SLVWD Board Meeting Summary
August 15, 2024
Mark Dolson
Highlights:
Reserve Policy and Working Capital
Board Officer Nomination
Committee Appointments
Raftelis Consultants, Inc. Agreement
Next Board meeting will most likely be at 6:30 PM on September 5, 2024
Preliminaries
President Hill, Director Smolley, and Director Layng were present in person. Director Fultz participated remotely. Director Largay was absent and excused.
There were four public comments prior to the Closed Session.
Bruce Holloway of Boulder Creek said he noticed two litigation items on the Closed Session agenda. He suggested that the public should be informed if these involve the Interim General Manager. With regard to the Closed Session agenda item concerning the appointment of a General Manager, he said he hadn’t ever seen Staff make such public criticisms of a General Manager, nor had he ever seen a General Manager employ such coarse language in a meeting. He recounted an incident this spring when Interim General Manager Brian Frus walked out of an Administration Committee meeting, and he talked about Brian’s failure to respond to repeated requests from Director Fultz to be shown the Department of Water Resources grant. Bruce said Brian seems to be engaging in domineering and withholding behavior, and he advised the Board to rip the band aid off and pull the plug on this failed experiment of hiring Brian.
Debra Loewen of Lompico Canyon agreed. She said she thought Brian had failed his audition, and the District should wish him well. If instead, the District renewed his contract, she said this would become an election issue in November. She said she was really alarmed by Staff comments about inefficiencies that affect all customers.
A Boulder Creek resident said she was deeply concerned by the Interim General Manager’s refusal to meet with Nicole Launder Berridge re: the Bracken Brae consolidation.
Nicole Launder Berridge of Bracken Brae said she twice expressed her concern about how the change in District leadership in November, 2023 affected Bracken Brae. She said the Board Vice President met with her team and assured them that Interim General Manager Brian Frus would not do anything to hold them back. Instead, she said she received two separate ultimatums from Brian, most recently in a meeting in April. On July 18th, she said Brian threatened her in the parking lot, saying that if she did anything to threaten his proposed Phase 1 project, the consolidation would not move forward. She said the District needed someone who wants to represent San Lorenzo Valley as a community public water system.
Brian offered a prepared response. He said he has lived in the San Lorenzo Valley for 27 years, owns a home in Felton, and feels great pride in, and has only the highest regard for, this community. He was part of a group that fought very hard to become part of SLVWD, and he was proud to step up and serve the District and the community. He described the public mistrust, the misunderstandings, and the falsehoods as deeply disturbing. He added that there was probably another story that he couldn’t publicly disclose because he didn’t want to argue about it. He said the District has a lot of challenges, and the only way to overcome these is if we are all rowing in the same direction. He said it was sad that we eat our own in this valley.
The Board then adjourned to Closed Session. The Public Meeting resumed at 6:30 PM.
President Hill reported that, in the just-concluded Closed Session, the Board did not reach any decisions, and it would return to Closed Session at the conclusion of the Public Meeting.
Director Fultz made a motion to add an item to the agenda. He argued that the imminent termination of the Bracken Brae FEMA grant constituted an emergency, and the agenda should be expanded to incorporate a study session focusing on the Bracken Brae and Forest Springs consolidations. Legal Counsel Barbara Brenner responded that the District had conducted a phone conversation the day before with Bracken Brae representatives, and appropriate steps were taken to allow Bracken Brae to work with Sandis so as to avoid loss of their FEMA funds.
Director Smolley said he would like to hear more about this and also give Bracken Brae a chance to comment. He said he wasn’t prepared for a study session this evening, but he would support a modified amendment limited to hearing about progress on the grant. This led to some further procedural discussion, and the Board voted 4-0 to delay any changes to the agenda until the conclusion of General Public Comment.
Nicole Launder Berridge of Bracken Brae said the deadline to complete construction using FEMA funding is 48 months from August 22, 2020. She said she met with the District’s Legal Counsel one day ago. She said she was Bracken Brae’s official primary point of contact with the District, and Staff had been told not to speak with her. She warned that the District could be in breach of contract.
Debra Lowen of Lompico Canyon said Bracken Brae can't afford to be waiting and waiting as prices go up. On a separate topic, she argued that, in approving the new rate structure with the higher basic service charge, the Board voted to reduce water consumption rates. She wanted the District to report the amount the District “gave up.” She estimated that this amount was very close to the amount the District has estimated it has lost due to the initiative.
Karen Brown of Boulder Creek said she had been going through the District’s Capital Improvement Plan, and she saw the Interim General Manager not complying with the Board with regard to Bracken Brae. She said her next step will be to scrutinize the District’s checkbook.
Cynthia Dzendzel of Felton read the following statement: We all want safe and affordable water. We depend on an elected Board and the employees of SLV Water District to achieve this outcome. The most effective and efficient team is one in which each member supports and feels supported by the others. Board members volunteer much of their time, and leave when their health or family take priority. Staff leave when they are offered better opportunities for advancement, retire or die(!). Rather than denigrate their service, our community should find ways to reward their loyalty and show appreciation. The public plays a critical role for a public agency. The Board and staff answer to ratepayers. We convey by our comments that we either support or condemn the creation of a hostile work environment and demeaning statements at Board meetings and in the media. There has been too much criticism and too little support for those trying to perform in the face of daunting challenges. Major challenges are still the need to make repairs due to the CZU fires, upgrade aging tanks and pipelines acquired through consolidations, harden facilities vulnerable to wildfire and arson, and increase the availability of water for future emergencies. Ratepayers must commit to making positive suggestions to the Board and staff at public meetings, and refuse to support anyone making hostile and demeaning comments. Please support those with a positive vision for the future of SLV Water District, and ensure that we will all have clean and abundant water. We can find a way to ease the burden on our struggling neighbors, without starving the District of needed revenues. Let’s work together, and keep the water flowing for all.
Eva Smelenzova, Forest Springs Board President, said she was grateful for Brian's outreach following the August 1st meeting and glad to have learned that critical activities are already underway. She wanted to know if the District was still on schedule for issuing contracts in October. Brian said it was.
Jeff Campbell of Bracken Brae said his community had a binding Letter of Intent with the District, but under new management the project had stalled, putting FEMA funds at risk. He said the Bracken Brae system was failing, and the District needed to act now.
Karen Vitale, a Forest Springs Board Member, said they were at a critical point in the consolidation activities, and she requested a standing agenda item to report on progress. She said the lack of transparency was polarizing the community. Also, she wanted to know if the October date for issuing contracts would be gated by the need to obtain a loan. Brian said the District needed to do something about financing in September, but he was limited in what he could say in response to a non-agendized item. This led to a further exchange in which Karen complained that they were still in the dark on many key points. President Hill said the Board would have to come back with an answer.
Penny Bryant of Forest Springs said she was very aware of the complexity of being on a Board. She echoed the request for the consolidation to become an ongoing agenda item until it is completed.
Joseph Martinez of Forest Springs said he strongly supported the consolidation. He said it was more than a simple interconnection: it includes a new mainline to new tanks and many new ratepayers. It expands SLVWD’s footprint, income, and potentially even treatment options. He argued that the District should prioritize funding, rather than performing the equivalent of a pocket veto. He also complained about cancelled meetings and said other organizations are required to publicly disclose the reasons for these. Legal Counsel Barbara Brenner said there was no requirement to disclose the reason for cancelling a committee meeting.
Bo Jenson of Bracken Brae said he agreed with Jeff Campbell’s comments. He said Bracken Brae had put in hundreds of hours, especially Nicole, and it was very frustrating that the SLVWD Board hasn’t acted on the results of this work. He said the Interim General Manager was ignoring them, their system was failing, and he didn’t understand SLVWD’s behavior.
Bill Berridge of Bracken Brae said his wife, Nicole, worked tirelessly and selflessly to advance the consolidation. She had great relationships with people prior to Brian’s appointment. Brian has stonewalled, been rude, threatened Nicole in the parking lot, and subsequently refused to work with her. He described Brian as unfit for this position, and he urged the Board to do the right thing and get rid of this guy now. He also described this as a wake-up call for Forest Springs.
Steven Lemke of Forest Springs said he wanted to support what others have said. He said he had been trying to rebuild since the fire, and delays, mistakes, and miscommunications have been a recurring them. He asked the District to please stop these.
Patrick Hanley of Bracken Brae said they had worked diligently with former District Manager Rick Rogers, the Board, and Legal Counsel to get the Letter of Intent. They understood that SLVWD was committed to helping to restore their water system. He said he was totally disappointed with the new General Manager, and there was no doubt that Brian should not be in this position. He said the District’s lack of commitment to helping was very disappointing.
Shandra Hunt said, as a community member, she had concerns about the Highway 236 corridor and its lack of firefighting capability. She saw this as a safety issue for all of the San Lorenzo Valley.
Jacquelyn Hendricks of Forest Springs said she wanted to reiterate what many have said. Her community was being deeply harmed by SLVWD’s lack of action.
Yvonne Linton of Forest Springs said she wanted to know the Board's commitment to moving forward and the reason for the delay. She said the consolidation will bring new ratepayers into the District, and their inability to get a straight answer was very disrespectful.
A final speaker from Forest Springs said he just wanted to know what the problem was.
In the light of this additional input, Director Fultz restated his motion, and President Hill seconded it. Brian read an email he sent earlier in the day authorizing Sandis to work with Bracken Brae on the scope of work needed to preserve their FEMA funding. He further elaborated, saying Staff had been pushing this along from the get-go, and it took quite some time to get the language for this. The District is on schedule to award bids October 3rd. He added that the District is already devoting Staff and Legal time to this even though District ratepayers can’t pay for the consolidation. He closed by saying that there was a lot of hyperbole and some very false statements being circulated. Barbara once again confirmed that the District had responded to the immediate ask from Bracken Brae, and Brian added some further remarks about Nicole. He said that after their first meeting, Nicole went out of her way to communicate with everyone except him, and he had to request that she copy him on all comments and inquiries to District Staff. His position was that Staff had bent over backwards to accommodate her, and that Nicole wanted all the Department of Water Resources money to go to Bracken Brae.
In response, Nicole read an email she sent to District Engineer Garrett Roffe on February 22nd. In response to a question from Director Fultz, she stated that there was no need for his motion at this time, but that many steps still remain. Director Fultz withdrew his motion.
Unfinished Business
None.
New Business
Reserve Policy and Working Capital
This agenda item was introduced by Heather Ippoliti, the consultant acting as Interim Finance Manager. She explained that on June 7, 2021, the Board adopted a resolution approving a reserve fund policy based on GASB 54. However, GASB 54 applies to governmental funds, whereas water district funds are considered enterprise funds. This revises the proper calculation of the District’s working capital (i.e., reserves). Rather than using all six of the following, the revised calculation uses only the first two:
1. Operating Reserve (37.5% of Operating Expenses)
2. Capital Reserve (2.5% of Capital Replacement Value)
3. Compensated Absence Reserve (33.3% of audited balance)
4. Fire Surcharge Restricted Balance
5. Debt Service Restricted Balance
6. Assessment District Restricted Balance
As a consequence, the District’s current working capital is $4,074,445 greater than previously thought. This slightly reduces the urgency of the District’s need for a loan. Staff is preparing a project cash flow projection as requested by the Budget and Finance Committee and expects that to be completed in the next month or so.
There was some discussion of the relevant details, but everyone agreed that this was a welcome development. Brian credited Heather, who works for the District only 16 hours per week, for discovering this. President Hill noted that two policy reviews (by the Budget and Finance Committee) and two audits failed to catch this. It was also agreed that a more detailed discussion could be deferred to the next Budget and Finance Committee meeting.
There were three public comments. Bruce Holloway of Boulder Creek said there was a lot here that he didn’t understand. He asked if the audited financial statements would be revised, and President Hill said no decision had yet been made. Mr. Holloway’s time expired before he could finish his questions and comments.
Karen Vitale of Forest Springs asked how this would affect the timing of the loan and the contract for the consolidation-related work. President Hill said this wasn’t known at this time, but Brian said the District had this very much in mind. Ms. Vitale asked how this would affect the prioritization of the capital projects, and Brian said this was at the forefront of the District’s strategy, but he was limited in his ability to comment on a non-agendized item. Ms. Vitale asked if there was a Plan B. She said she wanted to be sure there were no unintended consequences in terms of delay of debt financing. President Hill said this was all new to both Board and Staff, and further discussion would be required.
Debra Loewen of Lompico Canyon said the Finance Manager at the time of the Fire Surcharge said the surcharge did not technically qualify as a restricted fund because the Board can vote to remove the restriction. President Hill said this was understood, but the Board would not do so.
Director Smolley moved to direct the Interim General Manager to bring a revised reserve policy to the Budget and Finance Committee. President Hill seconded this.
The motion passed 4-0.
Board Officer Nomination
President Hill noted that there was currently no Board Vice President. Director Layng nominated Director Smolley to be Board Vice President. President Hill seconded this.
There was no further discussion or public comment. The motion passed 4-0.
Committee Appointments
President Hill indicated that he wished to fill current vacancies as follows:
· Director Largay is appointed to represent the District (along with Director Smolley) on the Santa Margarita Groundwater Agency. Director Layng is appointed as an alternate.
· Director Layng is appointed to serve on the Administration Committee (along with Director Fultz).
This was formalized as a motion, and Director Smolley seconded it.
Director Fultz offered an extended comment, saying he wanted to reiterate a point he made at the last meeting. Appointments are made by the Board President. Board members are not eligible to object. They are required to serve, subject to the Board's approval. He also said he believed it important for Board members to rotate through multiple committees over time.
There was no public comment. The motion passed 4-0.
Raftelis Consultants, Inc. Agreement
This agenda item was introduced by Heather Ippoliti, the consultant acting as Interim Finance Manager. She said while Staff has calculated the estimated impact of Measure U on District revenue, Staff has requested that Raftelis independently verify these figures. Raftelis provided has agreed to do so for a not-to-exceed amount of $4,285.
Brian said it was easy for Raftelis to run new numbers using the existing rate model. He said this action was being brought to the attention of the Board on the advice of Legal Counsel.
Director Fultz thanked Brian for bringing this to the Board and asked if it was a brand-new agreement with Raftelis. Brian said it was. Director Fultz urged that earlier comments by Debra Loewen be incorporated into the Statement of Work so the District could determine “how much money was being left on the table by the Board.” This suggestion was not pursued.
There was one public comment. Cynthia Dzendzel of Felton said she had a lot of questions about the costs of Measure U and the costs of initiating a new rate structure to compensate if the initiative should pass. Director Fultz said these questions were not germane to the current issue, and President Hill agreed.
Consent Agenda
The Consent Agenda had ten items (any of which could be moved to the regular agenda upon request from a Director):
a. CBEC Inc. Conjunctive Use Contract Amendment
b. Approval of Board Meeting Minutes for August 1, 2024
Director Fultz pulled items (a) and (b).
CBEC Inc. Conjunctive Use Contract Amendment
Director Fultz noted that the contract was being extended for a year and that there was a current balance of $10,432. He wanted assurance that this item would come back to the Board for approval if spending were to exceed this amount. Brian said Staff was well aware of the relevant policy. He said the immediate goal was simply to keep the contract alive.
Director Fultz moved to extend the contract for one year. Director Smolley seconded this.
Director Layng noted that it would be preferable to have updated data for the new year.
There was no public comment. The motion passed 4-0.
Approval of Board Meeting Minutes for August 1, 2024
Director Fultz questioned whether the minutes captured the public comment of District Engineer Garrett Roffe. It turned out that they did.
Director Fultz said the minutes did not accurately capture President Hill’s directive that Staff schedule a session involving the entire Board and the community to discuss consolidation issues. He felt the reported language allowed for too much flexibility in interpretation. President Hill suggested that the minutes be approved with the recommended correction. Director Fultz so moved, and President Hill seconded.
There was one public comment. Nicole Launder Berridge of Bracken Brae thanked the Board for their attention to this.
The motion passed 3-0 with Director Layng abstaining per protocol since she was not on the Board for the meeting in question.
The Open Session adjourned at 8:30 PM, and the Board returned to Closed Session.