public comments.  An unidentified speaker complained that the County had required him to install a 1” meter even though he barely used it.  Now, with the proposed rate increase, he will be paying an extra $32 per month.  He said the County was similarly imposing this 1” meter requirement on homes being rebuilt after the CZU Fire.  He described this as unfair and requested that it be added to a future Board meeting agenda for more detailed discussion.  Director Ackemann asked why the County was imposing this requirement, and Interim General Manager Brian Frus explained that it was necessary to ensure adequate fire-flow.  [This places increased demands on District infrastructure independent of the amount of water actually consumed.]

Elaine Fresco of Felton objected to receiving notices from the District for the rental units that she owns.  She said she paid the bills, but she shouldn’t be responsible for redistributing all the notices.  [Who actually casts the Proposition 218 vote in this case?]

Jim Mosher of Felton reported that the Friends of San Lorenzo Valley Water (FSLVW) citizens group has prepared an extensive FAQ regarding the proposed rate structure.  The group reviewed the District’s FAQ and meeting notice, and determined that these did not adequately address the impact on ratepayers, particularly for heavy users in summer months (because the District’s reliance on averages in its informational materials underestimates the full impact).  He emphasized that the intent of the FSLVW FAQ was not to criticize the Board or Staff because the group recognizes the many challenges they are facing.  FSLVW also encourages future examination of the Ratepayer Assistance Program (RAP) for low-income residents per the letter the group submitted to the Board in December.  The FSLVW FAQ is available online at:

https://www.friendsofsanlorenzovalleywater.org/hot-topics-rate-increase

 

New Business

Comprehensive Financial Report for Fiscal Year 2022-2023

Interim Finance Director Heather Ippoliti introduced Jonathan Abadesco of C. J. Brown and Co. to present the result of his firm’s annual review of the District’s financial status (for the year ending in June of 2023).  The review was conducted in accordance with relevant standards and principles.  It included both a limited set of spot checks (looking at receipts, disbursements, cash, payroll, and a handful of transactions) and a full audit of assets, liabilities, revenues, and expenses (with attention also to the potential for any fraud).  Interviews with Staff and Board were also part of the process.  The result was a Clean Opinion.

President Hill opened the floor for Board questions.  Director Mahood requested that two inaccuracies be corrected: (1) a reference to the “CZU Fire” as the “Boulder Creek Fire,” and (2) failure to mention 2022-2023 winter storm damage on the order of $5 million.  She also wanted to know why the annual Santa Margarita Groundwater Agency fee was classified as an “investment” when it is actually an operating expense being fully applied to staff and operations.  She said she had this same question a year ago, and Staff said they would look into this.  Jonathan’s explanation was that any interest an agency has with another agency is viewed as an investment according to accepted accounting principles.

Director Ackemann asked how long the District had been receiving these annual audits and whether it had ever received anything other than a Clean Opinion.  Director Fultz said it had been at least since 2016, and all opinions had been clean.

Director Smolley asked detailed questions both about a reported $600,000 increase in investment income and about a sharp drop in pension liabilities.  Jonathan explained that these were respectively due to an annual fair-market adjustment on investments and to a CALPERS adjustment.

Director Smolley pointed out an error in a reference to the Directors, and he asked if the District was better or worse off as a result of the year’s activities.  Jonathan said, in his opinion, the net position increased 7%, so the District is now better off.

Director Fultz took issue with the report’s failure to include certain additional details.  He also suggested that the estimated population of 19,500 was likely too low.  He guessed that it might be closer to 22,000.  He further called attention to the numbers for water produced and water sold.  These showed a 38% loss, some of which was presumably due to flushing but much of which was presumably due to leaks [or possibly winter storm damage].  He also noted that water sold was down 32% from its high in 2014, whereas water produced was down 17%.

Director Smolley followed up on this with a question for Brian.  He said the Board requested a water audit a year ago, and he asked if this was something the District could take on this year.  He clarified that this could be something pretty basic, and that Director of Operations James Furtado seemed likely to have some ideas about how to proceed.  Brian agreed to pursue this.

Director Mahood moved to accept the report with the changes she had previously requested.  Director Smolley seconded.

There was no public comment.  The motion passed 5-0.

Alta Via Pipeline Replacement Project Change Orders

District Engineer Garrett Roffe introduced this agenda item.  He said Staff was seeking Board approval for three change orders (#5, #7, and #8), totaling $333,851 (increasing the not to exceed contract amount from $2,201,213 to $2,535,064).  Two orders were for completed work, and one for pending work for a Caltrans project.

The Alta Via Neighborhood in Brookdale (including Alta Via Drive, Monan Way, and Prospect Ave) was damaged by the 2020 CZU fires, destroying above ground water mains in the area as well as several homes. The District’s currently ongoing project includes installation of a permanent pipeline beneath the roadway, which will replace the temporary fix in place since 2020. The current project also greatly increases the number of fire hydrants in the neighborhood.

The change orders were:

#5. Repair of Culvert on Monan Way

While saw cutting and excavating beyond the Monan Way slide, Anderson Pacific encountered a storm drain culvert which was not called out in the plans.  This storm drain had separated and was clearly no longer functional, which may have been a contributing factor to the slide itself. District staff instructed Anderson Pacific to repair the culvert to be operational. This extra work and materials amounted to $2,250.

#7. Temporary Bridge Installation on Monan Way

Since the slide risked damage to pipe and loss of access to the residences beyond if left as is, a temporary solution of steel I-beams and plates was welded together above the existing soil to allow for safe residential and construction access while diverting the pressure from the failing slope. The contractor has generously provided use of their own steel I-beams for this bridge, and the plates are being rented. This extra work and materials amounted to $29,254.

#8. Relocation of Water Main within Hwy 9

Several hundred feet of District water main within Highway 9 in Brookdale needs to be relocated from the northbound lane to the southbound lane to accommodate a Caltrans viaduct project. The relocation is connected to the pipe abandonment work included in the Alta Via project. This extra work and materials amounted to $302,347.

The Board had a number of detailed questions.  They were generally satisfied with the answers provided by Garrett and Brian.  Director Smolley moved to approve the change orders, and Director Mahood seconded.  There was no public comment.  The motion passed 5-0.

 

Board Committee Assignments for 2024

President Hill introduced this agenda item by saying he didn’t receive much in the way of specific requests from Board members.   His proposed assignments were included in the Board packet.   Director Fultz was worried that a response from him might have had Brown Act implications.  Brian suggested that directing future responses to the District Secretary would avoid this concern.

Director Fultz argued that, even though he understood the attraction of basing committee assignments on areas of expertise, he thought the Board would be better served by returning to its previous practice of rotating committee assignments over each four-year term so that Directors get a better feel for all aspects of District operations.

Based on the memo from President Hill, Director Mahood moved to appoint:

  • Ackemann and Fultz to the Administration Committee with the committee size set to three.

  • Mahood and Hill to the Budget and Finance Committee with the committee size set to four.

  • Smolley and Hill to the Engineering and Environment Committee with the committee size set to four.

  • Mahood and Smolley to represent the District on the Santa Margarita Groundwater Agency with Ackemann as an alternate.

Director Hill seconded.  There was no public comment.  The motion passed 5-0.

District Secretary Holly Hossack said she would email each committee member on January 5th, checking availability for some specific dates.  The committees will then meet and decide their monthly meeting time.  The first committee meetings will be in January.

 

Consent Agenda

These items are deemed adopted if nobody pulls any of them for further discussion.  Seven items were listed:

a. REDWOOD PARK PIPELINE REPLACEMENT PROJECT-CONSTRUCTION CHANGE ORDERS

b. FALL CREEK FISH LADDER REHABILITATION PROJECT-CONSTRUCTION CHANGE ORDERS

c. LONG SERVICE LINE AGREEMENTS

d. MULITPLE USER VARIANCE 2024

e. BOARD MEETING MINUTES 11.2.23

f. BOARD SPECIAL MEETING MINUTES 11.8.23

g. BOARD MEETING MINUTES 11.16.23

Director Fultz pulled items (a) and (b).  Director Mahood moved to approve the remaining items, and Director Fultz seconded.  There was no public comment.  The motion passed 5-0.

The Redwood Park Pipeline Replacement Project had two change orders for Casey Construction totaling $62,900.  Director Fultz asked why the cost for the first change order was so high, and Garrett explained that the contractor had to go back and dig in order to correct a previous specification error and establish the desired three connections.  Director Mahood moved to approve this change order, and Director Smolley seconded.  There was no public comment.  The motion passed 5-0.

The Fall Creek Fish Ladder Rehabilitation Project had five change orders for Syblon Reid Construction totaling $123,627.  Garrett said these were negotiated by Staff but not yet approved by the Board.  Brian said previous District Manager Rick Rogers signed off on the first change order, but Brian didn’t agree that this decision was within his signature authority.

Director Fultz recommended that this be examined by the Administration Committee as part of the District’s Purchasing Policy.  He felt there should be some flexibility, and he asked how the numbers were arrived at.  Garrett said contractors submitted pricing that they felt was fair, and the District reviewed this for questionable components.  Director Fultz said the Board had seen a lot of overages over the past year, and he suggested that the District should try to figure out how to deal with this most effectively.

Director Smolley asked for a little more transparency and detail in terms of the Staff’s review of submitted pricing.  Brian said that Garrett had rejected many requests but that Staff was trying to move quickly.

Director Smolley moved to approve the Fall Creek Fish Ladder change orders, and President Hill seconded this.  There was no public comment.  The motion passed 5-0.

 

District Reports

Brian said Staff would like to begin providing these reports quarterly (as opposed to monthly) beginning at the next Board meeting on January 18th.  There were no Board objections.

 

Written Communications

The Board received an email message on December 15th approved by 257 customers of Big Basin Water Company requesting that SLVWD immediately begin negotiating with the court-appointed receiver, Nicolas Jaber, to pursue a merger.  Brian suggested that he could draft a letter reiterating the Board’s decision: the Board is on record encouraging the County and the State to help secure appropriate funding.

 

The meeting adjourned at 8:10 PM.