SLVWD Board Meeting Summary
April 1, 2021
Mark Dolson
Highlights:
Board vacancy to be filled by appointment.
Discussion on draft FY 2021-2023 Bi-Annual Budget.
Letter to PG&E approved.
Next Board meeting is at 6:30 PM on April 15.
Preliminaries:
There was one public communication. Jim Mosher commended the District for the recent environmental restoration work with AmeriCorps in the Felton Library Park.
New Business
Board Member Resignation / Board of Directors Vacancy
District Counsel Gina Nicholls introduced this agenda item. On March 18th, the District received an email resignation from Director To stating that she was resigning, effective immediately, for personal reasons. The resulting Board vacancy can be filled either by appointment or via an election. If the Board were to take no action by May 17th, the vacancy would be filled by the County Board of Supervisors. The Staff recommendation was to proceed with an appointment, posting a public notice on April 2nd and receiving applications until April 28th. This would allow for a decision to be made at the May 6th Board meeting.
Director Henry spoke in favor of appointing a new Director. By law, an election could not be held until November of 2021, and it would cost a significant amount of money. It would also deprive the Board of potential candidates who lack the financial resources to run a campaign. Meanwhile, the 4-member Board would be at risk of a 2-2 deadlock.
Director Smolley asked whether Board members could reach out to potential candidates for appointment to encourage them to apply. Gina said she was not aware of any rules about this. Director Smolley also wanted to know whether it would be okay for Board members to privately engage in discussion with individual applicants in advance of the May 6th meeting. Gina said this could run afoul of the Brown Act if, for example, multiple Directors contacted a candidate who was sure to be appointed. Director Smolley noted that three members of the public had emailed to support the appointment option, and he said he was also in favor of appointment. He moved to pursue an appointment, and Director Henry seconded. Director Fultz said he would offer his own comments following public input.
Former Director Rick Moran said he had been on both sides of the process of filling a Board vacancy. He expressed a concern about the appointed seat being held for only two years, meaning that four Board seats would be open in the November 2022 election. It would be preferable and customary for there to be a potential turnover of only three seats; this would provide for greater stability on the Board. Director Mahood said she understood this concern, but California law requires that the seat be up for election midway through the four years when someone resigns in the first half of their term.
Larry Ford spoke in favor of an appointment. He believed that good candidates would apply and saw no reason for additional delay or expense
Nancy Macy concurred with Director Henry that campaigns are too expensive; she supported an appointment.
Karen Holl said the Board decided a few months ago that an appointment made the most sense, and multiple qualified people applied. She favored an appointment
Jim Mosher also agreed with using the appointment process. Following up on Rick Moran’s concern, he asked how the two-year term would be handled in the November 2022 election. Gina said she would work on answering this.
Alina Layng said she supported the appointment process.
Director Fultz asked how a Director could violate the Brown Act by individually contacting candidates. Gina posited a scenario in which only one person applies, and they are likely to be appointed. Having two Directors contacting this candidate could violate the Brown Act, the same as if this occurred subsequent to an election. If there were multiple candidates, though, she characterized this as a grey area. Director Fultz wondered what issue there could be. Gina did not reply, and Director Fultz suggested that they might talk offline.
Director Fultz said his preference was still for an election (in November 2021) rather than an appointment. He argued that the electoral option was hamstrung by an undesirable lack of flexibility in the California government code (e.g., constraints on allowed election dates and lack of vote by mail), and he suggested that the state legislature should modernize the process. He also said he was unpersuaded by concerns about the cost of an election because Board members seemed to care about cost only in the one area where people have the potential for direct input into their representation and not with regard to other aspects of the budget. Lastly, he said that any subsequent vacancy would place the Board at risk for having a majority of appointed Directors.
The motion passed 4-0. Director Mahood said the request for applications would be issued April 2nd.
Unfinished Business
High Level Presentation of Biennial Draft Budget for 2021-2023
Director of Finance Stephanie Hill introduced this agenda item. This presentation was essentially a snapshot of a work in progress; this same material had already been considered in detail by the Budget and Finance Committee.
The budget’s revenue projections were based on estimated consumption levels which are projected to remain roughly the same (decreasing 2% each year). The only projected rate increases were from the fifth year of the current five-year schedule of increases and from the proposed fire recovery surcharge of $1 million per year over an upcoming five-year period.
The budget’s projected new expenses included one new hire (an Assistant to the District Manager), two promotions (for the Water Treatment Supervisor and the Environmental Planner), $100,000 for a required rate study, $40,000 for a “Going Digital” campaign, and an increase of 1000 new meters in each year ($11,000 per year).
Capital assets are still being worked on. When this work is complete, a fuller picture will become available. Also, $30,000 will be added for the November, 2022 election. Operating expenses are projected to grow from $8.5 million to $8.8 million to $9.2 million.
Director Smolley asked a number of detailed questions, most of which focused on resolving apparent discrepancies. Stephanie explained that the $90,000 increase in projected operating expenses was largely tied to the CZU fire. There was an increase in cost from switching from surface to well water after the fire; the budget also assumes a 7% annual increase in utility costs as well as increases in contract services due to natural disasters and PG&E power shutoffs.
Director Fultz asked about approved headcount. Stephanie said that there were 35 people in 2020-2021 and would be 36 in 2021-2022. District Manager Rick Rogers explained that the new addition was for a high-level management position (similar to what Soquel Creek has) to assist him in completing modernization efforts, outreach (e.g., improving the website), engineering (improving records, online capabilities, and scheduling of capital improvement projects – too many of which are currently becoming stalled due to lack of time), and updating procedural manuals. Over time he foresaw reductions in other expenses (e.g., by diminishing reliance on Legal Counsel for writing tasks). Director Fultz suggested that this sounds more like an Assistant District Manager. Rick said he has been looking at other districts and discussing this, and it is still at a draft stage. He didn’t believe it needed to be a supervisorial position, and he planned to reassess the need after two years. He identified a reduced reliance on consultants and an increased work product as two measurable outcomes that he was seeking. Director Fultz advised that increased headcount is typically a very long-term commitment that needs to be approached with great caution.
Director Fultz also sought more detail on planned installation of new meters. Operations Director James Furtado said that 500 meters were budgeted for the current year, but many were diverted to respond to an excessive number of dead meters. A lot of meters are starting to die, and the District is trying to get ahead of this. Director Fultz suggested that this was a foreseeable consequence of replacing about 6000 meters in three years about 12 years ago.
Director Fultz asked if the Board would be receiving a more detailed update on capital obligations. Stephanie said yes; Staff has already started pension and OPEB discussions, but these have not yet been included – they will be reviewed by the Budget and Finance committee in April and brought back to the Board in May.
Director Fultz asked how the District was accounting for the $3 million already spent on fire recovery. Stephanie said this will be included in the upcoming capital obligations along with projected FEMA reimbursement. Director Fultz asked if the $400,000 increase in operating expenses for the current year was due to the fire. Stephanie said the vast majority is. There is about $100,000 for legal work, and the remaining $300,000 is either fire-related or Covid-related. Director Fultz asked if any of these expenses were recoverable, and James said that some of them would be (e.g., water sampling and testing).
Director Fultz suggested that the District might want to account for the fire-recovery surcharge a little differently because part of it is supposed to replenish the reserve account. Stephanie said this was a little tricky because part of it will go toward paying down finance debt. She offered to talk with auditors about how to categorize this.
Director Fultz ended by reminding the Board of his concerns about increasing costs. He said he liked the multi-year budgeting approach, but the District was still not addressing the fundamentally unsustainable nature of its budget.
Director Henry said she appreciated Stephanie’s responsiveness to the Board and all the work that she has put into this. President Mahood said the plan for regular contributions to pensions is a big step forward.
There was no public input.
Letter to PG&E
Environmental Planner Carly Blanchard introduced this agenda item. A draft follow-up letter to PG&E was brought to the Board at the last meeting in response to a request by the Environmental Committee. Several modifications were recommended and subsequently introduced.
Director Fultz was not present for the discussion at the previous Board meeting, but he said the letter was fine before and was also fine now. Director Smolley said the new concluding paragraph addressed his concerns, and he moved that the Board approve the letter. Director Fultz seconded.
Alina Layng offered some very minor grammatical edits to make the presentation as professional as possible.
Nancy Macy said the letter was really important, and she was grateful for the work that was done on this. She noted that the Santa Cruz Board of Supervisors sent a formal complaint to the California Public Utilities Commission (CPUC) calling attention to the many logs left lying on the ground and creating a fire hazard. Other counties also sent letters of concern and complaint to the CPUC. She hoped that adding the voice of a public water agency would be helpful.
The motion to approve the letter passed 4-0.
Consent Agenda
Director Fultz dictated some minor editorial revisions to the Board Meeting Minutes for March 4th. These were approved by a vote of 3-0 with Director Henry abstaining.
District Reports
Director Henry raised a procedural concern about Board members posing detailed questions in the Board meetings and then, when Staff can’t provide immediate answers, receiving responses offline which the rest of the Board never gets to see. She suggested that these questions be put in writing and that the written answers be made accessible to the entire Board. She also raised a concern about the role that these kinds of oral questions play in unduly prolonging Board meetings. She noted that some staff members have been at work since 6:00 AM or 7:00 AM and that overly long meetings create a hardship both for them and for many members of the public. She also wondered, however, whether there could be Fair Political Practices issues with putting everything in writing. President Mahood said there is already a stated preference for questions to be sent in writing with answers to appear in the next agenda packet. She therefore didn’t see a problem except that the Board did want to avoid gratuitous questions.
Director Fultz suggested that Director Henry had raised a number of issues worthy of further discussion, but he recommended that this be conducted as part of a formal agenda item. He asked whether the Board could agendize this or send it to a committee. Meanwhile, he wanted to know whether the Board was saying that no questions can be asked in the meeting. President Mahood replied that the current guidance is only that written questions are preferred. Director Fultz responded that oral questions about reports could be very valuable for the community. He then asked about the meaning of the term “abandoned” in a report on the pipeline replacement work on California Drive. Operations Director James Furtado explained that a portion of the old 2” pipe that is no longer needed has been filled with mortar and left in place.
Director Smolley requested that future Operations Reports include the status of meter replacements. James and Stephanie offered to work together on providing quarterly updates. Director Smolley also questioned whether there was any need to include the hydrographs in the Board packet, and James explained that this was requested by a previous Board member. Director Fultz said he would be fine with a less detailed graphic presentation. President Mahood noted that the detailed data on Fall Creek has been helpful.
Beth Thomas said these meetings were really helpful for the community to learn about the water district. Cynthia Dzendzel said she appreciated the graphs and some of the data.
Director Smolley said he wanted to summarize the discussion at the most recent Santa Margarita Groundwater Agency (SMGWA) meeting. President Mahood noted that this was not on the agenda, so Director Smolley would have to limit himself to a brief summary with no discussion. Director Smolley then said only that the agency had wanted to set a stretch goal, but the Directors voted to require more information. Director Fultz suggested that a regular SMGWA report could be added to upcoming agendas, and President Mahood agreed.
Rick Rogers reported that the Boulder Creek radio station is now happily up and running with expanded coverage thanks to the District’s accommodation of their improved antenna.
The meeting was adjourned at 8:00 PM.