SLVWD Board Meeting Summary
February 17, 2022
Mark Dolson
Highlights:
Revenue Stabilization.
Cross Country Pipeline Replacement.
Next Board meeting is at 6:30 PM on March 3rd.
Preliminaries
There was no closed session prior to the meeting. Seven members of the public were in attendance, but none of them offered any non-agenda-related public comment.
As part of the President’s Report, Director Ackemann reported that she recently met with Congressman Jimmy Panetta and invited him to take a tour of the District’s fire-damaged facilities and to view the progress on recovery. (The San Lorenzo Valley will be part of the district that he runs for in 2022.) Congressman Panetta visited today, and there was a wide-ranging discussion. Director Ackemann praised District Manager Rick Rogers and Environmental Programs Manager Carly Blanchard for their excellent contributions to the event. Board President Mahood also talked with the congressman about the Santa Margarita Groundwater Agency (SMGWA) which she currently chairs.
New Business
Revenue Stabilization Rates
This item was moved to the top of the agenda so that it could be quickly dispensed with. The Budget and Finance Committee had prepared a recommendation to implement Revenue Stabilization Rates, but District Manager Rick Rogers said more recent developments had led Staff to recommend that this item instead be returned to the committee for further discussion.
Director Fultz asked what had changed. Rick explained that water consumption (as inferred from production) has been recently increasing, and some projects have been put on hold by the State (specifically, Caltrans). He suggested that things were changing almost daily, so it seemed premature to raise rates. President Mahood added that the delayed projects will push associated spending out beyond the current fiscal year, so the plan is to perform a thorough budget review for the second year of the biennial budget as part of a more comprehensive reassessment. She noted that consumption may be increasing in response to a very dry January and warm early February. This new information surfaced subsequent to the committee meeting and was discussed with the Directors who serve on that committee. Director Fultz asked whether the District actually wanted consumption to increase (given its conservation goals), and Rick said the District was still in a drought but nevertheless had excess surface water available.
Director Smolley asked when the Board would have a chance to discuss this more fully, and Rick said he expected it to be on the agenda for the second meeting in March. Director Smolley then deferred further comment.
Director Ackemann asked Rick if he was saying that, while the District doesn’t want to encourage overconsumption, it currently has water available that will otherwise not be used, and it makes sense to use this. She thought it also made sense to delay increasing rates. Rick basically agreed.
Director Henry said she really didn’t want to implement Revenue Stabilization Rates because she recalled how unpopular this was in 2017, and she knew how angry people could become. However, looking at the numbers and knowing how difficult it can be to get out of a financial hole, she had supported the increase. She was glad that the District was now able to hold off.
Speaking as a member of the public, Cynthia Dzendzel asked to what extent using more of the currently available surface water would simply recycle it (via septic) back into the ground rather than letting it flow into the river. Rick didn’t explicitly address this. He said the District currently has Foreman Creek back in the system so the Lyon Treatment Plant is producing the bulk of the water. Clear Creek and Sweetwater Creek are not being utilized due to CZU Fire damage. There is no raw surface water storage, so only treated water is being moved up the valley.
Director Fultz suggested that the District might refine its guidance to relax the emphasis on conservation while the District is relying on surface water. Rick said this would be a very difficult message to expect customers to act on because people establish patterns of use that are hard to change; also, more complex messaging is inherently confusing. He thought it might make more sense to roll back to Phase 1 conservation. Director Fultz said it might still be possible to place a message on the District’s website.
Director Fultz reminded everyone that delays in capital spending, while they might allow the budget to remain balanced in a given year, were still not the same as savings. He urged everyone to bear this in mind and to focus on increasing the District’s operating margins. Rick agreed but noted that the District’s budget did include one position that it will not be filling (Finance Manager). The District is still hoping to hire a Project Manager.
Director Ackemann asked whether the deferred projects would also result in some savings in Staff time. Rick said this savings will be just a small fraction. The District doesn’t have operating costs that it can cut without impacting its ability to supply water. Director Ackemann also asked if the District had any more information to explain the increase in water usage. Rick said it did not, but water consumption is directly related to the weather (e.g., people working outside their house also use water for cleaning). He agreed with Director Fultz that consumption may still not return to previous levels.
Lastly, Director Fultz wondered whether the dry conditions could be inducing more leakage in District pipelines. Rick said he wasn’t sure about this. The District still has several redwood tank replacement projects in the budget that are moving ahead.
There was no formal Board action.
Cross Country Pipeline Constructability Study
The major item on this evening’s agenda was a two-hour presentation (and associated discussion) led by Jeff Tarantino of Freyer & Laureta (with Justin Semion (CEQA/Permitting), Mark Myers (Geotechnical), and Aaron Smud (Constructability)). Jeff reported the results of an extensive analysis (including SLVWD Staff) of options for replacing the Peavine and, especially, the Five Mile Pipeline destroyed in the CZU Fire of August 2020. This information was presented to the Engineering Committee on December 21, 2021; the Committee recommended presentation to the full Board of Directors prior to finalization of the report.
The presentation was far too long and detailed to capture in this meeting summary. The PowerPoint slides are included in the agenda packet on the District’s website:
The CZU Fire irreparably damaged two HDPE pipelines (Peavine and Five Mile) while also altering the surrounding forest and increasing the risk of long-term erosion. The goal of this project was to assess the District’s options for restoring its ability to access the raw water that previously flowed through these two pipelines. Candidate solutions needed to be responsive both to updated permitting regulations and constructability concerns and to expectations for improved operability and resiliency. The possibility of incorporating green energy technology was also examined.
Three different CEQA compliance pathways were investigated. In increasing order of rigor, these are: (1) Emergency Statutory Exemption, (2) Initial Study/Negative Mitigated Declaration, and (3) Environmental Impact Report. The preferred pathways remain to be determined, but it is clear that the Peavine and Five Mile projects will be treated separately and that Peavine will be the easier of the two and the first to move forward. Tree removal needs to take place in the fall, so the Peavine replacement could be constructed in the summer either of 2023 (if an Emergency Statutory Exemption is sufficient, and things move quickly) or 2024.
To assess potential replacements for the Five Mile Pipeline, four separate work groups were established with District Staff on each to evaluate issues relating to Safety, Constructability, Operations and Maintenance, and Stakeholder Impact. Both Success Factors and Risk Factors were explicitly identified and numerically assessed across a range of options involving the choice of pipeline material, construction methods, installation methods, and routing. In the end, seven alternatives were rated:
· 1. Above-ground HDPE pipe along the current route
· 2. Above-ground welded steel pipe along the current route
· 3A. Below-ground HDPE pipe with above-ground welded steel stream crossings along the current route
· 3B. Below-ground HDPE pipe with below-ground HDPE stream crossings along the current route
· 4A. Independent Clear Creek and Sweetwater pipelines along a new route with associated pump stations
· 4B. Common Clear Creek and Sweetwater pipeline along a new route with a pump station
· 5. Common Clear Creek and Sweetwater pipeline with an associated treatment facility along Highway 9
Each work group evaluated each alternative, and option 3B (with a pipe depth of 18”) received both the highest success score and the lowest risk score while meeting all four project goals. It would be feasible to implement this by removing trees in the fall (so as not to interfere with nesting season), restoring Peavine as soon as possible, and completing Five Mile over two years (so that the entire process would be completed over three years). Also, two green energy generation options were assessed (impulse turbines and inline pressure reducing valves), either of which would be capable of generating 10 to 30 kW (based on combined Peavine and Five Mile flows).
One final slide (not included in the Board Packet) showed the probable total project cost to be between $53.8 and $62.8 million. A lot of this would presumably be covered by FEMA, but this is considerably more than the $20 million that the District estimated for total fire recovery costs when it passed its $5 million Fire Recovery Surcharge in August 2021.
President Mahood thanked Jeff for a very informative presentation. Director Smolley, Chair of the Engineering and Environmental Committee, added his thanks as well. He also appreciated the attentiveness to the feedback provided by his committee in December, and he concurred with the materials and methods that the team is recommending (based in part on his own experience with the various options). He asked how likely it was that Peavine construction could start in the summer of 2023, and Jeff said it ultimately depended on the response of the relevant regulatory agencies. Director Smolley also wanted to know what ongoing access the District would have to Jeff’s team. Jeff said a follow-up agreement will be needed once a path forward has been chosen. Lastly, Director Smolley clarified a few details involving pipe depth and tree removal.
President Mahood commented that the estimated cost invokes serious sticker shock. She suggested that the District needs to know how much FEMA will actually reimburse and what the alternative cost (and environmental impact) would be of a cheaper solution. Aaron said the cost will vary with the trench type, but the “premium” cost of the recommended solution over the cost of above-ground HDPE pipe is somewhere in the range of $1.5 to $4 million. Unfortunately, he didn’t think there were any massive savings to be had here.
Director Fultz had a number of questions. He asked about the possibility of a hybrid approach that mixes various options. Jeff said this could be examined more closely in the next phase of the project. Director Fultz asked about earthquake resilience, and Jeff said the team had looked at this, and HDPE pipe was far more flexible than steel. Director Fultz asked whether a pipeline depth of 18” was really sufficient given that there was contamination to pipelines buried three feet below the ground during the Paradise Fire. Rick said this damage was due to steam entering the line, not from fire above.
Director Fultz also raised the possibility that the benefits of replacing the entire pipeline and reconstructing all the pre-fire intakes might not be sufficient to justify the required investment. He asked what percentage of the District’s water comes from each of its water sources. Rick said the team was not tasked with this question, but it could potentially be examined more closely. He said the District would likely be forced to draw more water from wells if it abandoned any of its water sources. Director Fultz asked if more water could be drawn from Clear Creek and Foreman Creek, given that Sweetwater Creek contributes less than they do. Rick said this would not be possible in the summer, and he added that the amount of water available from Fall Creek is constrained by Fish and Wildlife. Director Smolley agreed with Director Fultz that it was responsible to question the Return on Investment (ROI) for restoring all of the surface intakes. Rick reminded them that the cost of restoring the system would be heavily subsidized by FEMA and that the only alternative was to consume more groundwater. Director Fultz asked whether the future consolidation with Big Basin (which has its own surface water source) would change this. Rick said the District would be relying on this new source to serve Big Basin. Director Fultz also asked about the possibility of using water from Loch Lomond. Rick said the District was trying to increase its surface water use because there are additional operational costs associated with using groundwater. Director Ackemann agreed that the District needed to understand the cost of foreclosing any specific intake option going forward.
Director Fultz suggested that another possible option might be to reroute the pipeline to allow water to be pumped to a higher elevation so that it could then flow down to the Lyon Treatment Plant. Rick said this would involve reconstructing pipeline trail and might also require leaving District property. Director Fultz also suggested that FEMA might not pay for the preferred option (i.e., replacing the above-ground pipeline with a buried pipeline). Rick said the next step will be to sit down with both the CEQA legal team and the FEMA team. The big question will be what percentage FEMA will pay for fire-hardening the replacement pipeline (which, in turn, depends on how applicable codes are interpreted). It will take quite a while to sort this out.
President Mahood affirmed that the Board was not being asked for formal direction at this time. She said she didn’t think anyone was enthusiastic about above-ground plastic pipe. Rick said he simply didn’t want the team to spend time on scenarios that don’t attract Board interest.
Director Smolley asked if it was time for Rick to begin having a discussion with FEMA to get a feel for their questions. Rick said it was, and Director Smolley expressed his support. Rick said FEMA has its own internal environmental team which may dictate to the District. Director Ackemann mentioned that she learned today from Congressman Panetta that they are seeing some unusual delays in agency administrative processing, so the District should anticipate very significant delays.
Two members of the public provided input. April Zilber asked about a diagram in the report showing a narrow bench with only 6” to 8” of fill above. She asked what percentage of the pipeline would be on a narrow bench with shallow fill. Jeff said a quantitative estimate wasn’t available at this time, but the narrow bench provides an opportunity to reduce disturbance to the watershed. Also, sloughing of soil from above would be expected to provide additional cover.
Rick Moran expressed enthusiasm for the energy generation options but said he wanted to know how long it might take to recover the $1 million in incremental cost for this. Rick said it was too soon to say. President Mahood noted that the anticipated power generation of 10 to 30 kW is pretty small, and Justin agreed that the ROI was not great.
Director Fultz similarly agreed that the ROI won’t be there. He said the Board will need to engage in further discussion to determine how to finance the balance of this project (after FEMA reimbursements have been finalized). For example, it might make sense to consider a bond or a special assessment. He agreed with others that he didn’t want the District to build another above-ground pipeline due to ongoing fire danger.
Director Smolley urged Rick to not even mention the hydroelectric options to FEMA. Rick agreed that this was not in FEMA’s domain, but he said there could be other benefits to it, and this was the time to consider it. He predicted that it might take two or three appeals to arrive at a final figure from FEMA. Meanwhile, though, the District can move ahead on the environmental front. He said he was glad to have Foreman Creek back in use and also glad to have Emergency Use authorization for transferring water from Fall Creek. He said the entire matter will be brought back to the Engineering and Environmental Committee.
President Mahood said she hoped the focus would be on the underground HDPE solution. She noted that welded steel presents landslide and earthquake hazards along with increased environmental impacts and more difficult repairs. Rick agreed that buried HDPE was a very resilient solution. He said he appreciated the work of the entire team.
District Reports
Since it was now past 9:00 PM, Directors Fultz and Smolley agreed to email their questions to Rick. However, Director Fultz still wanted to know the status of the Felton Heights Tank Project. Rick said the District was having difficulty hearing back from the property owner (who lives in Palo Alto). Rick thought the District had met his list of concerns, but he still hadn’t heard from him. He promised to try to call.
Director Henry asked about a payment of $13,000 to Ernie’s Auto. Operations Director James Furtado said this was for a transmission replacement on one of the District’s dump trucks. He also mentioned that pipeline flushing will get underway in March.
There was no public comment.
The meeting was adjourned at 9:10 PM.