SLVWD Board Meeting Summary
June 21, 2023
Mark Dolson
Highlights:
Foreman Pressure Break Structure Design Project
Forest Springs and Bracken Brae Initial Study and Mitigated Negative Declaration (IS-MND)
Emergency Construction Management Contract for Quail Hollow Pipeline Replacement
Emergency Construction Management Contract for Quail Hollow Pipeline Replacement
Award Notification for Urban Community Drought Relief Program
Biennial Budget Fiscal Years 2023-2025
Ad Hoc Committee Report on Recruitment for District Manager
Next Board meeting is at 6:30 PM on July 16th
Preliminaries
There was no Closed Session prior to the meeting.
Director Mahood participated remotely.
There were no additions or deletions to the agenda.
There was no public comment on non-agendized items.
District Manager Rick Rogers requested a minute of silence on behalf of former District Engineer Josh Wolff who passed away suddenly on June 8th and who will be greatly missed both professionally and personally. Directors Ackemann and Mahood subsequently shared personal statements of sorrow.
New Business
Foreman Pressure Break Structure Design Project
District Manager Rick Rogers introduced this agenda item. He reminded the Board that the District’s North System surface water supply is comprised of water diverted from Foreman Creek, Clear Creek, Peavine Creek, Sweetwater Creek, and Cool Creek. This raw water is collected near the Foreman Creek Intake Structure and conveyed to the Lyon Water Treatment Plant.
This collection of raw water from diversions ranging in elevation from 1,330-feet down to 928-feet requires that a pressure break be provided prior to conveyance to the treatment plant. This reduction in pressure is accomplished in a pressure break structure which brings the collected water to a uniform atmospheric pressure. The previous Foreman Pressure Break Structure was destroyed in the 2020 CZU Fire and must be replaced prior to restoration of the raw water supply from Peavine Creek, Clear Creek, and Sweetwater Creek.
The District published a Request for Proposals (RFP) outlining the requirements for the Foreman Pressure Break Structure in April, 2023. Two proposals were received: Freyer & Laureta bid $119,400, and Sandis Civil Engineers bid $382,999. Staff recommended that the District accept the lower bid.
Director Fultz asked if anyone knew why there was such a large discrepancy between the two bids. Rick said he didn’t know whether former District Engineer Josh Wolff had conversations to explore this. President Smolley said the District had seen similar cost differentials between these two firms in the past. District Secretary Holly Hossack said Josh told her, “I guess Sandis didn’t want the job.”
Director Fultz also asked whether there was a FEMA deadline for completing this project. Rick said the District would request extensions from FEMA. He said FEMA understands delays due to things like environmental review; they just don’t want to see inaction.
President Smolley asked when the original structure was installed. Rick said it was about 25 to 30 years ago. The new structure is basically a huge concrete block with chambers and screens in it. The previous structure was a large concrete basin with a wooden roof. The basin sustained several stress cracks from the high heat. An adjacent wooden structure with a battery bank burned as well and created concerns about hazardous materials. The new structure will be as fire resistant as possible.
President Smolley asked whether an environmental review would be required. He also asked when the District would actually need this structure (since the treatment plant is currently receiving water only from Foreman Creek). Rick said this particular contract requires no environmental review because it is just for the design. He said the pressure break will be needed when Peavine Creek is added to the input. This is still in the future and will involve multiple meetings with Fish & Wildlife.
Directors Ackemann and Mahood expressed their support for this contract. President Smolley moved to direct the District Manager to enter into a contract with Freyer & Lauretta for an amount not to exceed $119,400. This motion was promptly seconded.
There was no public comment. The motion passed 5-0.
Forest Springs and Bracken Brae Initial Study and Mitigated Negative Declaration (IS-MND)
Environmental Planner Carly Blanchard introduced this agenda item. SLVWD is seeking to consolidate two small mutual water companies north of Boulder Creek. Forest Springs provides service to 128 residential customers, and Bracken Brae has 24 residential connections. Both companies were severely impacted by the 2020 CZU Fire and ongoing drought.
In 2022 the California Department of Water Resources awarded SLVWD a Small Community Drought Relief Program grant of $3.2 million to upgrade/install about 9000 feet of 10” and 12” water main in the existing SLVWD right-of-way; to install a new pumping station located within an easement at the corner of Ridge Drive and Big Basin Highway; to demolish the two existing 17,500-gallon existing concrete block Forest Springs water storage tanks and four 10,000-gallon Bracken Brae temporary water storage tanks; and to install one or two water storage tanks (with a total capacity of 120,000 gallons) at the existing Forest Springs tank site.
The District prepared a Draft Initial Study & Mitigated Negative Declaration (IS-MND) in compliance with the California Environmental Quality Act (CEQA) State Guidelines. The 30-day public review period commenced April 28th, 2023 and ended May 29, 2023. Four comment letters were received during the review period: from the State Water Resources Control Board, the California Department of Fish & Wildlife, the California Department of Transportation, Nicole Lauder Berridge (Bracken Brae Water Commissioner), and Karen Vitale (Forest Springs resident).
After the public review period, the District worked with Panorama Environmental, Inc to respond to all comments, create a Mitigation Monitoring and Reporting Program (MMRP), and finalize the IS-MND. Staff recommended that the Board adopt the IS-MND.
Director Hill clarified that no new expenditure is being recommended, and Carly confirmed this, saying Staff believes the District has responded appropriately. Director Ackemann asked about ongoing reporting requirements, and Carly said reporting would take place during construction. Director Mahood said she was pleased with where things stand; Staff responded well to comments and did a thorough job, and the District is definitely meeting the environmental requirements.
Director Fultz requested more detailed information on the required surveys and on expectations for removing existing pipes, as opposed to just capping them. Carly said multiple specific surveys (e.g., for bats and for bees) would be required, but the work will primarily take place on an existing roadway. Rick added that a biologist will only be needed for some very short sections, and Carly said crews will participate in a training program before the project begins. Rick said there may be some above-ground pipes that need to be removed. The District hasn’t yet seen the CalTrans permit.
President Smolley pointed out that the District was going above and beyond with regard to mitigating noise impacts. It is abiding by the County noise ordinance without taking an entitled exemption. Rick added that pump station will go the extra mile: it will be a concrete structure with noise-reducing mufflers. The closest customer is 70 feet from the pump station. Rick said noise may be an issue during construction but not during operation. He also confirmed to Director Fultz that similar noise reduction measures were planned for the Park Tank.
President Smolley moved to adopt the IS-MND, and this motion was promptly seconded. President Smolley then opened the floor for public comments.
Alina Layng of Boulder Creek said she lives near the pump house, and many of her neighbors have come to her with concerns. The study only considers generator noise but not normal operating noise. Also, this is now a noisy staging area. Pipe stacks have collapsed, and activity has ramped up further since the comment period ended. She closed with a number of questions: how loud is baseline operating noise going to be? How much is this costing? Is no other site available? Why isn't everyone being notified? What is the long-term use plan (e.g., will there be a lot of equipment moving in and out)?
Rick said these were all great comments. He explained that the IS-MND has nothing to do with staging of pipe and material in the big lot. A contractor on a different pipeline project rented this property because he couldn't find another storage location. The District has received complaints and is working with the contractor, but it had nothing to do with the contractor renting this property, and this has nothing to do with the consolidation project.
Rick said the pump station will be tucked away in a corner. Josh was working with the contractor on this, and the District will address noise and safety issues (along with the color of the pump station). He said the District contacted three other property owners with suitable locations in the same general area, and all refused to work with the District. The consultant Garrett Peterson subsequently explained that the IS-MND only considers generator noise because this is expected to dominate. The night-time standard is 60 dBA. Given the building design, cement with mufflers on the vents, the noise should be below this threshold. Carly added that the Redwood Park Tank was modeled at 45 dBA at roughly 25 feet.
Eric Martin of Boulder Creek said he lives 150 feet from the proposed pump station, and his wife has sleep issues. He said he had talked with Josh, and Josh couldn't come up with a number for the noise that will be produced by the pump house. He felt that the District was asking him to accept this plan on blind faith. Also, he said he had been told that the pumps can be running at all hours, and this presents a problem for people trying to sleep. In addition, he warned that there will be zoning issues based on the lot size, ultimately leading to litigation. Eric’s position was that this construction only benefits Forest Springs and Bracken Brae, so the pump house should be placed nearer to their properties. He said that, absent more information, it will be hard for his community to sign on to this plan. The IS-MND only focuses on short-term construction noise. Lastly, he stated that a lot of people that live in this area are nervous about coming to the Board meeting and presenting in public.
Rick said he would take Eric to a very similar pump station. He clarified that, while the pump can come on at any time, it won't run much more than four hours per day. He also pointed out that the pump station currently serving Eric is located next to someone else’s house. President Smolley asked if the four hours per day were likely to be at night, and Rick said it probably would (because this avoids peak-hour energy pricing), but he felt pretty confident that noise will not be an issue. He said the District has a pump station at Scenic and Highway 9 and another in Felton that have very similar designs. He promised to get engineering data from Sandis on operational noise. Eric responded that he was specifically concerned with start-up noise, and Rick said the valve opens slowly to address this. Eric reiterated his feeling that this process is creating a lot of disbelief and distrust in the community.
The motion passed 5-0.
Emergency Construction Management Contract for Quail Hollow Pipeline Replacement
District Manager Rick Rogers introduced this agenda item. He summarized the current situation on Quail Hollow Road by reminding the Board that the District installed a 12” distribution main under the road in 2022. During the storms of early 2023, 200 feet of roadway caved in and was temporarily covered with steel plates. On June 1, 2023 the District contracted with Anderson Pacific Engineering Construction, Inc. to perform an exploratory repair of the failed water line trench. The District now needs to prepare and submit a repair plan for the Department of Public Works (DPW) to approve, but this requires that a Registered Professional Engineer be attached to the project. In the absence of Josh Wolff, Staff is recommending the District contract with MME Civil and Structural Engineering for an amount not to exceed $50,000.
The Board agreed that replacement PE was needed immediately. President Smolley asked if there was any chance that the costs would exceed $50,000. Rick said he thought not. Director Fultz asked if the contract had already been executed, and Rick said it had, as the County was pushing to get this done. Director Fultz suggested that it would have been preferable for Rick to approve a $30,000 contract and then come to the Board for the remaining $20,000 (since Rick has authority to approve up to $30,000 on his own). Rick said his priority was to fully address this as quickly as possible since a contractor was already on the job, and Rick had to respond to a similar emergency relating to the next agenda item.
President Smolley moved to ratify the contract, and Director Fultz seconded this. There was no public comment.
The motion passed 5-0.
Emergency Construction Management Contract for Blue Ridge Tank Replacement
District Manager Rick Rogers introduced this agenda item. He described this as very similar to the previous agenda item: a replacement PE is needed on this in-progress project to replace a redwood tank along with about 8500 feet of pipeline. Rick was asking the Board to ratify an emergency contract with MME Civil and Structural Engineering in an amount not to exceed $50,000. Rick noted that the other 2021 CIP projects will not require a PE and can be handled by the District’s in-house inspector.
The Board agreed that this was the same scenario as the previous agenda item. President Smolley moved to ratify the contract, and this was immediately seconded. There was no public comment.
The motion passed 5-0.
Award Notification for Urban Community Drought Relief Program
Environmental Planner Carly Blanchard introduced this agenda item. The Department of Water Resources’ (DWR) 2022 Urban Community Drought Relief funding opened in December and proposals were accepted on a rolling basis until January 31, 2023, with priority given to early applicants. The program had a $3 million minimum award per applicant and a 25% non-state cost share. All awarded funds must be spent by December 31, 2026.
The District submitted an application for $4.5 million to replace five redwood tanks that are currently leaking and undersized with 120,000 gallon bolted steel tanks. The application also included one polyethylene tank that is undersized and was damaged in the 2020 CZU Fire. Each tank will cost approximately $1 million to replace, for a total of $6 million. Carly was happy to report that the District has been awarded the requested $4.5 million.
Director Hill noted that since the award notice was only received June 12th, the $4.5 million was not included in the District’s current budget (i.e., the next agenda item). Director Ackemann asked if a separate environmental analysis would be needed for each tank, and Carly said it would – this will be part of the District’s $1.5 million cost share.
Director Fultz asked if the District would be able to complete all this work by the end of 2026. Carly said there would most likely be an opportunity for an extension. Rick said some of these tank projects were already in progress, but each tank would probably take a year (including bidding). He said the District can begin environmental and geotechnical assessments for Highland and Blue Ridge now. The problematic tank site will be the Echo Tank due to a problem fitting on the current lot. Carly said the District would probably be able to begin spending the grant money in a month or so.
There was no public comment and nothing to vote on.
Unfinished Business
Biennial Budget Fiscal Years 2023-2025
Finance Manager Kendra Reed introduced this agenda item and provided a brief summary of the final draft budget. Operating expenses came in at $9.5M for FY23-24 and $10M for FY24-25. This includes a new Construction Inspector position and an Environmental Planner position that was not included in the previous biennial budget. Total full time equivalent (FTE) employee headcount for the District is 37 employees.
Operating revenues are budgeted to be $12.6M for FY23-24 and $12.7M for FY24-25 including the Fire Recovery Surcharge (FRS). There are no rate increases factored into this budget. Operating revenues make up the District's largest source of income, representing 87% of overall revenue. Of the operating revenue, the water basic and water usage fees generate over 97% of the operating revenue, not including the FRS. Surcharge revenues are $1M for both FY23-24 and FY24-25. All Surcharge revenues received by the District will be maintained in a restricted fund or account from which CZU Fire expenses will be payable.
The District’s anticipated capital expenses total $27.1M in FY23-24 and $11.8M in FY24-25. This is significantly more than in previous years and mainly due to repairing damage from the CZU Fire.
The biennial FY2023-2025 budget forecasts a decrease in reserves of $2.5M for FY23-24 and an increase in reserves of $4.2M for FY24-25. The decrease in FY23-24 is due to capital project expenses exceeding grant/FEMA funding and debt financing. The increase in FY24-25 is related to the anticipated FEMA reimbursements.
Current cost estimates for early 2023 storm damage exceed $4 million. California has secured a Presidential Major Disaster Declaration, which will make FEMA funds available for assistance in making repairs. It is anticipated that 75% of eligible expenses will be reimbursed by FEMA.
Director Mahood, Chair of the Budget and Finance Committee, thanked Kendra for responding to all the Board and Committee input, and she thanked Kendra and Rick for laying out capital expenditures over the next five years.
Director Hill, who also sits on the Budget and Finance Committee, agreed and said the most important message for him was that the District will be in trouble in two to three years because its loan margin will drop too low. This makes the current rate study crucial.
Director Fultz had a wide range of comments and questions, some of which were very detailed. Kendra assured him that a cash flow analysis and comparisons between budgeted and actual spending would both be forthcoming on a regular basis. Director Fultz’s two overarching concerns were ones that he has repeatedly emphasized: (1) the sustained (and, in his view, uncontrolled and unjustified) increase in operating expenses, trending well above inflation since 2016, and (2) the failure to establish a sustainable operating margin sufficient to support the estimated $5-6 million of annual required investment in infrastructure based on its expected lifetime.
With regard to operating expenses, Director Ackemann suggested that it would be helpful if the forthcoming rate study could provide more information about how other water districts are navigating increased operating costs because SLVWD is not alone in this experience. She pointed out that costs are being driven by increasing energy costs, increasing back-up generator costs, etc. Director Fultz argued that SLVWD still needed better control of operating expenses and higher operating margins independent of whatever systemic challenges it might be contending with. He said the District had failed to produce an appropriate five-year budget. Director Ackemann responded that Director Fultz had unrealistic expectations for how SLVWD, as a government agency subject to regulatory conditions, could behave. She said he was advocating for some unspecified path that he had faith in the existence of, but she needed to see evidence that this path actually existed. Director Fultz’s rejoinder was that he had been repeatedly told that it wasn’t his job to do budgeting. He urged the community not to give the District one dollar more in increased revenue until the District explains what it has achieved with the increased spending to date.
President Smolley said he was hearing two separate questions: (1) What are the ratepayers getting with the increased cost? (2) What are other districts doing? Director Hill said the question currently before the Board was simply: does this budget accurately represent where the District is financially right now? Director Fultz took issue with the focus on accuracy. He said the question was whether the budget sustainably addresses the District’s capital needs. Director Hill agreed that it didn’t do the latter, but he said it was up to the Board to separately mandate a change in direction.
Director Mahood agreed with Director Hill. She said it was unrealistic to think the District could somehow pivot on a dime and reflect this in a biennial budget. A major policy change on reserves would require detailed and extended discussion. With regard to the increase in operating expenses, she said it was pretty obvious where this was coming from. For one thing, during the time interval in question, the District added Lompico, and adding many users to an ancient system without increasing headcount is unrealistic. The other factor, as noted by Director Ackemann, was that the District is subject to a huge number of unfunded mandates such as the Santa Margarita Groundwater Agency. Another is increasing standards for water quality, environmental controls, environmental standards, and approvals. Director Mahood said that to think the District could magically have expenses rise only by inflation was ludicrous, and she wished Director Fultz would stop making this argument and present something somewhat more realistic. She also noted that the District was limited in what it can ask the rate study provider to do. The provider is undoubtedly aware of regional trends, but the current contract may not allow for Director Ackemann’s question to be explicitly included.
Director Fultz responded by saying that the Lompico addition did not fully explain the increase in staffing. He also clarified his position by saying he only wanted operating expenses to be limited to a particular multiple of inflation. He argued that even a 1.5% lowering of operating expenses would pay off significantly in the long run. He also insisted that he had never advocated for a sudden change and that he couldn’t be asked how he would control operating expenses if nobody else was showing how the District was going to fund capital improvement.
President Smolley opened the floor for public comment, and Jim Mosher, a Felton resident and a public member of the Budget and Finance Committee, spoke first. He said he appreciated what Kendra and Staff have done. With regard to operating expenses, he pointed out that a lot of Staff time showing up in the operating budget is actually going to capital projects (e.g., much of Carly’s activity). Hence, increased capital spending constitutes an additional reason for operational expenses to rise.
A second speaker suggested that there might be “outside the box” opportunities for improving operating efficiency (e.g., by installing solar panels, operating pumps at night, etc.). Director Hill responded that increased storage capacity allows for increased pumping at night. He said the District invariably replaces tanks with much larger ones, but it currently only has a couple days of storage, depending on the time of year.
President Smolley agreed with Director Hill’s statement that the current budget appropriately reflects the District’s current conditions. He said he appreciated all the work that had gone into preparing this, and he moved that the Board approve the resolution adopting the budget.
The motion passed 4-1, Director Fultz voting no.
Ad Hoc Committee Report on Recruitment for District Manager
Director Hill introduced this agenda item. He reminded everyone that District Manager Rick Rogers has announced his intent to retire and that Directors Hill and Ackemann have been charged with coordinating next steps. The two of them assembled a series of questions and criteria to assess candidate recruiting agencies. Proposals were solicited from 15 agencies, and three submitted valid responses. Directors Hill and Ackemann ruled out GMP Consultants because they are mostly based in Washington State. This left Ralph Anderson & Associates of Rocklin California and Koff & Associates headquartered in Berkeley California.
The Anderson proposal was for a fixed fee of $32,775 payable in four stages based on progress. The Koff proposal was for a fixed fee of $25,000. Directors Hill and Ackemann conducted hour-long calls with Anderson and with Koff. They were more impressed with the thorough approach described by the president of Anderson for recruiting someone who would be an excellent fit for the District. The Anderson president had a better understanding of SLVWD’s needs and community, and was planning to be more personally involved. Director Hill made a motion to award the contract to Anderson, and Director Ackemann seconded this.
Director Fultz sought to better understand the likely benefit of spending an additional $7000 on Anderson via some further questioning. He didn’t believe Anderson’s assurance that they could find a candidate in three months, but President Smolley noted that Koff made a similar claim (four months). Director Fultz asked if either Anderson or Koff shared a list of recent positions and how long it had taken them to fill them. Director Hill said they did not. Director Fultz asked what would happen if Anderson failed to fill the position, and Director Ackemann explained the staged fee structure. She said Anderson would continue performing until the position is filled. She also said Anderson would meet with the District to get input about possible local candidates.
Director Fultz asked about plans for involving the local community in the decision process. Director Ackemann said the president of Anderson asked about this, and Directors Hill and Ackemann suggested that they might want to introduce the two top candidates to the Board and to the community. Director Fultz noted that there was a more formal commitment to involving the community in the District’s previous search, and Rick noted that this process had become very political, with the Board and community disagreeing.
President Smolley sought confirmation that the District was prepared to meet all of Anderson’s expectations. He added that he was impressed with Anderson’s attention to utility-related experience. Director Mahood said she thought Directors Hill and Ackemann had done a good job of vetting and explaining their recommendation.
Rick suggested that, now that a recruitment effort was in progress, the Board should explicitly place the issue of transition on the agenda, particularly in view of the need to navigate the recent loss of the District Engineer and the District Counsel.
President opened the floor for public comment, and a resident of Ben Lomond opined that Rick deserves a smooth transition into retirement and that, consequently, there should be a plan for an interim District Manager.
The motion to award the recruitment contract to Anderson passed 5-0.
Consent Agenda
These items are deemed adopted if nobody pulls any of them for further discussion. The minutes for the Board’s May 18th and June 1st meetings were adopted without comment.
Department Status Reports
There was no discussion of Department Status Reports.
District Manager Rick Rogers announced that the regular Board meeting scheduled for July 6th has been cancelled.
The meeting adjourned at 9:00 PM.