Name: Feb 18, 2025 Las Virgenes MWD Board Meeting - Las Virgenes Municipal Water District
Duration: 2 h 19 min 14 s
Description: So how's it possible to have this budget when it was unknown before we didn't know so we don't budget in the budget we don't include much in the way of revenue for capacity fees or connection fees.

[0:00] Good morning, everybody. It's 9 o'clock, we will get started.

[0:07] Let's see, I don't.

[0:11] Let's see, for the pledge of allegiance, I think. Let's see, how about Brian, lead us in the pledge of allegiance, please. Thank you.

[0:20] You know, your heart is ready to hear.

[0:22] I play the speech in a student lab of the United States of America.

[0:27] And it will be publicly for which it stands.

[0:29] One nation.

[0:31] I'm going to grow up in the invisible world.

[0:33] Thank you so much.

[0:37] And Susan, could you call the role?

[0:40] Director Levine.

[0:42] Director Burns.

[0:43] Yeah.

[0:43] Director Poland.

[0:44] Yeah.

[0:45] Director Louis.

[0:46] Yeah.

[0:46] Director Cordesky.

[0:47] here. I'll present. Thank you so much. And item number two, approval of the agenda.

[0:52] Ask the general manager whether there are any changes to the agenda. No,

[0:56] proposed changes. Thank you. Fantastic. Ask the board for motion in the second to approve

[1:01] the agenda.

[1:05] Would somebody on the board like to approve the agenda? I'll make them,

[1:09] I'll make the motion now. Fantastic. Do we have a second?

[1:12] All right. I'd love to hear it. All right. Let's have a vote. All those in favor say,

[1:18] I all those against say nay any abstentions seeing none moving on item three public

[1:26] content public comments members of the public may now address the board of directors on matters not

[1:31] appearing on the agenda but within the jurisdiction of the board no action shall be taken on any

[1:36] matter not appearing on the agenda Susan are there any public comment cards submitted no comments

[1:42] That's it this time.

[1:43] No comments, thank you.

[1:45] Item number four, consent calendar.

[1:47] Does anybody on the board want to pull an item

[1:50] from the consent calendar?

[1:53] Seeing none.

[1:55] Can I get a motion and a second to approve

[1:57] the consent calendar?

[2:04] We have a second.

[2:05] Let's get, we can now vote.

[2:07] All those in favor say aye.

[2:09] All those opposed say no.

[2:12] Are there any abstentions?

[2:14] Seeing none.

[2:15] Item number five, illustrative

[2:17] of End of Verbal Presentation Agenda Items, Item 5A, MWD Representative Report, Director

[2:24] Louis. Could you prove rather report?

[2:26] Yes, thank you, Mr. President. I was at the MWD Committee meetings all day and then

[2:32] the board meeting last week. And in my report, I've stated before I want to just give you

[2:38] the highlights. In every board meeting, they have a different eight member agency of the

[2:43] 26 come and give report. And this is what time it was West Basin and EJ Caldwell gave a really

[2:50] great report. And he's the West Basin General Manager, which is one of our neighbors.

[2:55] I spoke to him about Malibu briefly actually before the meeting. He said he's going to get

[2:59] together with our General Manager to talk about his thoughts for Malibu. And then as well as

[3:06] he spoke about how reliant and how dependent he is on Matt and how important Matt is.

[3:13] And it was

[3:13] how supportive he was. And Matt has a rule, seemed like the meeting, I, I, everyone's got a really good attitude and really good, everyone's really happy now.

[3:23] I don't know what happened. I know you've all heard that we let our general manager go, Dale Hasch-Galio. And I don't know if that's, that's why or not.

[3:33] But everyone's really like congenial and gets along and metropolitan promoted Devon Apate, the interim general manager to be general manager.

[3:41] And so far, he's done a great job and hopefully he continues.

[3:45] And at the March 11th meeting, Devon is going to give a report of his goals for his job.

[3:53] And he mentioned he wants to stabilize met internally, which is really important.

[4:00] I think there's a lot of issues with the unions and with this employees.

[4:03] And he's wants to work on the climate action, water sustainability, infrastructure,

[4:09] which I think of Sepulveda feeder, which he's going to keep hearing a lot from me,

[4:13] and Dave's going to hear a lot from me about our Sepulveda feeder project.

[4:17] And also, his other project he wants to work on is third one is long term financial stability.

[4:23] And so I thought of a, you know, I thought of a good tagline.

[4:26] I should probably tell him, help Met, help California.

[4:29] But the one thing he didn't mention is one of his three goals was internal structure of his staff.

[4:35] staff so hopefully that'll be included in his talk on March 11th because I think it's a real another important bullet point.

[4:45] Adon also came out with his commit. The dawn, the chair of the board has a lot of power at metropolitan. The chair has a lot of power. I'm like no offense, but the chair has less

[4:55] business. And he gets to pick the committee chairs. He also picks who's on the committee.

[5:00] So he told us we have until March 5th to tell him what committees we want to be on. And

[5:05] I'm working on that now with our consultant, Jim Green and Dave. I sent Jim Green a note

[5:10] that I have to come up with my committee assignments and he wrote me the most amazing complete analysis

[5:16] of which ones I should be on and why and taking his advice. And I have until March 4th to

[5:20] to tell a dawn, a dawn did announce that I would be chair of the legislative and communications

[5:27] committee. So thank you, Chair. It's good for Jeremy, so Jeremy's happy. So the board

[5:36] did not have any objections to the slate, but March 11th, our board will vote on all the

[5:43] committee assignments. And hopefully, if no one objects, I'll be the chair of the legislative

[5:48] of communications committee and for sure on the communications committee I want to work

[5:52] on the tours.

[5:53] I think the tours are so valuable to understanding California water and I think it needs some

[5:59] more money and some more robust tours and that effects I'll be working on that as well

[6:05] as speaking of tours I spoke to director Levine and we are talking about we get a date trip.

[6:11] So what we want to do is we want to I'm planning a trip now I think the date will be mentioned

[6:16] is mainly for our staff and our board, but also we maybe open it up, we have room to

[6:22] some of the elected officials, city council people and mayors of our local cities and

[6:26] other that would like to join. But what we want to do is basically follow the water from

[6:31] Jensen to here. So I'm envisioning and we're going to have a stop in the Sepulveda feeder to see

[6:37] the tank in the Sepulveda pass and to understand that and then go to Jensen and literally follow the

[6:42] bus back from Jensen to here so we can understand how the water gets from Jensen to our homes.

[6:48] We saw how the piece how it goes from Orville, at least to the big break.

[6:52] We missed the part from Big Break to Jensen because we flew out of Oakland instead of driving

[6:56] back down.

[6:57] But we will at least see Jensen to here and that trip will be in the next couple of months.

[7:02] And the last piece I want to mention is we, Metropolitan has a lot of water right now and

[7:07] they don't have a lot of money, so they've elected to have a policy where they're going

[7:10] to if they have extra water allowed the general manager to sell water and everyone was pretty

[7:16] much in favor of it. It's kind of a, but I met with the general manager, David Peterson,

[7:23] who's at the meetings help announced. I made a friendly amendment to add that the has to be based

[7:32] on when water is accepted. If the state water dependent areas have access, don't have access.

[7:39] need, need water, they won't sell it, it's not just met in general, but also making sure that the state water

[7:45] dependent areas have access to that water before we sell it. And they added that to the amendment, which I think is,

[7:52] I think is really important for us. And I guess that's my report. Any questions? Any comments?

[8:02] Okay, seeing no comments, I just have a comment. I, Jay, I think you're doing a great job there. And I appreciate your hard work.

[8:08] thank you so much. All right, moving on to item 5B, legislative and regulatory updates.

[8:15] I believe I see Jeremy Wolfe in the building.

[8:29] Sorry for the delay in getting up here.

[8:32] I was just listening to a council of governments meeting talking about the debris removal and where

[8:37] some of that material is going to go. I'm not going to report on that today because it's an ever-involved

[8:42] evolving issue and could change by this afternoon. So but a lot of contention in the community.

[8:48] Okay, so I want to start off with some really, really exciting news.

[8:52] We hear announcing that Senator Ben Allen will be carrying our bill on hydrant theft.

[9:00] So we found that out last Thursday and this is really exciting news since he's both our

[9:04] senator and a leader in environmental space.

[9:07] And as of Friday, the bill got a number, so it's SB 394.

[9:14] So we're going to be tracking that really closely.

[9:16] So 394, remember that.

[9:18] You're going to be hearing that a lot these next few months.

[9:20] And just a really quick refresher on the bill and why we're doing this.

[9:24] And as you guys know, water theft takes many forms

[9:26] and the most egregious being water theft from fire hydrants.

[9:30] Illegal actors have been documented connecting

[9:32] to and filling water trucks from hydrants

[9:35] without the proper use of hydrant meters

[9:37] to avoid paying for this water.

[9:40] These water trucks can hold up to 6,000 gallons of water,

[9:43] resulting in significant loss for water agencies.

[9:46] And the stolen water is usually used or sold for profit for commercial purposes.

[9:52] And some examples of this include company use it for construction companies using it for

[9:56] construction sites, dust mitigation, landscaping, and water trucks actually selling this water for

[10:02] profit.

[10:03] And we've documented all this at loss virginess.

[10:07] So in some cases, stolen water is even transported outside the water service area.

[10:11] And the really egregious thing is that these activities are premeditated with the tool.

[10:17] You have to have a special tool to open up a hydrant.

[10:20] And this type of water theft can also cause costly damage to the fire hydrant and the system itself.

[10:26] So the integrity of the hydrant system becomes compromised for when it's needed.

[10:33] Now the problem is current fine amounts are not strong enough to deter the theft

[10:36] and may instead be seen as the cost of doing business.

[10:39] Why not just do this, if I get caught what's the worst that's going to happen?

[10:42] I'm going to get $250 fine.

[10:45] So the current penalties are insufficient to deter and prevent criminal activity from

[10:51] occurring.

[10:52] So our bill recognizes and addresses these inefficiencies and existing penalties by authorizing local

[10:58] agencies that provide water service to adopt an ordinance with enhanced penalties specifically

[11:04] from water theft from hydrants.

[11:06] So, under our bill, so it's lost virginess and aqua is the sponsor,

[11:13] fines for water theft for a hydrant would be punishable as follows.

[11:17] For the first violation would be $2,500, $5,000 for the second violation,

[11:22] and $10,000 for the third, and then each additional violation would be $10,000 after the third threshold.

[11:30] Lastly, this bill will help agencies recover damage as a result of water theft

[11:34] from the fire hydrant by authorizing utility to bring civil action for damages against any

[11:39] person who without authorization tampers with or diverts water from a hydrant.

[11:45] So this has been a, I'm really proud that we got Senator Ben Allen.

[11:48] It's a big, it's a big win and he's going to really tie this into fire prevention as well

[11:53] to make sure that our fire infrastructure is ready for the next natural disaster in our region.

[11:59] So speaking of legislation, we're currently tracking 27 bills of importance to the district,

[12:06] but within this week, that's likely to double.

[12:08] State legislators have until the 21st or this Friday to introduce bills.

[12:13] This is the first major deadline of the 25-26 legislative session.

[12:19] So while some bills have already been introduced, hundreds more are expected to be introduced over

[12:23] the final days leading up to the deadline.

[12:26] And many of these bills are what's called a spot bill and spot bills are place folders that can be amended into full bills later on.

[12:33] So if you missed the deadline, you can then introduce a spot bill.

[12:37] So some an author introduced us something, they said, actually, I don't want to do that.

[12:41] They take out all the language and then put in something new and that's called a spot bill.

[12:45] So while the deadline for introduction is Friday, there's still ways around it.

[12:50] But I'm glad that we got our bill in before the deadline.

[12:54] Also, legislative leaders announced in December that they would reduce the number of bills that assembly members and senate members could introduce during each two year session.

[13:04] So typically, an assembly member could introduce 50 bills in a two year session, but now they put that down to 35.

[13:12] And in the senate, it used to be 40, but now it's 35.

[13:15] So they're trying to limit the amount of legislation introduced, which I think is needed.

[13:22] So one issue that I want to highlight that's popped up again is and it's really controversial and we're going to hear a lot about it is water rights.

[13:31] So as a quick reminder, California water rights govern how water is allocated and used in the state based on a complex system of laws that include riparian rights which are for landowners adjacent to the water source and appropriative rights based on historical use often requiring permits.

[13:49] So, this system also considers ground water rights in environmental protection.

[13:54] So, it's a complex set of regulations and just a brief history.

[13:59] So, these water rights actually date back to the mid-19th century and are rooted in gold rush

[14:04] era. So, we're still operating off laws from the gold rush era. Miners established the first

[14:10] appropriative rights following the first in time, first in right principle. When California became a

[14:16] state in 1850, it adopted English common law which include riparian rights for land owners

[14:21] near water sources. Over time, state and federal laws, court rulings and regulatory agencies

[14:27] were fined the system, leading to today's complex water rights. So why am I talking to you guys

[14:32] about this? Laws versions doesn't have any water rights, but MWD where we get our water certainly

[14:37] does, and they have water rights on the Colorado River and the State Water Project where senior

[14:43] their rights holders, such as agriculture users have priority during shortages.

[14:48] This can limit the supply that MWD has, especially during droughts.

[14:53] So there's two bills that have already been introduced.

[14:56] And one of them deals with emergency permitting in aqueous-

[15:00] We've already done an opposed position. And then the other bill, which is really interesting, is regarding tribal water uses. And it's a really sensitive issue, but complex and has impacts for us in Las Vegas. And so we're likely to see more water rights bills, and I'll be tracking that, because, like I mentioned, it does have direct impacts on our system.

[15:20] On 31st of last month, Newsom issued an executive order that ease storm water capture and storage. And so this made it easier to divert.

[15:29] and store excess water from the latest round of winter storms.

[15:34] Newsom also did this in 22 and 23, and this facilitated the diversion of storm water use

[15:40] to help to recharge groundwater supplies.

[15:43] And what it does is it directs the Department of Water Resources and other state agencies

[15:47] to take action to maximize diversion of excess flows to boost the state's water storage

[15:52] in mostly northern California, but this includes the San Luis Reservoir and the Delta.

[15:58] The order streamlines water right approval for diverting and storing flood water, reducing

[16:06] bureaucratic delays, water agencies and districts can temporarily bypass certain environmental

[16:11] and procedural hurdles accelerating the implementation of storage.

[16:16] So this is good news for us and Newsom has done this last few years, but I think it will

[16:20] lead to a little bit more water availability.

[16:23] A really quick update on the advanced clean fleet regulation.

[16:28] If you guys remember the ACF, advanced clean fleets, I'm not putting a dollar in there.

[16:34] It was adopted by the California Air Resources Board, CARB, and requires a phase transition

[16:42] to zero emission vehicles from medium and heavy duty fleets, including publicly owned utilities.

[16:48] That means that our water tenders, all our construction trucks would have to become zero

[16:53] road mission electric vehicles, and that's a problem because the technology is not quite

[16:58] there.

[16:58] So, California Municipal Utilities Agency is working, I attended the regulatory committee

[17:05] last week, and their staff is working with the California Air Resources Board to come

[17:09] up with some sort of resolution because it's not tenable the position that we're in right

[17:14] now.

[17:16] So, during the meeting many concerns were expressed, and as a result, CMUA staff were directed

[17:21] to engage with CARB staff and executive leadership to ask for additional changes for publicly

[17:26] owned utility fleets. So I will keep everyone posted on that. And my last item is that

[17:31] in federal news, there is a bipartisan bill introduced by Senator Padilla and Senator

[17:38] Murkowski that aims to, it's going to create an atmospheric river forecasting program.

[17:46] And it's really interesting the bill supported by Aqua, and it requires the National Oceanic

[17:52] Atmospheric Administration NOAA to establish a forecast improvement program within the National

[17:57] Weather Service.

[17:58] And why does this matter for us?

[17:59] Because it's going to enhance forecasting that will help water managers, emergency responders

[18:03] and local governments prepare for potential flooding.

[18:07] Advanced forecasting will also assist in water agencies in optimizing reservoir operations

[18:13] to balance flood control and water conservation.

[18:15] And it may lead to the investment of water banking and recharge projects to help store excess storm water for future use, so I think it's really positive. I'm going to be focusing on that.

[18:25] So with that, that concludes my report. Are there any questions or concerns?

[18:31] Any questions or concerns for Jeremy?

[18:34] A question and a concern, please.

[18:36] The question in a comment, the question is who came up with the amounts on 394 for the chip 255,000 and 10,000?

[18:44] Aqua, along with Dave and Dawn and Joe and Ursula, it was a pretty, yeah, we came up with that as a way to deter.

[18:53] Yeah, and we, but it is subject to amendments and changes, so it also reflects penalties that we had originally intended in our code

[19:05] that were sensed ruled by Keith to not be enforceable.

[19:10] So it's interesting that less versions has come up with these basically, with Vaco.

[19:14] And then my other comment is, and it's just a, I don't know if it's a good idea or a bad idea, but on the fire hydrants, there could any talk about it.

[19:23] Some type of tag or sign that says, you know, stealing this water is a punishable by theft and a fine.

[19:32] and also could impair our fire department

[19:35] from putting out fires in this neighborhood.

[19:38] So people can kind of,

[19:39] because people walk by fire hydrants all the time, right?

[19:42] A lot of them, and they could see this sign,

[19:44] and because I don't think people know

[19:46] that there's theft, it's cost anything.

[19:49] You know, they might think it's just there for them to take,

[19:50] but now they have a sign, like a warning.

[19:52] I don't know if it's practical, but it's just a thought.

[19:55] Like a way in on that, I don't know.

[19:57] And this is before I pass the baton on to Don, his group.

[20:00] But what started our pursuit of this bill was we were getting ready to launch a campaign,

[20:08] see something, say something. And so what you just mentioned I think was going to be a part of

[20:12] that and that's when we discovered that we had the ceiling on the fines in the state statute.

[20:20] So kind of let us down in this path but I think that's something that staff was considering.

[20:26] Yeah, so is it practical to put a sign on each fire hydrant?

[20:31] Um, not necessarily, it doesn't necessarily need to be a sign.

[20:35] I mean, there's, there might be several ways to do that.

[20:38] It could be a sticker or some kind of a pencil or something, but just, uh, it's going to be

[20:43] more than just that.

[20:44] I think it's going to be kind of a, uh, uh, public service announcement.

[20:50] Yeah.

[20:50] See something say something.

[20:51] I think everyone should know that if you steal water, that there's, he's fines.

[20:55] and it's also harming, and maybe they can't lie,

[20:58] I wonder if they have liability for a fire,

[21:01] or two if they stole a fire,

[21:02] if they stole water and the fire hydrogen stopped working well,

[21:05] then their fire came up and they couldn't use that fire hydrogen

[21:08] because of that, they could be liability in it.

[21:10] Is that in the bill at all?

[21:11] No, but I mean, that is interesting

[21:13] because we do include in it that you can,

[21:15] I just want to get the exact language,

[21:17] was that we can recover costs from the damage

[21:20] that was done, and that previously hadn't been in there.

[21:22] So maybe there's a way to wrap that in there.

[21:24] And the other thing though, one example that we got from this was that in San Jose, I believe

[21:30] a San Jose where they have to put special equipment to lock the hydrant because they're

[21:36] dealing with so much theft.

[21:37] And that's what we don't want to happen.

[21:40] And there was signage on it too, was that from East Bay mud, or was it Northern California?

[21:48] LA County waterworks did that in the yellow balance while they put these locking devices on

[21:52] the hydrant, it's not great, the fire department really does not like them. They break them off if they

[21:58] need to but in the event of a fire you really want to access the fire hydrant quickly but I do recall

[22:04] there was a little tag that was attached to it and it did have a message about that. We can certainly

[22:10] look at that. It may not be practical to put them on every hydrant but there's hydrants that are

[22:17] sort of more likely to experience theft from,

[22:21] probably we could put some kind of message on that.

[22:24] Yeah, even the stickers are good idea.

[22:26] Yeah, the ones that are more likely is that

[22:28] because they're in more of an area where they aren't seen.

[22:31] Yeah, they're more in a remote area.

[22:34] And those are sort of higher risk

[22:35] because people see things and they will report it.

[22:40] I just wanted to ask if you're done.

[22:42] Yeah.

[22:43] How have we estimated how much water?

[22:45] remember I reported two trucks that I saw but how if we estimated how this is

[22:51] happening and how do we get that knowledge to certainly the legitimate water

[22:55] companies they're not going to be the ones doing this how do we get this

[22:59] information it's almost impossible to estimate with accuracy how much water is

[23:03] stolen what we do know is we have we have unaccounted for water loss of

[23:10] revenue so this is we know how much water we bring into the system we know much

[23:14] how much water our customers are using based on their meter usage and so is that difference.

[23:20] So what we did is we estimated that somewhere between 10 and 20 percent of that non-revenue

[23:26] water could be from water theft.

[23:31] And who issues the summons?

[23:35] Who actually?

[23:36] I mean, did the sheriff go and stop some?

[23:38] How do we know?

[23:39] Now, so there's no summons.

[23:41] So it is a criminal, it can be a criminal offense.

[23:45] The problem is that no district attorney

[23:48] will prosecute a fire hydrant theft.

[23:50] And there's been a lot of examples of that.

[23:53] And that's the reason for making this fine

[23:55] is to increase the administrative penalties.

[24:00] Okay.

[24:02] So I too have reported in the past,

[24:04] I know a spot with a,

[24:07] I've seen water tank is still in water.

[24:11] It's in Kaisa up in Hidden Valley.

[24:14] So,

[24:17] how do you, how do you find?

[24:21] You got it.

[24:21] It's almost going to catch up in the act.

[24:23] How is he going to do it?

[24:25] Yeah.

[24:25] And in fact, the incident that you're referencing,

[24:28] I think was some years back during the drought of 2012 to 2016.

[24:34] I mean, we actually jointly funded an investigation with Cahegas, and we actually had a private

[24:43] detective photographed these water trotchants, recorded their license plates and prepared

[24:52] a report, and it was quite an active operation.

[24:55] So that is an option that's not probably what we're envisioning initially.

[24:59] I think probably having customers reported and educating people about when you do see

[25:05] a water truck filling from a hydrant, if you see that without a meter, that's an indication

[25:10] that it's probably not authorized.

[25:13] There are a couple exceptions in the event of fire, the fire department, they do fill and

[25:18] they are authorized to do that without a hydrant meter, but for the most part it should have

[25:23] a meter.

[25:24] In direct allude, I thought your idea was good, I'd add, maybe we put a QR code on it.

[25:28] So if there is a customer who sees it, they scan that QR code and if they did take a picture or at least it tells them a little bit more of the story of why so that if it's around the different cities, people might look at it in New York City right now.

[25:43] There's a big problem with people. They're so little space with bicycles and all this. I don't know if you've heard this, but because of the snow and everything there.

[25:50] people have been parking by the hydrants and the fire department has not been able to get two fires

[25:55] quick enough than in the news twice in the last week, two weeks. So I have a question about

[26:01] spot bill. You mentioned that last year. So my question is how many spot bills actually turn into

[26:06] a real bill that really gets passed that becomes something valuable? Yeah, absolutely. I don't have

[26:20] issue that wasn't an issue in the legislative deadline, but then becomes an issue.

[26:27] I don't have a statistic, but a good amount, start off as one thing and then

[26:31] introduces a spot bill and then gut and amended, changed all the language and then come back.

[26:37] And a lot of times for some controversial stuff, that's how they'll sneak it into.

[26:41] They'll wait a little bit as long as they can, change all the language and put something new in.

[26:46] But I'll work to get more information on that so I can better articulate that I do want to ask you as you started off

[26:52] What is the latest from the cogs? What was the latest you heard?

[26:56] I think it's important for all of us. First off, the Calabas is dumb is literally out our door. We can see it. Yeah

[27:02] So anything that is put there will blow over right into this building and our employees in ourselves and the whole

[27:10] from when I understand it could go to at least the fires where a hundred mile radius of the material in the air.

[27:17] So what was the latest because I wanted to ask one question that you'll know better.

[27:21] I noticed that the supervisor's pulled the item from the agenda.

[27:24] So how does that work and why did that happen?

[27:26] And just for clarity, the item that was on the Board of Supervisors for this morning.

[27:30] The only authority that the Board of Supervisors has over that is the timing and the tonnage.

[27:36] So, not if the materials can come at all, that's, it's a really complex web between

[27:41] Army Corps of Engineers, California Recycle.

[27:47] We were just listening, there's a lot of failure to communicate.

[27:50] I do want to note that during Wolsey Fire, a lot of materials were put in the landfill and

[27:56] there is a process to do it, but the lack of communication to the community seems to be

[28:01] the big sticking point.

[28:04] Again, it's so fluid and changing.

[28:06] I don't know what, maybe I can do an update and schedule it for another meeting or

[28:13] Dave, is there anything you want to add on this because you're right, it's a big issue,

[28:17] but I don't even know where to begin and I don't want to capitalize on it.

[28:19] You know what they're still taking the buses down today?

[28:21] No, they've canceled the buses and I can't tell you a certainty that no fire debris has been sent to the

[28:30] The only debris that has been sent to the Calabasis landfill is mudslide materials from PCH and just to clarify those buses were going to were being authorized by the city of Calabasks taking homeowners down there to demonstrate and to speak at the board.

[28:48] All right, very good.

[28:49] Anything else for Jeremy?

[28:50] All right. Fantastic. Jeremy, thank you so much.

[28:53] Thank you.

[28:54] Appreciate it.

[28:54] All right.

[28:55] And now moving on to item six, our Treasury Report, Director Levine, could you please

[29:01] provide a report?

[29:02] Okay.

[29:03] The only item of any unusuality, if that's a word, is we had about $6 million going to

[29:12] The MWD, which about 4.1 million was related to our taking them up on our ability to purchase water from them.

[29:22] And so, as you know, they had a program that they offered all the member agencies about, being Brian told me 10, was it about 10 agencies, plus or minus, took advantage of the program.

[29:34] So essentially, we paid, in this check run, about $4.1 million, and we will have water delivered to us at MWD's option over the next five years at the current rates, which is the key, right, as we know water rates are going up.

[29:51] So we determined this would be a good use for funds, so we bought about 32.

[30:00] 200 acre feet of water, which we'll get over the next five years. So that's pretty much why the check run was so high to MWD. The only other thing I would add is that this money came out of our rate stabilization reserve, so which had about $8 million. I think if I get that right, so we still have about $4 million left there. So that is the scoop on why that check run was so high to me.

[30:30] Great. Any questions for R&S?

[30:33] I have a question for Director Lewis.

[30:35] How would you know, or maybe don't,

[30:38] how much was the total that Metropolitan pulled in

[30:40] from all these 10 agencies that purchased ahead of time?

[30:45] It was a total of 100,000 acre feet that Metropolitan pre-sold.

[30:51] So they had received authorization from the board

[30:55] for it to be a two-year program.

[30:56] The original intent was 50,000 acre feet in 2025, 50,000 acre feet in 2026.

[31:05] The demand was so high that orders came in in excess of 100,000 acre feet immediately,

[31:12] and they proportioned it out to the number agencies.

[31:16] So our proportion was 3,274 acre feet, and that was based primarily on historical purchases.

[31:23] So they sold all 100,000 acre feet, so if you want to figure out the revenue, is it looking

[31:33] at the full services, is it just $332 or is there a system access, power and treatment

[31:38] surcharge? Is it all those get added together?

[31:40] Yes, so it would be $1,256 and acre foot times $125 million.

[31:48] dollars. It's quite a large influx of cash. Okay, I actually don't really know what 125 million

[31:58] means to them considering the numbers. I see 92 million dollars paid for this and that, and

[32:04] I don't really, did it help directly? Yeah, it helps a lot because we have a budget deficit, so

[32:09] we have the water. I mean, it's a great short-term decision for Met because they get the money,

[32:13] but long-term, it could be, you know, five years will be paying for this, you know, and I know,

[32:18] usually about less time work. So, and yeah, I mean, if you are really interested in this and

[32:22] in the budget and finance committee meeting last week, this was all laid out in graphs. I don't

[32:27] remember the numbers off the top of my head, but it's all budgets and finance and how much came in

[32:32] from this particular program. It's all laid out. Okay. And then another question is considering where

[32:38] Director Levine said it came from. That money was not supposed to be doing this. That money I remember,

[32:43] we were supposed to be segregated for very specific items in our budget or process,

[32:52] so will it be replaced in some days?

[32:54] So that's having a reserve.

[32:56] That reserve fund is intended for rate stabilization, and so we felt like there's an excess here,

[33:02] because this serves to achieve that goal by setting the rates and buying the water now at

[33:11] today's prices and avoiding the increase in costs later and it will be replenished.

[33:16] So we've done this in the past when we draw from that reserve fund that we replenish those funds.

[33:21] And so Dawn outlined a plan. Did you want to describe that how to replenish it?

[33:26] Sure. So over the course of the next five years as we receive water that we pre-purchased,

[33:33] since we won't be paying for the water that time, that's the time that we'll replenish the

[33:37] that rate stabilization fund.

[33:39] So I'll be replying slowly.

[33:44] Thank you.

[33:45] Fantastic.

[33:46] Thank you.

[33:46] And moving on to item number seven,

[33:49] General Manager, 7a, Climate Action and Adaption Plan.

[33:53] Does the General Manager have a report?

[33:56] So Joe will give the report on this item.

[33:57] It's been something that Joe has led for us.

[34:01] And what he'll be talking about

[34:03] is the first year annual update on the plan's implementation.

[34:07] Good morning, President Cordesque, board members.

[34:10] So let's just get the acronym out of the way.

[34:13] Climate action and adaptation plan is also CAP, C-A-A-P so that I don't have to keep putting

[34:21] dollar bills in the acronym jar.

[34:24] So let me just a little background first.

[34:26] So the state of California, as you probably were, enacted legislation over the past several

[34:30] years.

[34:32] That's really aimed to reduce greenhouse gas emissions and

[34:36] mitigate the effects of climate change.

[34:39] Future legislation and regulations may also set mandates on water and waste water

[34:44] utilities such as ourselves because the conveyance, pumping, and all that stuff.

[34:48] It accounts for about 20% of the overall electricity usage in the state of California.

[34:52] So it's pretty substantial.

[34:55] Additionally, I just want to emphasize that most grant and

[34:58] even though interest loan programs, so we think of SRF, the State Revolving Fund that we've pursued for pure water has a requirement.

[35:08] Well, to be competitive for these certain loans and grants, we have to have an adopted cap which if I could remind you that was adopted by both the JPA and the LVMWD Board in October of 2023.

[35:26] So we did, we did do that and we were successful in pursuing the CSORF loan.

[35:36] The, so the development and active, active implementations.

[35:39] So that's what we're talking about here.

[35:41] We can't just produce a cap study, a report, and then stick it on a shelf somewhere and

[35:47] not do anything.

[35:47] We have to actively implement for it to really be valid.

[35:56] We've been primarily doing this.

[35:59] The really the impetus was for the Pure Water Project, again, SRF funding, but I would

[36:05] also like to mention that the cap was necessary to renew the NPDES, that's the national

[36:11] pollutant discharge elimination system permit, our discharge permit for TAPIA.

[36:16] We had to have a cap for that as well, for the discharges to Malibu Creek, which will continue

[36:21] you do until November, well, until sure water is built, but up to November of 2030.

[36:28] On October 3rd of 2023, the board was presented with a final cap at which time resolution

[36:33] number 267 adopting the 2023 cap was approved.

[36:38] The JPA took a similar action, the night previous to that action.

[36:45] The plan requires that progress reports be provided to the board of directors for both

[36:48] the LVMWD and the JPA on an annual basis, so that's why we're here today, giving you this report.

[36:56] A copy of the cap and the matrix that provides the status of the various implementation measures

[37:03] and actions are attached in your report. The intent at this point is with the JPA, we intend to

[37:12] provide basically the same report as an information-only item at the March meeting.

[37:18] The matrix includes a list of 22 different measures or categories in 107 distinct actions that fall within the measures which were identified in the cap.

[37:30] Included is a brief description of each action along with the status, schedule start, schedule completion, assigned lead person.

[37:37] I think that Jim Quarkis wins the prize on having the most, taken the lead on most actions that fall, interestingly fall within the facility's maintenance category.

[37:52] So Jim, I told Jim he has job security for some time, and there's some notes for each of those actions.

[38:01] This is all as an attachment in the report that's provided to you.

[38:06] To date, 49 actions of the 107 have been started or substantially completed, three were completed, and 53 have not been started yet.

[38:17] Two items have been deemed impractical or infeasible to pursue, and therefore not being further considered for implementation.

[38:25] I want to point out in the resolution that was adopted a little over a year ago.

[38:30] So, there's a lot of things in this cap, a lot of actions, but anything of any substantial

[38:38] dollar amount, a lot of the studies or assessments we do could be kind of back of the napkin,

[38:43] not requiring hiring a consultant, that sort of thing.

[38:47] Jim's already done some of these efforts, but anything substantial, it needs to come to

[38:52] the board for approval before we pursue it.

[38:55] Bottom line is something's not feasible, it's not going to be pursued.

[38:59] because we do want to, it is important for us to have competitive rates for our customers.

[39:07] So just real quick, completed items, I just want to highlight include the following action.

[39:14] I-9.4 establish procedures to regularly conduct maintenance of the SCADA.

[39:21] That's a supervisory control and data acquisition systems to identify potential improvements in operational efficiencies.

[39:27] I know Ivo has been taken to lead on that, action in R-4.6, develop a schedule and monitor

[39:38] vegetative management efforts in defensible space relative to critical assets at risk and

[39:44] then create our resource conservation manager, Craig Jones has been taken to lead on that.

[39:50] Action, O-6.2, develop internal protocols for employees working under extreme heat conditions and air quality emergencies and alignment with Cal, OSHA, heat illness and prevention guidance.

[40:05] In the report, there's a list of several items that have started and worthy of highlighting.

[40:13] I won't go through each of these in the interest of time, but I just want to mention what I've highlighted in the report.

[40:19] or are primarily items related to water conservation,

[40:23] which we've been doing a very good job with,

[40:26] both on the portable water side and the recycle water side.

[40:32] The other items relate to pure water,

[40:35] a pure water project and water supply in general.

[40:38] So for instance,

[40:41] Director Lewitt mentioned efforts with met,

[40:45] with support of the past, the feeder.

[40:47] That's all in the cap.

[40:48] Yeah, so working in collaboration with Metropolitan and other member agencies,

[40:53] Caiagas, et cetera, we have in the works our water supply and diversification study,

[40:59] for which we'll have a stakeholder workshop beginning a March.

[41:03] So these are all things that I've highlighted and the other thing that I want to mention is

[41:08] there's a handful of items in their associated with hardening for wildfires.

[41:14] So that's something that's been in the works and continues to be in the works.

[41:16] In fact, we plan on this year getting a consultant on board to help us really assess each of our facilities

[41:27] and help us put a plan together to really lock down the hardening efforts that need to happen.

[41:34] Actions deemed impractical or infeasible and to be eliminated from further consideration.

[41:39] I'll just mention the one. There's two in the report. I'll mention this first one.

[41:44] That's action in our dash 4.5.

[41:48] When retrofits and upgrades are not adequate or feasible, develop plans to relocate critical

[41:53] assets outside of Cal Fire High and very high fire hazard, severity zones to the extent

[41:59] practical.

[42:01] So this has to do with wildfire hardening again.

[42:05] In collaboration with staff, conversations basically we decided that all of our facilities

[42:12] These are within hellfire high and very high fire zones and that just there's really no option to relocate them anywhere else.

[42:24] So therefore that was deemed not feasible and practical.

[42:28] I'll mention that the consultant that helped put this cap, really put this cap together.

[42:32] They're working off of a template, kind of an industry standard model of actions.

[42:37] And this is one that we probably would have said, yeah, we're just not going to include that in the first place.

[42:42] but they got in there and we looked at it and we said that's not going to be practical.

[42:46] So our efforts are going to be to hardener facilities. And so that's a lot of different things.

[42:51] It's things like making sure we don't have any vegetation in that first five feet

[42:56] on the outside perimeter of any kind of building or facility.

[43:01] It means a lot of things. It means amber resistant ventilation screens and for attic spaces and

[43:07] and lots of other things, so I wanted to just mention that.

[43:11] Most actions that have not been started are slated to commence in the coming year or within the next few years.

[43:17] The timing is based on prioritizing individual actions,

[43:21] completing prerequisite actions, or the availability of staff and

[43:25] our financial resources.

[43:27] The matrix reflects a collaborative effort with the CAP committee members,

[43:32] which consists of LVMWD staff from various departments and

[43:36] and divisions that play a role in the implementation of the cap.

[43:39] When you look at the who's taking the lead on various action items in the matrix,

[43:44] they'll give you an idea who's sits on this cap committee.

[43:50] So as far as financial impact, there is no financial impact associated with the recommended action,

[43:55] and that action tonight, or this morning, is to receive and file the climate action and adaptation plan.

[44:02] And you'll update, and that concludes my report.

[44:05] Thank you, Joe. That was a comprehensive update.

[44:11] There is no vote on this item, and so I guess we don't really need to have.

[44:17] I guess we can.

[44:19] The reason I bring this to that. I attended. It's a grey zone. I attended a outside meeting with Region 8 board to discuss the impacts of the paradise fire and so many of the

[44:33] the items that we discussed were immediately appropriate and it needed to be addressed

[44:40] by us.

[44:41] And I see some of them addressed in the cap.

[44:45] And so in the cap, you're talking about protecting the pump stations.

[44:51] We didn't obviously see the pump stations when I went into order to do it.

[44:53] And I was shocked at how surrounded by vegetation they were.

[44:58] And the fact that you had to bring

[45:00] And fuel up there. What happens if it is, what happens if the worst thing happens and there's a fire and you can't get the pump station. Are you need power? Is that addressed in the cap or is that how? It's actually, I was going to talk about in comments, but I think that now is the appropriate time. So that's a great question. So fire hardening in general is addressed by the cap. So it is something that we are, especially in the wake of the policy as fire. It's definitely something we're taking.

[45:29] very serious. I've gotten direction from a general manager to get a professional on board.

[45:37] That'll help us look at every single one of our facilities and make sure that it's as

[45:41] fire hard and as possible. And that could very well mean cutting down trees, removing vegetation

[45:50] How do you maintain fuel if you have, you need generators, a huge impact.

[45:59] Yes.

[45:59] Huge.

[46:01] Okay.

[46:02] I will go on the board.

[46:03] This is directly appropriate for this, but it's so much else I'll bring it on the board cover.

[46:07] Thank you.

[46:07] Are there any other questions or comments?

[46:11] I have one, but it's very small in terms of this.

[46:14] But who knows how all this is going to affect things on page 12 is a type of might want to visit it's in the upper right corner where it says increase greenhouse gases mean less eat escapes the space. I think you meant to have a page there.

[46:32] I appreciate that and I also I also appreciate the staff's focus on fire hardening our facilities.

[46:43] And I wait. There was more. Oh, okay. It was just about even at the mountain fire.

[46:49] There are pumping stations burned up immediately. So I think it's it's really incumbent on us to make sure that not only.

[46:56] me, and I'm trying to work with Edison. I've been making some attempts at seeing how

[47:01] we can become critical infrastructure and not be shut off or have special wiring placed

[47:07] in to us so that, and I don't know if we replace it here, at least we wouldn't lose power

[47:12] in our main area, but I don't know about going to the pumping station, but if we couldn't

[47:17] get to them with the diesel, then we might not be able to actually get them to function.

[47:21] So it seemed crazy what happened in the Palisades fire and how hard everybody had to work when he for hours a day for for weeks.

[47:30] It would seem that we could do as much as possible to harden those facilities so that we can get to them and not have them go offline.

[47:38] Fantastic, any other comments?

[47:41] Seeing none.

[47:42] Moving on, item eight, engineering and facilities.

[47:44] Now, the Palisade's fire response and recovery grant are in leaf to specify customers to support

[47:51] rebuilding of destroyed homes.

[47:55] I believe this is Eric Schlaggators.

[47:59] Yeah, we're going to tag team this one.

[48:02] I did want to just do a brief intro to the item before I hand it over to Chris to present

[48:08] the staff report.

[48:11] I think three of the five board members were not here following the Woolsey fire, so I thought it was important that we just touched on the history a little bit.

[48:22] So this concept of relief really originated following the Woolsey fire and the item being brought to the board this morning is consistent with that same approach of the resolution that was previously approved.

[48:35] The district has always taken proactive steps in lessening the impacts to our customers.

[48:42] And a good example of that, which we did during following Woolsey Fire as well as following

[48:47] this incident, was Chris in the technical services staff.

[48:52] We've already filled out Fireflow forms for our customers that have been submitted to the

[48:58] Fire Department and the permitting agencies.

[49:00] So essentially those are ready to go for any of our customers that are going to be applying for building permits.

[49:06] So anyway, we can lessen those permitting schedules because as we all know, it's quite a lengthy process to get those approved.

[49:15] That's a necessary step that we've taken to help our customers.

[49:21] And then in regards to financial relief, generally older homes typically are not sprinklers.

[49:26] they don't have fire sprinklers within those homes, and due to code changes,

[49:33] anytime a new structure is rebuilt, it will require fire sprinklers.

[49:38] And in order to meet those fire sprinkler flow demands, it typically would require a larger meter

[49:43] to be installed for customers at their property. And as part of the capacity fee and the process

[49:52] of installation of a larger meter, it can come at a significant expense to customers and a lot of

[49:58] times it's not planned for. I think on average it can be approximately $10,000 more. And so

[50:07] we feel that this relief, as mentioned that was previously approved and it is consistent with what

[50:14] that we've offered from other incentives is important and so the district is recommending

[50:22] waving the capacity fees for those properties and it's once again tied solely to fire protection.

[50:30] So there's really not an expense that the district is taking by waving this fee because the

[50:36] actual capacity used by these homes, as long as they meet the requirements of this resolution,

[50:41] there will not be an exceedance of the capacity for these homes because these are like-sized homes.

[50:50] They're going to see the same demands that they once saw. The only increasing capacity is solely

[50:55] related to the fire sprinkling of those homes. So one of the other things I wanted to remind the

[51:01] board that is really important is this relief is really solely for those customers that are truly

[51:08] having a hardship to rebuild. It is not for all customers rebuilding homes. We recognize the

[51:14] impact of the community, but for many customers, this is an opportunity where they could

[51:20] build larger. They have the means to build larger and are likely fully insured for

[51:26] their recovery efforts. So I just wanted to highlight that.

[51:31] So with that, I'm going to go ahead and hand it over to Christy and dive more into the details of

[51:35] item. Thank you Eric. More and more. Pretty much took my whole presentation so I'll try to make it a little bit faster. I have to

[51:42] give me some of the boring parts. So as Eric was pointing out, this is, you know, people who are affected most, most of the homes have three

[51:50] quarter inch meters and to meet new fire regulations are going to need to upgrade to one inch meters. So at the current subdivision rates without any

[51:57] relief upgrade would cost each homeowner $11,303 with no pressure regulator and $11,549

[52:05] with a pressure regulator. Under the current capacity fee schedule, if the relief is granted,

[52:12] it would be $756 for a 1-inch meter upgrade with no regulator and $1,002 with a regulator.

[52:21] So it's a through the proposed resolution customers would say $10,547 in the case for a 1-inch meter upgrade.

[52:30] So a significant savings to those customers.

[52:34] Eric already touched on some of the things staff is already doing with the fire flows.

[52:38] So that we've already provided those to the fighter prime minister.

[52:40] It's just an extra step that they're not going to have to do to come into us.

[52:43] So those have already been and those are for a two year, they're good for two years.

[52:47] So after those two years, we have a list going and then we'll upgrade those if they haven't come in.

[52:55] To ensure the proposed relief goes to homeowners who truly need the assistance, staff proposes

[53:00] the series of conditions for the relief to avoid an overly broad application.

[53:05] At the same time, staff seeks to recommend conditions that are not too strict for eligible

[53:10] homeowners to qualify in support of the rebuilding process.

[53:13] In the resolution itself, sorry, this is going to be the technical stuff a little bit more

[53:18] boring.

[53:18] but number one is to authorize the

[53:21] general manager to provide customers

[53:22] with a credit for existing three-quarter-inch meter.

[53:26] And then at the then-current rates for a one-inch meter

[53:28] and offset the cost of the apical construction fee

[53:31] and water conservation fees and then the stipulations

[53:35] there as follows.

[53:36] A, the credit applies to only one or two family dwellings

[53:40] or townhomes that were destroyed or rendered uninhabitable

[53:42] by the Palisades fire.

[53:44] B, the replacement dwelling is no more than 5% larger

[53:48] or lesser in size as measured by square footage and without the addition of accessory units

[53:54] or outside buildings, see the customer provides evidence to the satisfaction of the general

[54:00] manager that his or her insurance will not or is insufficient to cover the costs of

[54:05] the subject fees.

[54:06] D, the customer pays the applicable meter administration installation charges pursuant

[54:13] to section 3-2.205 of the last version of municipal water district code, e, the fees for any subsequent

[54:23] upgrade to the meter shall be figured with credit provided for the three-quarters meter rather

[54:27] than the larger one-inch meter. F, the credit shall be available upon request by any eligible

[54:33] customer through December 31st of 2032. G, the property could not have been sold since the time of

[54:40] in order to be eligible, H, in the event the meter upgrades are necessary that exceed one

[54:49] inch in size, customers will need to provide documentation that the need for the increase

[54:54] is directly tied to increased fire protection to receive the waiver of fees within the resolution.

[55:01] If the increase in meter size requires upgrade of the service line to the main, the owner

[55:07] will be required to pay for the construction of the larger service line.

[55:13] So that's the stipulations.

[55:15] And then one of the other things I know was discussed in a previous board meeting that

[55:17] staff's looking into is additionally staff is evaluating the opportunities to require remotely

[55:22] actuated valves to be installed on the customer service lines that would allow the district staff

[55:27] to turn off services remotely when homes are lost due to the fires to minimize water loss

[55:33] and assist in maintaining the system integrity.

[55:35] The requirement would be considered for rebuilt homes lost in the fire as well as for

[55:41] new service installations, for new developments as part of the permitting and approval process

[55:45] pursuant to the district standards, now as well.

[55:51] So the recommendation is to pass an approved and adopt proposed resolution number 2648, granting

[55:57] relief to specified customers to support rebuilding of homes destroyed by the Palisades fire, and

[56:03] that concludes my report.

[56:05] Awesome.

[56:05] Thank you, Chris. Thank you, Eric.

[56:07] Do we have a motion and a second?

[56:10] I'll make the motion to approve the second item as published.

[56:14] That's classic. Do we have any questions or comments?

[56:17] Yeah.

[56:18] So why don't we require retrofitting the safety device

[56:24] onto existing houses because there's more than 100 houses up there.

[56:28] I don't know, 20,000 houses.

[56:30] I mean, it's, it's a, it's an issue as we discovered that the policy is fire, that

[56:39] they had no control over the water running out.

[56:41] Correct. So we've been looking into it, and currently there's not many technologies available

[56:46] currently that provide what we need. There is some work with I know Mueller has a couple of

[56:52] valves that they're working on. I think census and a couple of other meters are looking into it,

[57:00] And the way it was born is that I've understood some of the reps I've talked to thus far is it was born out of being able to turn people's like more East Coast people were your water meter is inside your home.

[57:10] So the water, you know, we don't have to go in your house to turn your water off.

[57:14] So they're trying to figure out ways so that they can remotely shut people's water off. That was kind of what it was born. That's what the main reason.

[57:21] So it's getting there it's quite it's not quite there and one of the other tricky parts is is you know

[57:28] It's a remote actuator valve inner meter box. Is it gonna fit in the meter box? Is it you know the size requirements?

[57:33] Do we need an additional meter box the power requirements?

[57:38] Is it you know battery powered? We have to put a little solar panel next to it

[57:42] Do we need to require you know as it physically powered by Edison?

[57:46] You know we have to run a power line to it and that's it's a headache. Oh yeah. Yeah, there's gonna be a lot to figure out

[57:50] a lot of I know I know it would be a lot of pieces when I brought it up and actually guys if I can jump in so it's

[57:56] already interrupt and you're probably stealing a lot of the thunder but there is a requested future agenda item that we

[58:03] will be returning to the board specific to this item and there are a lot of complexities as as Chris touched on but we'll

[58:09] make sure we address those and that's not one of the common I got from the region meeting was the how the paradise fire we're

[58:19] burned the whole town down. One of the things they did was to allow speedy recovery was

[58:27] they put on check valves, so at least they had some way of controlling a benzene coming

[58:33] back into the system from the fires they had. One of the additional thoughts might be appropriate

[58:39] at this point of time. We can look into that as well. Awesome. It was an idea that, wow, that's

[58:44] a good idea. Thank you, Lynn. I think Randy was next.

[58:47] I have a couple questions. So first of all, I'm curious how many homeowners were impacted in the Woolsey fire that took advantage of this

[58:55] Thing that we did we had about 30 applications come in some more denied for various reasons

[59:01] I wasn't here for part of that, but of the 30 that we received I think it was

[59:06] Seven I think that we're actually took advantage of it so okay, and then what I don't understand is

[59:13] So we're saying that there's like $11,000 that would cost, that would cost them if we didn't do this.

[59:22] Currently right now under the capacity fee rules, if somebody comes in and they want to upgrade from a three quarter inch meter to a one inch meter, and that could be further building a bigger house, the remodeling just to meet the new fire standards, that

[59:35] That incurs a capacity fee.

[59:36] So the current difference right now on that is the 11,330, I think it is or something like that.

[59:43] Where does that fee go?

[59:46] It goes into, so the district is an enterprise-funded district.

[59:51] We have three enterprises.

[59:53] One of them is potable water.

[59:55] Potable water has two funds within it.

[59:58] One is for replacement and one is for...

[1:00:00] Or what's called new construction. So in short, it goes into the new construction fund that is used to fund projects that increase the capacity of the overall water system. So there's a nexus there between the connection fees, which are placing a new demand on the system. And the use of those fees to increase the capacity of the water system. So an example might be if we were working on a pump station,

[1:00:27] and that pump station was serving an area that needed more capacity.

[1:00:32] The construction funds might be used for the part of the project to add an additional pump

[1:00:37] to that pump station.

[1:00:40] So you're talking about just waving fees here, is it?

[1:00:43] At the end of the day.

[1:00:45] Yeah, essentially.

[1:00:46] Essentially.

[1:00:47] We're going to charge them here, the admin fee and all fee.

[1:00:50] So how does it says the item is budgeted?

[1:00:53] How does that work in the budget?

[1:00:55] So how's it possible to have this budget when it was unknown before we didn't know so we don't budget in the budget we don't include much in the way of revenue for capacity fees or connection fees.

[1:01:12] The reason for that is we don't have a lot of development activity in our district.

[1:01:16] district. Every district is different. We're for the most part built out. We're seeing

[1:01:20] infill development. So we don't count on a lot of revenue coming from connection fees.

[1:01:25] And so because of that, waving this would not affect the budget in a substantive way.

[1:01:33] The other thing here that's important, and I think Eric or Chris pointed out is that we don't connect,

[1:01:40] we don't collect connection fees for fire protection. The connection fees for domestic

[1:01:46] So your day to day usage fire protection is like an extraordinary need and it's not something that we charge a fee for and so we see here what we're really doing is actually implementing that policy, which is the reason for upsizing these meters is for fire protection and fire protection only and for that reason we don't feel like really the connection fee is appropriate in the first place.

[1:02:12] Okay. And then just comment because we just don't know is I would think that most insurance

[1:02:20] policies have this building code upgrade in the policy. So like my comment is I'm not

[1:02:28] sure why we take this on as an issue because in fact so few people and then they have to

[1:02:35] have our staff review all this, determine hardship and all this, I don't know, not sure

[1:02:42] I told you get it.

[1:02:43] Yeah, I think there's a lot of home owners who are underinsured and there is generally

[1:02:48] in the policy, there's actually a the coverage limit, there's a maximum amount of percentage

[1:02:56] that is allowed for what's called code upgrades and it is frequently a problem because there

[1:03:02] There are many, many different building code changes that have been implemented.

[1:03:06] One example is just seismic.

[1:03:09] And so, these homeowners are struggling at times to stay within that amount.

[1:03:17] And this relief can help them on that.

[1:03:20] And so, if they do sort of find themselves bumping up against that limit, it helps them.

[1:03:26] And I'll just add one other thing, what I saw after Wolsey, all the public agencies

[1:03:32] commit to doing their best to facilitate the rebuilding process.

[1:03:37] But I found it unusual to actually find a clear action where the agency took to really,

[1:03:45] truly help the rebuilding process aside from trying to streamline, in quotations, the administrative

[1:03:53] process.

[1:03:53] So I feel like this is something tangible that we can do a point to, that we actually took an affirmative action to provide this relief.

[1:04:02] And I realized it is somewhat of a limited group of people, but in talking with Eric and Chris, I know that it did make a difference after Wolsey for these customers.

[1:04:13] If I could also just point out, after the Wolsey fire, I'm actually not sure how many homes burned in that fire.

[1:04:20] But at this date, I mean, it's been seven years.

[1:04:24] There's only been 40% of the homes

[1:04:26] where have not been rebuilt and, you know,

[1:04:30] so I feel like rebuilding after these fires

[1:04:34] is a struggle for a significant portion

[1:04:38] of the population if we can help.

[1:04:40] Then I think it's a great idea that we do that.

[1:04:43] All right, I think Jay, what's next?

[1:04:44] Can I just have a comment?

[1:04:45] You know, during, when I was at the EOC,

[1:04:47] we took a trip, I think it was day two

[1:04:49] of the fire. And we saw the water coming out out of our pipes. Someone said it could be up to

[1:04:56] 50 gallons a minute. And it really, then you hear everyone talking about that there's a water

[1:05:02] supply issue. And I had to say no, there's not a water supply issue. It's a

[1:05:06] water pressure issue. And one of the reasons is when the house burns down, everything burns down,

[1:05:11] the water keeps going in. So I have that video on my phone. It really bothers me seeing all that

[1:05:15] water going out because that water could be going in the fire hydrants. It could be going on the

[1:05:18] fire. So I actually, um, and anything you put outside to turn the, if you turn the water off,

[1:05:26] then all the homes don't have, including the fire department doesn't have the water to put

[1:05:30] the fires out of the existing homes that are still, they're still trying to save. Also, people

[1:05:34] could still be in their homes and they, and they won't have water and they could be using their

[1:05:38] homes, they could be living in the home even, and I have water. And we can't go shut it off because

[1:05:43] it's not safe to go do so. So I showed this to Shane Chapman. I actually showed in my video. He even

[1:05:48] said he even wanted me to send him that I sent him a video. I mean, the guy in charge

[1:05:53] of every pipe in the metropolitan system wanted my video. And so I said, this is a real

[1:05:59] problem. And he said what the technology that they're working on is underground. I didn't

[1:06:03] think about this, but it's brilliant. He put the sensor underground. So when we know the

[1:06:08] house is burned down, which I don't know how you know that, but maybe through drone or maybe

[1:06:13] somehow we figure that out, we can in our corporate office hit a, it's probably not this easy,

[1:06:19] but hit a button and then turns the water off to that house because it's getting from the

[1:06:23] sensor underground that didn't burn because it was underground. So I just thought when you guys

[1:06:27] come back to the future agenda, which I can't wait to hear, that maybe you somehow look into that issue.

[1:06:32] Thank you. Fantastic. I like the idea of the drone turning it off.

[1:06:37] If because it might be easier wirelessly if the drone knew that and could send a signal

[1:06:42] just that one because I don't see how we're going to bring all those wires back for that knowledge, but maybe I'm wrong on that, but I had a different question.

[1:06:50] And let me just add that they're especially right now.

[1:06:53] Maybe it's only 102 homes. Thank goodness it only was and we're not got 5000 people that are without their homes in which case we might think about this even differently.

[1:07:02] But there is a line here that it will also apply to new development as part of the permitting and approval process.

[1:07:09] So, why would we put that in there if someone is just building new, not replacing from the fires?

[1:07:16] I mean, maybe a misunderstanding.

[1:07:18] I think this is in regards to the remote actuated valve consideration.

[1:07:22] And I think that was just if we're going to require them on the rebuilds,

[1:07:27] we would want to maybe consider other areas that are maybe of higher,

[1:07:31] fire risk areas to more proactively place those on those existing services.

[1:07:38] It's okay. And why does it cost so much more? I was trying to read the, what is E-R-U?

[1:07:44] I mean, besides emergency rescue or something. What is the R-U? Seriously, it's a sewage capacity,

[1:07:51] these per E-R-U's. To an equivalent resident unit. Yeah, so it has to do with the number of

[1:08:00] individuals living within the home. Oh, okay. But I couldn't figure out, did anyone else try to

[1:08:05] figure out how the $10,000 or $11,000 is computed based on, so you don't have to do it.

[1:08:12] I just want to know why it's so much more money for each of these pumps or each of these

[1:08:18] valves.

[1:08:18] I'll just mention that the capacity fees are based on capacity fee study that the border

[1:08:23] proves some time ago.

[1:08:25] So there's actually a report that shows how they're calculated that I could share with you.

[1:08:29] And I will add to you, I think they touched on it, but it's really the system buy-in element.

[1:08:37] So the district and over time, we've made the investments for pumping capacity, pipeline

[1:08:44] conveyance capacity, water storage, it's the capital investments that have been made.

[1:08:50] So this component is the buy-in for these services, buying into that capacity that's been already

[1:08:58] are they completed or planning for the future?

[1:09:00] As they say in family feud, good answer.

[1:09:03] That one, good answer, good answer.

[1:09:04] That one makes sense that I couldn't figure out

[1:09:06] out of what was here.

[1:09:09] And I suppose that that goes forward

[1:09:11] to what we've been hearing since the policy fire

[1:09:14] that everybody wants to have bigger capacity

[1:09:18] and the ability to put piping in the streaks

[1:09:22] and even in your own letter, you just can't do that

[1:09:25] without expanding these pipes to such as large extent and these kind of fees would would indicate that. Thank you.

[1:09:32] Awesome, that was a great discussion.

[1:09:35] I think we should bring this to a vote.

[1:09:37] Let's see.

[1:09:38] Could I guess we're looking for a roll call vote Susan?

[1:09:42] Do we?

[1:09:44] We don't need a roll call vote if we're oppressed.

[1:09:46] Let's just go ahead and all those in favor say aye.

[1:09:49] Aye. All those against say nay.

[1:09:52] Are there any abstentions?

[1:09:54] Great. Moving on. Moving on to item number 9, 9A, Finance and Administration, 2025,

[1:10:02] rate and study. Financial analysis and revenue requirements. Is this Brian Richey?

[1:10:09] All right. Good morning, President Kordesky and directors. I'm going to share my screen.

[1:10:16] All

[1:10:34] right, so today we are going to go through a financial analysis and revenue requirements.

[1:10:40] firements, PowerPoint that's going to basically be the first step of the rate study process.

[1:10:47] So we're going to be setting rates for five years, for 2026 through 2030.

[1:10:53] And I'm here today with our rate study consultant, John J. Gower, who we've been working with

[1:11:01] him and his team to basically go through all of the costs for the district and to determine

[1:11:06] and what is the actual revenues that will need

[1:11:10] over the next five years of the study.

[1:11:16] So what are the elements of the rate study, briefly?

[1:11:19] So in November, we came in,

[1:11:22] we discussed some policy principles,

[1:11:24] which I'll go over in a couple of slides,

[1:11:26] which are essentially goals

[1:11:29] that we have for this upcoming rate study.

[1:11:32] So today, the next step is we're gonna be going over

[1:11:35] the financial plan and analysis,

[1:11:36] looking at all of the costs that we have and looking at what we need in terms of revenue to make sure that we can meet those cost obligations over the next five years.

[1:11:48] So then after that next step there will be a cost of service analysis where essentially we'll be assigning costs to different classes of customers based on the burden of cost that they share in the revenues that it needs to meet that burden.

[1:12:03] But then draft rates will be brought to the board and then eventually there'll be public

[1:12:10] workshops for customers to be able to weigh in and give their feedback.

[1:12:15] There will be a public hearing to adopt the rates and then this is an important one.

[1:12:22] There's an annual confirmation of the rates that occurs.

[1:12:26] So essentially when we get to the final rates that are adopted, we're going to be adopting

[1:12:31] what's the maximum rates that we can adopt, but every year we can come to the board,

[1:12:37] and if we feel that we don't need to raise rates to a certain level, we can actually reduce those

[1:12:42] rates. So that's important to keep in mind, it's an annual confirmation process that comes to the

[1:12:48] board. So today won't be the actual rates, that'll come at a later time, but it will show the revenue

[1:12:53] requirements that we need. So why is it important to do this? So it supports the key district

[1:13:02] business values of sound sound financial management sound planning and appropriate investment.

[1:13:08] It also supports the debt issuance for the pure water project. So the board has historically

[1:13:16] paygoed or paid cash for most of its CIP projects. So what this is showing is that there is

[1:13:23] a need to issue debt for the pure water project. And then it provides cost certainty for our

[1:13:29] customers as well. It lets them know, okay, over the next five years, you're sort of what I have to

[1:13:35] look forward to in terms of what the eventual rate increases will be.

[1:13:43] So, as I said, back in November,

[1:13:46] we brought to the board policy principles, which are basically goals for the rate study. And so,

[1:13:54] I'll go through these really briefly, but the first policy principle was to maintain a rate structure

[1:13:58] that is fair and equitable across customer classes and to maintain commercial water budgets

[1:14:05] that promote efficient use in a manner that supports business and economic development.

[1:14:11] The second one is to maximize revenue stability to navigate variable economic and hydraulic

[1:14:18] conditions.

[1:14:19] So essentially what that means is there's certain fixed costs that the district has no matter

[1:14:25] it, you know, if it's every precipitation, no matter what happens with our supply, from

[1:14:30] MWD, there are certain fixed costs that the district incurs, and we want to try to ensure

[1:14:36] that there's fixed revenues meet those fixed costs.

[1:14:39] So one of the things that's happened over the course of great studies in the past is we've

[1:14:43] been trying to make sure that as these fixed costs continue to increase, that we're meeting

[1:14:48] them with fixed revenues as well.

[1:14:50] So that's part of that second principle.

[1:14:52] The third one provide a strong price signal to drive an efficiency ethic and minimize rate impacts.

[1:15:00] So we want to ensure that customers that are efficient with their water usage aren't incurring the cost burden of inefficient users. So we want to make sure that that's that's fair. So that's what that third principle is is for the fourth one is to ensure the rates are compliant with California law. So there's a proposition to 18 process that we're going to go through and we want to make sure that everything can be justified and defensible.

[1:15:29] and that the eventual rates are in line with California law and then the fifth one is a new one

[1:15:36] that we added for this rate study and it's related to debt issuances. So we wanted to ensure that

[1:15:42] we meet a minimum debt service coverage ratio of 1.5.0. We work with our financial analyst PFM

[1:15:50] to determine that this is a number that allows us to receive a better rating than we normally would

[1:15:58] but if it's lower, if it's lower than 1.50.

[1:16:03] So that was sort of the genesis of adding

[1:16:05] this additional policy principle for this time.

[1:16:11] So there are certain assumptions

[1:16:13] that along with WRE, water resources economics,

[1:16:18] we worked with their team

[1:16:19] and came up with certain, in general,

[1:16:22] assumptions to have in the model that was forecasted.

[1:16:26] So there's no right or wrong answer to this.

[1:16:29] essentially how we look at these assumptions as we look at historical information, we look at

[1:16:34] our budget, we look at inflationary conditions, and then we come up with a best estimate that we

[1:16:42] feel can be defended and that we can justify within the financial analysis. So we have our operating

[1:16:50] expense assumptions. One that I wanted to highlight on there was MWD water purchases. So MWD water

[1:16:59] purchases are pretty much a third of the costs that we have at the district and those costs are

[1:17:06] what we call passed on to the customers. So as rates increase with MWD, those costs then are

[1:17:13] also increased and passed on to our customers. So in the analysis that we have today,

[1:17:19] we already know what the rate is for MWD for 2026. So that's essentially baked in already. And then

[1:17:27] for 2027 going forward, we're assuming that those costs are essentially netted off by increased

[1:17:34] revenues that we pass through on the customer bill. We have capital expenses in the analysis,

[1:17:42] so we got an approved 10-year infrastructure improvement plan from the board in November,

[1:17:50] and so that is included in the analysis, but it's smoothed over the 10-year. So what that means is

[1:17:57] We wanted to make sure that the revenue needs that we're bringing to the board had some fluidity to them.

[1:18:05] And so the IIP is basically budgeted to be even over the 10-year process, but it's a full complete IIP that was brought to the board.

[1:18:15] The reserves are fully funded in the analysis, so we have our 25% of operating budget included three years of current appreciation expense for the policies.

[1:18:25] And finally, we have our debt service projections also included.

[1:18:31] So the first one, pure water allocation, 11% of the debt service,

[1:18:35] potable water, 35% to recycled water, 54% to sanitation.

[1:18:41] Those percentages, why the percentages?

[1:18:43] There's a nexus that we've come up with that essentially assigns the cost to the pure water

[1:18:49] project to these enterprises based on the estimates that we've had.

[1:18:53] So, for example, running in related costs would go to recycled water,

[1:18:58] cost related to advanced water purification facility would go to sanitation, etc. So,

[1:19:05] that's sort of the background for those percentages. The other non-pure water projects would continue

[1:19:12] to be pay-go as has been done in the past where we will pay cash for those. We also included debt

[1:19:19] service through 2029 for the advanced meter water infrastructure project and so that's typically

[1:19:28] around I think we have about five million left on the project and so that'll be done in 2029

[1:19:33] and that's also included in the analysis and finally we have our estimated pure water project

[1:19:42] get service and I put based on the current rate environment which is fluctuating so today

[1:19:48] We base the some of the loans such as the WIFI alone is based off of a 30-year treasury bond or closely to that.

[1:19:57] And so you'll see some percentages today regarding that debt service today.

[1:20:03] I think the interest rate was at 4.7.

[1:20:05] In our current model, we have it at 5.2.

[1:20:08] So there's a little bit of contingency baked into there just to be conservative.

[1:20:12] But we are obviously analyzing that and you'll see in one of the slides coming up that there's actually well let me just go to the slide so you can see it.

[1:20:23] So in the next slide there's actually a comparative.

[1:20:26] So if you look in the first and I hope everybody can see that I'm looking at it now hopefully you can see that on your screen.

[1:20:32] But in the first sort of box area here there's a prior projection that we brought to the board in September 2024.

[1:20:40] And what this essentially was was our internal look at where we felt the revenue needs would

[1:20:47] be for the next 10 years based on the current information that we had in September.

[1:20:53] So in September, the interest rate was lower and we were assuming at that time a 4.4% interest

[1:21:03] rate for our WIFI alone.

[1:21:04] And we are also under the assumptions of a prior tenure IIP.

[1:21:11] So since that time, the interest rate has gone up.

[1:21:15] So it's about an 80 basis point increase since we last rejected it.

[1:21:21] So it's up to 5.20 now in our model.

[1:21:23] And there's also been an updated IIP.

[1:21:26] So we're using the latest and greatest of our capital projects.

[1:21:29] And that added some additional costs on there.

[1:21:32] But the key thing that I want the board to look at really with this slide, because this is sort of the meeting potatoes of what we're looking to present and I should say today's presentation nothing has to be approved.

[1:21:45] This is all just for your review and feedback for us as we move forward in the process.

[1:21:53] So, the one thing that I want the focus to be though is the last column in here.

[1:22:01] So, if you look at the very last column and you look at the prior projection,

[1:22:06] we're estimating about a 4.2% increase in our revenue needs over 10 years,

[1:22:13] which factors to about $8 annually on the monthly bill,

[1:22:18] So, excuse me, that it would increase.

[1:22:22] In the current projection, we're estimating about 5%, so it's gone up about a little under

[1:22:28] a percent since the last time that we brought it to the board, and we're estimating that

[1:22:32] the average bill increase would be about $10 to $11 for the customer.

[1:22:38] So I wanted to start there because there is going to be some numbers that you're going

[1:22:48] to see in the different enterprises, but this is looking at the combined view of the water

[1:22:53] and wastewater customer. So essentially if you're looking in that 2030 column, you can see

[1:22:58] that it looks like that the projection will be around 284 versus where it was before it was at 278.

[1:23:07] So it was about a $6 difference from the previous view that was brought to the board.

[1:23:13] So just wanted to highlight that there and then now I'm going to turn it over to Sanjay because Sanjay's going to go into a little bit more detail of what the analysis entailed and then we'll both be here for any questions that you may have.

[1:23:27] Just want to point out one thing.

[1:23:30] A point 0.08, a point 8 change is almost 25% even though it's only 1% more.

[1:23:38] That's true.

[1:23:39] That is true when you look at it like that's a good point.

[1:23:42] Jack.

[1:23:43] I have a question.

[1:23:44] Brian, when you say average bill, $10 to $11, and then you say 278 to 234 in the year 2030?

[1:23:52] Yes.

[1:23:54] You might have said it, I might have missed it, but that's based on how much is your average

[1:23:57] bill?

[1:23:58] Like who, what do we, what type of customer is that?

[1:24:00] Yeah, so the average bill is based on, there's a couple of assumptions, so it's a residential

[1:24:05] bill.

[1:24:05] We're assuming that it's 20, 100 cubic feet usage a month, and we're, the average bill

[1:24:14] we're looking at is the first column for 2025 is $215 for that average customer at 20

[1:24:22] HCF.

[1:24:23] Are we saying that's the, like, we add up all of our customers, and that's the average bill is so half of them are below 215, half of them are above 215.

[1:24:34] So this would be, and I believe it's an efficient, I'm looking over at Joe.

[1:24:38] I believe it's an efficient customer that we're looking at.

[1:24:42] An efficient average customer?

[1:24:44] Yes.

[1:24:44] Yes, as I recall it, we'd have to pull up the last rate comparison study.

[1:24:53] And the 20 HCF is what I recall was, that was pretty much in line with an efficient customer, so that stayed within budget.

[1:25:08] So if your bill is 100, it'll be 104, that's that your bill is double the average then instead of going up six bucks maybe goes up 14 bucks, correct.

[1:25:18] I think it's important to point out that at this point, we've analyzed the revenue needs and the next step in this process is the rate structure development.

[1:25:27] And within the rate structure development has been the policy of the board to try to minimize the impact on efficient customers and.

[1:25:35] And I'll leave it at that because the way I was the way I was like to analyze it is

[1:25:42] what how much will your how much will your someone says to me what will my bill go

[1:25:46] up to.

[1:25:47] So I want to, you know, eight bucks, if you're paying 100 now in 2030 it'll be 105 or if

[1:25:54] you're paying 300 it'll be 320 whatever that just so that that's really important like that's

[1:25:59] what people I think care about is going to be $10 more a month, $20 more a month for

[1:26:03] the same service.

[1:26:03] Let me just mention the, the, this isn't mediums, which is half above half below.

[1:26:09] This is mean or average and what I recall we did in the last, last time we did a rate increase

[1:26:15] in 2020, the study, we put a calculator on the website so people could see their individual situation.

[1:26:23] And that's, Dawn says that's what he was going to say.

[1:26:26] But can we clarify that this is just the impact of the increase in rate and interest rate, right?

[1:26:31] is that in terms of the change between the prior view to the last view. Yeah, that's primarily what's driving it. It's the increased interest rate. It's the increased capital projects and there's also a requirement that I don't want to steal some days. Thunder, but there's actually a requirement of the state revolving fund loan that we're looking to receive from California.

[1:26:57] There's a maximum, what's called a maximum annual debt service requirement that essentially

[1:27:05] what it does is it takes, it looks at your five-year debt service, so from 2026 to 3030.

[1:27:12] And instead of applying the debt service coverage based on the actual debt that you have in each

[1:27:18] year, it looks at what year is the highest.

[1:27:21] So for us, for our case, it would be 2030 is when we would have the highest debt because

[1:27:26] is the debt's going to be ramping up as we get the project going.

[1:27:30] Well, in terms of looking at the coverage for that loan,

[1:27:33] it says you can't take the coverage from 2026

[1:27:36] and apply that or 2027 in that year.

[1:27:39] You have to take the highest from 2030

[1:27:42] and apply that back to the preceding years.

[1:27:45] So what that does then is that makes it

[1:27:48] a tougher coverage ratio to meet.

[1:27:52] And then that in turn makes it

[1:27:53] and so that we have to have a higher revenue needs to meet that coverage.

[1:27:59] But I should say that the benefit of that is without using that loan,

[1:28:06] we would not say we're saving essentially $25 million projected over the life of the loan

[1:28:14] by going with SRF as opposed to if we were to issue bonds, for example.

[1:28:19] So there is a benefit for that, but in terms of the coverage ratio that needs to be made met that that has actually increased that so that's part of it as well.

[1:28:30] Those are really the three things that are driving it from the last.

[1:28:33] And if infinite rates go down over the next few years, will it go?

[1:28:37] Well, that's that's the thing like when I, you know, one of the first slides.

[1:28:40] I talked about when we eventually get to the rate setting process and we're established

[1:28:46] the adopted rates, we're setting them at the highest that we can set them.

[1:28:52] But if things work out better for us and we end up saying like, hey, we don't need to

[1:28:57] charge our customers this rate, we can lower the rates because we've adopted up to a certain

[1:29:03] amount.

[1:29:04] So that's what the annual confirmation part is about where we come to the board and say,

[1:29:08] Hey, we're still good to proceed ahead with these rates.

[1:29:12] So this is a case scenario.

[1:29:14] To elaborate a little bit on that.

[1:29:15] So under the prop to 18 process,

[1:29:18] the board will eventually adopt rates

[1:29:21] for the next five years.

[1:29:23] And then what we've done for at least the last 10 years,

[1:29:27] so I guess Dave and I have been here,

[1:29:28] is we come back every year and we confirm the rates.

[1:29:32] For the most part, we've been pretty accurate

[1:29:36] in our auction, not pretty accurate.

[1:29:37] We've been the accurate in our projections and nine times out 10, we've confirmed the rates that were previously adopted.

[1:29:45] There was a time in the past where we saw the sanitation, revenue, and

[1:29:51] reserve balances were exceeding our targets.

[1:29:54] So our recommendation to the board at that time, which was adopted by the board, was to not have-

[1:29:59] .

[1:30:00] I'm a rate increase in sanitation one year. So we do go through that process. And in talking

[1:30:06] to, you know, there's a lot of uncertainty in the interest rate direction right now.

[1:30:12] And the recommendation from PFM was to use the 5.2 assumed interest rate for WIFIET. But

[1:30:19] as Brian mentioned, you know, if that interest rate whenever we close the loan ends up less than

[1:30:24] that, which hopefully it does, then we would be able to recalculate each year and determine

[1:30:30] whether or not we needed to move forward with the full rate increase as projected.

[1:30:36] And that primarily is going to affect sanitation, compared to the other two enterprises.

[1:30:41] And just one more clarification, what's the average size family this applies to for parents

[1:30:48] and two children?

[1:30:49] Three, which is the average household size in the district.

[1:30:52] Oh, okay, and we know that that only takes up what 30% of the cost of the water is the external use that's 70 percent correct. So the assumption is three people per household, which is primarily for the basis of sewer.

[1:31:08] The sanitation so for the inside use, it still assumes the three people at 55 gallons per person per day under the current rules, which is going down.

[1:31:21] and it assumed I forget the size of the outdoor lot but the average outdoor lot in the

[1:31:28] district.

[1:31:30] So, I'm a little confused on debt coverage ratio, just a thumbnail sketch, if I have $100

[1:31:37] in debt, what does VCR apply to this project?

[1:31:42] What exactly are we talking about?

[1:31:44] Yeah, so let's say you have, let's say your net revenues are a hundred and twenty dollars.

[1:31:50] So after you subtract your expenses from your revenues, you have a hundred and twenty dollars.

[1:31:55] And your debt is a hundred.

[1:31:57] Then your DC, DSE would be that service coverage would be one point two.

[1:32:02] So we need one point five.

[1:32:04] We need one point five.

[1:32:05] Which means we have to have a hundred and fifty net.

[1:32:08] Correct.

[1:32:08] Okay.

[1:32:09] Right. 1.5, we have that discussion with the adoption of the policy principles. So 1.5,

[1:32:19] we are significantly more likely to have a favorable credit rating, which in turn reduces

[1:32:25] your debt payments.

[1:32:28] The payments are okay, right?

[1:32:30] Right.

[1:32:30] All right.

[1:32:30] So we could achieve a lower-age at the cost of-

[1:32:36] At the cost?

[1:32:36] At the cost of-

[1:32:38] an interest rate. Correct. So we're trying to balance all that and that's

[1:32:42] revenue needs. Okay. It's a lot of balance and a lot of power. Yeah. I'll turn

[1:32:49] it over to now. Oh. Since you made this presentation, you mentioned that we

[1:32:57] could still do pay go even though we have this project going on.

[1:33:02] Please explain

[1:33:03] that because we're going to be paying millions and millions of dollars. So we're

[1:33:09] have a cash pocket that we can do pay who is at the idea. That's correct yes so over the so

[1:33:15] basically what we did is we looked at the tenure infrastructure improvement program and looked

[1:33:21] at what the capital needs are for that program taking out pure water projects and based on what we

[1:33:29] have in here for the revenue needs that would still meet the obligations for those projects by a

[1:33:33] paying cash. Okay thank you. Thank

[1:33:41] you Brian, president, board member, staff, publics,

[1:33:45] my pleasure to be here to present this presentation associated with the financial plan for these

[1:33:50] three enterprises and how to fund pure water. So we'll go to the next slide. So I want to talk a

[1:33:56] little bit about the rate study process. How do we do a rate study then go into the pure water

[1:34:01] assumptions both for the rate study and for the pure water. Then we'll go into the financial

[1:34:06] plan, associated with each of these enterprises, that's portable, recycle, sanitation, during

[1:34:13] my presentation if you have any questions, please interrupt me, I want to make sure you're

[1:34:17] on par with me, you know, we don't have anything misunderstood and then talk about next steps.

[1:34:24] So how do you do a rate study?

[1:34:26] First, the goal of the study.

[1:34:27] So the goal of the study is to develop a 10-year financial model.

[1:34:30] We've developed a model in Excel's non proprietary staff, has a copy, Brian, has a copy of

[1:34:35] the model.

[1:34:35] So, we're looking at different risk.

[1:34:39] We can evaluate different financial risk, look at different indicators.

[1:34:44] But the key here is to ask ourselves how much revenue we need on an annual basis to meet

[1:34:49] our coverage ratio requirement, as mentioned, that's a big indicator reserve target.

[1:34:53] Then we do what we call cost of service.

[1:34:55] Cost of service is looking at the cost of providing that service, looking at your customers that

[1:35:01] demand those services and connecting them, developing that nexus.

[1:35:05] throughout use this word nexus a lot in this board meeting, that's great.

[1:35:09] So that's what we want to do, we want to connect the dots between the cost of

[1:35:12] providing service and nexus. Then we go into capacity fees, that's the one-time

[1:35:17] fee for development to occur, to join the system. There's infrastructure we built

[1:35:22] as mentioned, and they're just basically paying their part to join the system.

[1:35:26] There's also something called miscellaneous fees, those are one-time fees for

[1:35:30] people, not one-time fee voluntary fees that people pay to turn on and off

[1:35:34] their meter, for instance, that could be a miscellaneous fee. Then we developed the proposed

[1:35:39] five-year schedule. That schedule will be for all three enterprises. We will be performing

[1:35:47] your customers about the need of these increases, why are these increases occurring, what's changing,

[1:35:55] public outreach. In this step, it's really about promoting the value of our service, right?

[1:36:01] It's about what you've done, your accomplishment, and how you're going to meet the future challenges

[1:36:07] like you're talking about now with the buyers and stuff like that, really informing the customers

[1:36:12] and letting them know the leadership that you're taking.

[1:36:15] Then we go through the Prop-2-18 process.

[1:36:18] Prop-2-18 process besides the administrative record and the report that we developed, there's

[1:36:23] also a procedural requirement, there's some new code and play that we want to take advantage

[1:36:27] of, the limits liability.

[1:36:28] So we're going to be taking to that onto account. So basically typically we say 45 days. We're going to use 60 days now for the noticing. We send that notice to all your property owners.

[1:36:39] They have an opportunity to provide comments.

[1:36:43] We'll respond to those comments and then we'll have a public hearing. Yes.

[1:36:46] Yeah, I think I think it's important if you can describe I explained the prop to 18 to San Juan

[1:36:52] court case so everyone knows what that means. Yeah. So we have a close session on so we have a

[1:37:00] closed session discussion that that we'll get into some of the court cases related to rate studies today.

[1:37:07] Yeah, but just in general with profit to 18 San Juan, just so yeah, obviously. So I mean,

[1:37:13] The thing is is that so first the voters approve prop to 18 when the voters approved for

[1:37:19] water and wastewater was not considered property related and then through series of court cases

[1:37:25] the legal framework for designing rates has changed. So the big one was big horn where water and

[1:37:31] wastewater is considered property related then we have the San Juan Capastrano which basically stated

[1:37:36] that you need to have a nexus and a logic with your rate structure and it needs to be documented.

[1:37:41] There needs to be an administrator for record.

[1:37:44] And so that's what we've been doing through this process,

[1:37:46] and there's more court cases out there that have occurred.

[1:37:49] It's just providing, unfortunately,

[1:37:52] it's more and more burden on the agencies

[1:37:54] and making sure there's a logic and rationality.

[1:37:57] So that's what we've been going through this whole process.

[1:37:59] That we're limited and how much we can charge

[1:38:01] based on how much our cost is.

[1:38:03] Exactly.

[1:38:04] That's exactly what it is.

[1:38:06] And the way I like to look at it from a non,

[1:38:08] I'm not a lawyer, I'm an economist,

[1:38:09] is if you look at it from what a tax,

[1:38:13] a general bet, a tax and a fee for service,

[1:38:16] a tax, it's distribution, it's general benefit.

[1:38:18] This is a specific benefit to the property owner.

[1:38:22] So it's a fee for service.

[1:38:24] And because it's a fee for service, we need to show that.

[1:38:27] We can't have one person paying another person

[1:38:30] benefiting from it.

[1:38:31] We can't subsidize customers.

[1:38:33] Everyone has to pay their fair share.

[1:38:35] So that's the nexus.

[1:38:36] So we go to rate study process as mentioned Brian talked about the policy framework we want to have goals and objectives stated out front explicitly so we know what we want to accomplish so we know what success is that identified at the 1.5 for instance is a goal and objective coverage ratio.

[1:38:55] then we develop the financial plan.

[1:38:58] Financial plan is basically, again, that revenue needs,

[1:39:01] how much revenue on an annual basis,

[1:39:03] and it's really answers to question about debt.

[1:39:06] Should we issue debt?

[1:39:08] How much debt should we issue?

[1:39:09] What's the coverage ratio?

[1:39:10] What's the reserve targets?

[1:39:12] It's the financial condition.

[1:39:13] Then we get into cost of service,

[1:39:15] and that's now the allocation of the cost.

[1:39:18] Let's looking at the business model

[1:39:19] of providing service, allocating costs,

[1:39:22] and to the customers.

[1:39:23] In this step of the cost of service and rate design, we start asking ourselves about

[1:39:28] like fix and variable revenues, how much of those do we want to cover, what's the appropriate

[1:39:33] rate structure for our community still needs to reflect the cost of providing service,

[1:39:38] but we can start looking at these other secondary issues.

[1:39:42] Then we get into documentation.

[1:39:45] Documentation is a key deliverable of this study because that's your defense.

[1:39:49] it is lengthy. I suspect it's going to be over 150 pages with the three enterprises together and it has all the tables.

[1:39:58] So, one of the things about San Juan was that the consultant at that, I didn't do that study.

[1:40:04] The consultant had an Excel model and the judge said, no, you can't just give me an Excel model. I want it all documented.

[1:40:10] So that's what we do now. We translate the Excel model into a report and we have all the tables and there's no black box.

[1:40:16] So you can actually get a pending calculator and start doing the math and follow along.

[1:40:22] And usually everyone in a community has one person that does that.

[1:40:26] So that's what we anticipate.

[1:40:28] So you have maybe one person in your community that will actually follow the math and they

[1:40:31] can see how everything's derived and there's no black box.

[1:40:35] So financial plan.

[1:40:37] What we do is we start looking at projecting out revenues and expenses, we look at vegetarian

[1:40:42] information, historical, we work with staff and ask ourselves whether we think is appropriate

[1:40:47] for the future. Brian showed those percentages that we're using. The second one is determining

[1:40:53] the capital improvement funding, and that's really about how much cash and debt do we want to

[1:40:58] issue. We, PFM, by the way, a lot of great information that we incorporate in our model.

[1:41:04] We also look at the reserve targets. We evaluate that. We know recommendations reserve look great,

[1:41:09] we're not recommending any changes there, and then the debt covenant. And then based on all of these

[1:41:14] information we can arrive at the financial needs of the

[1:41:17] agencies at the enterprise. So what are some of the key

[1:41:21] assumptions? As mentioned, you're pretty much a built-out

[1:41:24] community, so you're just having some infills here and there,

[1:41:27] so we're assuming no growth being conservative there

[1:41:31] with sales, we're assuming no growth in sales in 2025.

[1:41:35] You know, one of the challenges with water sales is that

[1:41:38] it's very unpredictable as we've all experienced.

[1:41:41] Some of you who've been here for a while, you know that,

[1:41:43] you see it all over the map. And so that's one of the things we want to do is be the big conservative.

[1:41:48] As I mentioned, reserves were really, I like these reserve targets that we have, 25% operating,

[1:41:53] three years of depreciation of capital replacement reserves. And then we also have the pure water.

[1:42:01] That will be mostly all the capital with the IIP will be funded by Pego. And then pure water

[1:42:10] will be mainly funded by debt.

[1:42:12] And I'm going to talk a little bit more about that.

[1:42:14] And then we have the required coverage of 120,

[1:42:17] but the desire 150.

[1:42:21] So let's talk about pure water assumption.

[1:42:23] So we are using the debt assumption allocation

[1:42:27] percentages that PFM has.

[1:42:29] We've taken to that into account.

[1:42:31] And we are incorporating some pay go associated

[1:42:36] to fund pure water.

[1:42:38] Specifically, we're using $15 million from Potable,

[1:42:40] $10 million dollars for recycling and $10 million dollars from sanitation.

[1:42:46] We are issuing debt.

[1:42:48] We are anticipating $466 million dollars as the project with SRF loan and WIFIA.

[1:42:54] Now the SRF loan is sort of one of the main drivers of the study, as Brian mentioned.

[1:43:01] And that's because of that five year maximum annual debt service requirement.

[1:43:05] As Brian mentioned, we have to look at the debt typically when we do these studies, we

[1:43:09] just look at this year's debt service and we calculate the coverage. Now we have to go out five

[1:43:14] years and see what the highest is of those five years and use that to determine the coverage ratio

[1:43:20] requirements. So that does, and what year is it 5.2 now? That's where we're, no, with years lower,

[1:43:27] as Brian mentioned, it's at 4.7 tied to the Treasury, but where the challenge is uncertainty,

[1:43:36] The PFM is recommending that we use 5.2 for this entity.

[1:43:40] We're hoping that it's not 5.2.

[1:43:43] So what

[1:43:47] is it?

[1:43:48] Is there any vehicle that?

[1:43:51] Once it's frozen is it frozen in places at 5.2 for the last next 10 years or 15 years or is it?

[1:43:57] Can it vary depending on the interest rate?

[1:43:59] The actual business interest rate, which means it could go higher and could go lower?

[1:44:04] I think Don's going to ask that question.

[1:44:05] So, WIFIA's interest rate is locked in when you draw on the loan for the first time.

[1:44:13] So the interest rate, so once you lock it in, then that's the interest rate for 35 years.

[1:44:19] Unless if you, but of course if interest rate environments change significantly, with WIFIA,

[1:44:26] you could refinance it by issuing your own debt and paying off WIFIA.

[1:44:29] So there's a strategic element here which we will employ, we will be smart about when we

[1:44:36] draw on the loan first to try to achieve the lowest rate for the district and for the

[1:44:41] rate payers.

[1:44:42] So, even though it says 5.2, that's not what we hope to do better than that, but we also

[1:44:49] are relying on our financial advisor to plan for 5.2 as being the worst case scenario.

[1:44:55] And really, in rate setting, we can set rates lower.

[1:45:00] But we cannot set rates higher than what we go through in the rate setting process. So that's kind of what's guiding us. Our hope is we will achieve a better rate than that. And we will be smart about when we drawn those funds because we realized that that will lock that rate permanently. And it is a fixed rate. It's not a variable rate loan. So the terminology we like to use is there's adopted and there's implemented. So we're going to.

[1:45:29] a adopt, eventually something the board can consider the adopting rates, I should say.

[1:45:36] And if the board does adopt those rates, then as Don mentioned, each year staff comes

[1:45:42] back and evaluates whether we need to implement that or implement something lower.

[1:45:48] That's great that you do that, and then you have a historical track worker where you have

[1:45:52] done that.

[1:45:54] So, I do have a question. So, depending on, I guess it didn't fit right in here. I see we're

[1:46:00] funding the project with a range of sources, right? So, we have ratepayers, money. We have debt

[1:46:13] and we have grants. And so, is any of that money at risk with a new and

[1:46:22] administration. I don't know. Is there any of this? Is VG Board? How much money are we

[1:46:33] getting from the federal government? Is that backing the WIFI alone? The WIFI alone is federally

[1:46:38] funded, yes. So Jeremy might have some opinion on this. The current thinking, I'll say, is

[1:46:48] is that the WIFI alone is probably the least at risk

[1:46:50] because it's a loan program as payback.

[1:46:54] The Bureau of Reclamation grants are widely used

[1:46:58] in both Republican and Democratic areas.

[1:47:02] I think there's some other grants that are more at risk

[1:47:06] but are not directly related to this project,

[1:47:10] the Peerwater Project.

[1:47:11] So in a roundabout way that's to say

[1:47:14] that's our current thinking,

[1:47:15] But, you know, we don't know for sure.

[1:47:18] As close as you can get, I think.

[1:47:19] Yeah, I'll just add, there was a memo to a memo,

[1:47:23] a federal memo related to the specific programs

[1:47:27] that were on the cutting block.

[1:47:29] Bureau of Reclamation Funding for this purpose was not among them.

[1:47:34] The other thing is I think you really need to look

[1:47:35] at the enacting legislation to see

[1:47:38] if it was bipartisan or not.

[1:47:40] And Title 16 funding, which is what we're receiving,

[1:47:43] being always has been a bipartisan proposal.

[1:47:47] So I think of all things, it's least likely

[1:47:51] to be eliminated.

[1:47:53] So I feel like we're in pretty good shape.

[1:47:55] There's a lot of funding that will potentially

[1:47:58] be eliminated before this.

[1:48:01] That's good to hear, I appreciate that.

[1:48:03] And the last thing on this slide is the operating expense,

[1:48:07] which we'll start planning on fiscal year 2029,

[1:48:11] will be funded by potable water.

[1:48:12] So this slide shows a couple of things first to show yes, please in a previous slide, one of the first slides we talked about 35% of the income will be coming from recycled water.

[1:48:27] So is that considered part of a water?

[1:48:30] Yeah, so that was for the debt service payments.

[1:48:34] So the debt service payments are allocated for the construction of the project, but this last bullet is for the ongoing operating expenses of pure water project will be funded by potable water utility.

[1:48:47] So it's separating the construction will have the allocation and then the full operating will go to potable water.

[1:48:54] And potable is just considered anything that comes out of the lake or from that.

[1:49:02] So potable water, the potable water enterprise is basically all the water that goes to your

[1:49:07] home from the potable water system.

[1:49:09] So going back to the framework for the funding and financing for the pure water project, there's

[1:49:15] two distinct phases of it.

[1:49:16] There's the construction phase and there's the ongoing operation and maintenance of it.

[1:49:20] During the construction phase, we allocate a cost based on the nexus that Brian briefly described where basically sanitation is paying for the advanced fire treatment plant because that's the

[1:49:33] Elimit that's necessary for the regulatory compliance of the sanitation system. The portable water system is paying for

[1:49:41] improvements related to the project from

[1:49:44] basically the point that the molecules come out of the plant into the reservoir and then out and eventually into the distribution system.

[1:49:54] The recycle water has a nexus to the brine line because it decreases salinity in the groundwater in the basin.

[1:50:04] So, we have a nexus to the recycle system from the brine line.

[1:50:11] And that's how we allocated the cost for that to the brine line.

[1:50:15] And then once it transitions to the operations, then that treatment becomes an asset.

[1:50:21] So, the portable water system is purchasing that asset from the sanitation system.

[1:50:27] that asset purchase is going to pay for the treatment necessary to create that asset.

[1:50:35] So it's one way to look at it is it's basically the advance bar treatment plant becomes your

[1:50:41] treatment plant that Matt currently uses before we buy the water from Matt,

[1:50:48] although we're buying it from ourselves and the advance bar treatment plant.

[1:51:01] I understand everything you said, but it's a lot of the price.

[1:51:05] I know it was kind of constant.

[1:51:06] I'll just add, we did talk about this topic in our annual

[1:51:12] strategic planning meetings.

[1:51:14] And we had a flow chart that illustrated what Don explained.

[1:51:19] And it might be helpful if we send that to you again.

[1:51:22] And essentially, the flow chart shows how we propose to allocate the

[1:51:28] cost to the different enterprises and what the logic behind that was, and so we can share that

[1:51:33] with you and I think it will help to explain that.

[1:51:40] So this slide shows that that associated with

[1:51:44] pure water and it shows a couple of things first. It shows how it's allocated among the different

[1:51:49] enterprises as Brian mentioned. It also shows the total each year and that the big number for us from

[1:51:56] financial perspective is 2030 where you see that $14.4 million basically of debt service payment.

[1:52:05] And then that number in 2030 is what's going to drive the rate increase in 2026. So that's the

[1:52:13] this is legal under 218. Yeah well this is a requirement of the SRF loan.

[1:52:22] Yeah, so SRS stated and sometimes and this is a relatively new phenomenon SRF didn't have this before and so this is a newer one.

[1:52:33] I've seen this before back like 15 years ago.

[1:52:39] I used to see this stuff but not I did it now I'm seeing it again and this you're not the only client.

[1:52:43] I've seen other agencies now that are having this issue with SRF where we're looking at the maximum over the five years.

[1:52:50] So that 2030 numbers is sort of it is pushing the rate increase in 2026.

[1:53:06] $270 million out of the standing.

[1:53:12] You added up.

[1:53:15] 49% more and less.

[1:53:16] Yeah. Is the 14 million is the is the interest cost? No, the debt service. That's that's that's interest plus payment principle that plus interest. So a fully amortized payment. Yeah, that's what yeah, that's your.

[1:53:34] Yeah,

[1:53:37] and I know you're your background. So the the WIFI is a 35-year loan versus a typical bond would be an SRF would be a 30-year loan. So in the PFM financial model, it takes in the count of different

[1:54:01] So the two financial indicators I mentioned is the coverage ratio requirement. And it's really that five year maximum that we're looking at annual debt service and then making sure we meeting the ending balances in the out years.

[1:54:14] So it's interesting from a financial perspective, modeling.

[1:54:19] The first challenge we have is meeting the five years, and the second challenge is that

[1:54:23] year is making sure we have enough money to meet the cash needs to fund the infrastructure

[1:54:28] program, the IIT.

[1:54:31] So talking about IIP, we did look at different scenarios associated with IIT.

[1:54:36] The top one is the current IIP.

[1:54:38] We were a little concerned about how the ending balances were affected.

[1:54:42] We talked with staff.

[1:54:43] we did a lot of webinars and came up with an approach that we feel much more comfortable,

[1:54:48] which is basically averaging out the IEP. So you're still spending the same amount of money over

[1:54:53] 10 years. I'm only showing you five years, so if you add up to five years, it's not going to

[1:54:57] go to 10 years, but we're just showing you the five year expenditure, but the 10 years are the same.

[1:55:02] We're just smoothing it out. So we are recommending the use to proposed IEP and produces the same results.

[1:55:13] As mentioned, with MWD, we are taking to account the 9.5% increase and the 11.9% increase

[1:55:20] that are occurring.

[1:55:22] We are anticipating to pass through those costs in the future that's been the policy of

[1:55:28] the district in the past that MWD increases its rates.

[1:55:32] You just do an automatic pass through on to the customers.

[1:55:36] There's a lot of uncertainty about MWD as you may know.

[1:55:39] and so that helps us with that risk.

[1:55:45] And given that information, then these are the proposed increase in revenues.

[1:55:50] First, I want to just show potable water.

[1:55:53] That shows 9% than 3% each year.

[1:55:55] And then an MWD pass that will be on top for 2027 and above.

[1:56:00] Sanitation is 15%, then 8%, then fall last year by 5.

[1:56:05] Recycle is 1212 and then 1515.

[1:56:08] The reason why recycling is at 15-15 years is more to deal with the infrastructure, the

[1:56:15] pay-go capital, I mean the reserve targets.

[1:56:18] And then if we look at the revenues that are collected from potable and sanitation and

[1:56:22] looked at those two and the percent increase, we have that weighted percent increase right

[1:56:27] there at the top.

[1:56:28] It shows 10.96 and 4.69 and et cetera.

[1:56:36] So our next step is, you know, we definitely want to receive directs here from you if you

[1:56:40] any comments or concerns about where we're going because these are touch points throughout the study,

[1:56:45] is then do what we call cost of service. That's what COS stands for. Then we calculate the rates.

[1:56:52] And the rates, when we calculate the rates, we're going to actually show you the impacts of your

[1:56:56] customers. We'll show you different consumption profiles, low end users, the high end users,

[1:57:03] inefficient customers, be able to present that information to you. This is also an opportunity

[1:57:09] where we can develop that calculator that you mentioned and we can do what if scenarios.

[1:57:13] Present the five-year schedule to the board to receive comments that's a workshop.

[1:57:18] We will write a report and we want that to be also received by the board.

[1:57:22] We're also second part of the study through the capacity fees and miscellaneous fees.

[1:57:28] As I mentioned, administrative record and then conduct the public hearing.

[1:57:34] But I think that's it for my presentation. Is there any questions?

[1:57:38] questions? Any questions from the ward? Jay? I have a couple of questions. One is when

[1:57:43] we do the rate study for sanitation, how is JPA involved or are they involved, like our

[1:57:49] triumphal partners? Yes, so we are also working for triumphal. We're doing a rate study for

[1:57:55] them concurrently. That was how this was arranged. I'm actually going to be there on Thursday

[1:57:59] virtually to present the results there. We are looking at the JPA cost increases associated

[1:58:06] with the sanitation and allocation of that and we've been working with both agencies.

[1:58:11] So you'll give us our sanitation and then you'll give them their sanitation separately.

[1:58:15] And then you mentioned that the San Juan 218 case, we can't certain ratepayers can't subsidize

[1:58:22] other ratepayers. But I know in the city, and I always confuse about this, in the city of LA,

[1:58:27] they have four million ratepayers, but two million are in rate assistance. So that means the four

[1:58:33] 2 million that are not on rate assistance are subsidizing the 2 million but they're allowed to because they're not a water district

[1:58:39] or how are they allowed to but we're not how do we so agencies can use other sources of revenues that are non-rate revenue to find a low

[1:58:49] system program I believe the district does that for city takes out

[1:58:56] Yeah, so they can use the general fund, yes, but we don't have that option, correct, we're not allowed to.

[1:59:07] I have one comment in the slides that Brian showed there were three requirements.

[1:59:14] One was the values, one was that the supporting the dead influence and the last one was cost certainty for the customers.

[1:59:21] So I know we're going to have maybe town halls or whatever, so just something to think through is if that's one of the basic premises of cost certainty.

[1:59:31] And the biggest unknown is the met cost which flows through. It seems to me a little bit of a disconnect.

[1:59:39] So I know how we convey that in a way that's not going to frustrate people.

[1:59:44] We're saying we're going to have great certainty, but we can't really give that with the pass

[1:59:50] through.

[1:59:51] Yeah.

[1:59:52] And I mean, David mentioned this before.

[1:59:54] We do have some a little bit of certainty for the next, you know, upcoming year or so,

[1:59:59] but there's also a project.

[2:00:00] Section, I believe, that met has, you know, a 10-year projection that sort of gives it more of an outlook of what it will be. But from our standpoint, we can't put firm numbers in place until we actually have those rates. So you're here. Yeah. Yeah. Just two dots on that. One is we do know the 2026 rate because it has been adopted by met. And so it's incorporated as you're one of the five year rate studies. So that gives you a pretty good idea of what to expect.

[2:00:29] We will make that point to be clear that yours two through five do not include that.

[2:00:36] The other thing at Metropolitan that I do, Director Lewett and actually all the member agencies

[2:00:42] is we carry this message to Metropolitan and we tell them about this challenge and the

[2:00:47] fact that we need predictability in their rates to pass it on to our customers and so that

[2:00:53] if they have really large and extraordinary rate increases, it affects us at the retail

[2:00:58] level.

[2:00:58] So we also carry that message to them, they're aware of it and they are sensitive to that topic.

[2:01:05] Yeah and just in just a comment on my point I think we're kind of our rates are being really driven

[2:01:10] two big drivers right now one versus the pure water project which is something

[2:01:15] which we really have no choice in doing. It's the federal government really demanding that

[2:01:20] this be done and so we have no choice and the other thing we have no choice in is the rates that

[2:01:26] that come from metropolitan.

[2:01:28] And to be honest, I don't think they have any choices

[2:01:30] in raising their rates.

[2:01:31] And so I mean, it's unfortunate that both of these

[2:01:34] have come together at the same time.

[2:01:36] But, you know, and I appreciate the work

[2:01:38] that you guys have done to flatten out the rates

[2:01:42] and make them as reasonable, I guess as is possible

[2:01:46] under the given circumstances.

[2:01:52] Any other questions or comments?

[2:01:55] Seeing none.

[2:01:57] Thank you for your feedback.

[2:01:58] Thank you.

[2:01:58] That was a fantastic presentation. Thank you.

[2:02:01] Moving on to item 10, non-action items,

[2:02:07] general managers report, general business,

[2:02:10] Dave, do you have a report on general business?

[2:02:12] Thank you, President Cordesky.

[2:02:15] A couple items I wanted to note today

[2:02:17] is actually the start of a multi-day tracer study

[2:02:20] at Los Virginess Reservoir.

[2:02:22] We've shared our plans with you,

[2:02:24] and in fact the board approved.

[2:02:25] doing this tracer study where essentially we're looking at the flow dynamics in the reservoir and that will support the permitting for the pure water project and so that's beginning today and we'll take a couple days to complete.

[2:02:41] Also related to the reservoir, the ocean well, this big splash event, we've slated for March 21st, that's Friday.

[2:02:52] Today, the reason for that scheduling, we're trying to get that back on calendar as quickly

[2:02:57] as possible, also looking at a week when Congress is in recess, and that happens to be that

[2:03:06] week.

[2:03:07] There is during that week the water reuse conference that is the national conference

[2:03:11] in Tampa, Florida, but that conference will have ended and the ideas we come back and be

[2:03:18] able to attend this event on Friday.

[2:03:21] And the plan is to do it also in the morning

[2:03:23] as was previously planned.

[2:03:28] Compost is back at Las Virgines Composting Facility.

[2:03:34] In fact, we had on Saturday our first giveaway event.

[2:03:38] And so we're resuming giveaways at the beginning.

[2:03:41] We're being a little cautious in terms of commercial pickups.

[2:03:45] But we actually are back in business

[2:03:47] and have compost available.

[2:03:49] Also I want to mention that with the policy fire and the eaten fire, as with all major

[2:03:57] disasters and events, there is an after-action process, or I should say processes, those

[2:04:04] are beginning to start.

[2:04:07] And the county under Supervisor Lindsay Horvath has established an independent blue ribbon commission,

[2:04:13] and it's been coordinated and managed through UCLA and the Luskin Center, Matt Peterson,

[2:04:21] who's a Metropolitan Director representing Los Angeles, will be co-chairing that commission

[2:04:27] along with Fran Pavley. In fact, Fran contacted me and she's coming in this afternoon and Jeremy

[2:04:33] and I plan to talk with her and share some of our ideas and observations during the fire.

[2:04:41] And then last I want to mention, tomorrow morning, we're going to be having an employee breakfast

[2:04:48] where we're going to be cooking breakfast for employees to recognize their response to

[2:04:53] the fire. So we'll be doing that in the morning. Most of the managers, I think, are going to be

[2:04:59] at the grill and first thing when the employees come in will have breakfast for them.

[2:05:06] And then you're welcome to join us if you would like.

[2:05:10] I do have a couple follow-up items if I can move on to that.

[2:05:14] So follow-up items under 10 AB.

[2:05:18] We have two items at the first being a report on the fire hardening that we're doing.

[2:05:22] Joe mentioned earlier that we are issuing a comprehensive RFP to look at every site.

[2:05:27] So we'll bring back a report on that and what we're planning to do.

[2:05:30] So, the second item relates to the shut off valve and what we're proposing to do is approach this in a stepwise way.

[2:05:39] First, look at what types of devices are available and what are some of the pros and cons of implementing them.

[2:05:45] We'll bring a report to you.

[2:05:46] We can go over that and then we can talk about next steps in terms of incorporating these devices in our system.

[2:05:53] That concludes my report.

[2:05:54] Fantastic. Thank you. Just one question about this after-action process. Is that the one

[2:06:01] where you were asked by the governor to be part of a review of the hydrants having

[2:06:08] those pressure and things? I remember you talked about that. So I believe that topic is likely

[2:06:12] to come up, but I think that effort is probably going to be a separate one. It was specifically focused

[2:06:21] focused on LA County Public Works and LADWP, so I think that is likely to run a separate

[2:06:27] course.

[2:06:28] And I'll also add, there will probably be a variety of these efforts.

[2:06:31] There's going to be a number of different organizations that are likely to be looking

[2:06:36] at these after-action reports, and so to the extent that we are able will be participating

[2:06:42] and I'll share some of the lessons learned from them.

[2:06:47] one other thing I'll share is we are suggesting to the state division of drinking water that they organize in after action discussion to talk about some of the water quality orders that were issued following the fire and how they were implemented.

[2:07:03] Where they satisfied with what we did finally or they just made up their own rules about how they forced a little ball.

[2:07:28] I just want to kind of want to see if it's happening at a specific time or there are specific

[2:07:34] events happening that we might be able to mitigate.

[2:07:38] Can I suggest that perhaps we put that in our monthly activity report to the board?

[2:07:43] Yeah, that's what I was thinking.

[2:07:44] Yeah, we could do that.

[2:07:45] Although I was going to ask if you would clarify it.

[2:07:47] When you say taken down, I mean, where cars have crashed into Moverburg and we've got cars

[2:07:52] hitting our hydrants.

[2:07:53] Yes.

[2:07:53] Or whatever is happening to you.

[2:07:55] Yeah.

[2:07:55] I'm down.

[2:07:56] Yeah, we can do that.

[2:07:57] So damages to fire hydrants.

[2:07:59] Sure.

[2:08:00] You know what?

[2:08:01] We might as well move on to, oh, can I have a quick one?

[2:08:04] Your follow-up items on the fire piece, you mentioned our facilities, but I think I think was my

[2:08:12] item that I want on a future agenda was not just our facilities, but our service area.

[2:08:18] I know we're having some workshops, but whatever we're doing like just

[2:08:23] politically to harden our area, but not just our facilities, but good clarification. So

[2:08:29] So focusing more broadly, not only on the car.

[2:08:34] And before the fire, what we're doing, during the fire,

[2:08:37] what we're doing after the fire, and after the fire piece

[2:08:41] comes in with the trash dump.

[2:08:45] Because when they say watershed, if hazardous materials

[2:08:48] goes into that trash, and then it rains,

[2:08:51] that goes into our watershed, I assume.

[2:08:53] And do we have a role in that?

[2:08:54] Are we involved with that, you know, what's our role?

[2:08:58] So where do they use to cover the dirt or the dust?

[2:09:03] That's not coming from us.

[2:09:04] That's coming from the city.

[2:09:05] I'm not sure since they're so close.

[2:09:07] So landfills they all have what they call daily cover requirements that they spread the trash.

[2:09:16] And then they put a cover on it.

[2:09:18] It's usually like some kind of soil or other material that prevents dust and debris.

[2:09:23] I don't know the source of that material.

[2:09:25] but it's something they do. It's a routine part of their operation.

[2:09:30] The water, but then they water it, right? That's our recycled water.

[2:09:36] They do use water. They use recycled water to basically for dust control. So they went down

[2:09:42] the material to prevent dust. But what I was question is, is it our water or is it

[2:09:47] it is? It's water. In fact, the landfill is one of our largest recycled water customers.

[2:09:54] Okay.

[2:09:57] Fantastic. Okay, so let's go ahead and move on then. Although we kind of started it to it to 10B, which is director's comments and reports on outside meetings.

[2:10:06] Gary, since you start the ball, do you have any more comments or questions?

[2:10:11] No, that's fine. The only thing I would like to mention is that obviously this Thursday for anyone that would like to attend either by a Zoom or later.

[2:10:20] The just Scott Kalaski will be here speaking and I've spoken to him and he has said that the AI that he is going to introduce will be like nothing you have ever heard about before it's going to turn you on your head.

[2:10:32] So it's going to come from a completely different direction hopefully the way he explained to me that's correct.

[2:10:38] And please invite anybody that you think would be interested I've been inviting lots and lots of people I know it's the last minute but they certainly can stream in as well.

[2:10:47] That sounds fascinating.

[2:10:49] Randy, do you have any comments or questions?

[2:10:51] Okay, great.

[2:10:52] I do have a couple of comments.

[2:10:54] The first is our report, I guess, on an outside meeting last week.

[2:10:58] Myself, our general manager, Darryl and Jeremy met with Jackie Irwin and her group.

[2:11:05] Just on a post-fire sort of roundup.

[2:11:09] And we expressed to them, we told them about our operations and how we,

[2:11:14] and how we succeeded. And we're very successful in our operations during the fires.

[2:11:20] We talked to her about inter-connectivity with District 29 and topics on that. On those topics,

[2:11:30] and we also talked about our need for more generators, more and bigger generators to keep

[2:11:38] the water flowing during power outages, and that sort of thing.

[2:11:42] Jackie was great.

[2:11:43] I mean, she's been to, she has been to, to the fire station up in the 6th of, Bravo 69

[2:11:54] before.

[2:11:55] So she was familiar with the area, she was familiar with how rugged it is, and how steep

[2:12:00] it is, and she supports us.

[2:12:03] We didn't have a specific ask, per se.

[2:12:05] but we did just explain to us how we did going on in our district and discussed a little bit of the way in the future.

[2:12:15] In addition to that, there is a meet.

[2:12:19] So Charlie Casperi has for many, many years given reports on the Santa Monica Bay Restoration Committee meetings.

[2:12:30] And one, our first meeting, I am now, of course, representative for that organization and their first meeting is right here at the district on the 21st, which is next next Thursday at 9.30 AM.

[2:12:43] If anybody is interested in firsthand experience with this committee.

[2:12:50] Friday, sorry, go ahead and come on down and we'll be here and I think that covers everything

[2:12:56] I needed to say. Jake, do you have anything? I have a report on the Region 8 board which I'm

[2:13:05] on board member and we have a meeting to discuss the Los Angeles wildfire impacts and response and one

[2:13:14] One of the comments was, one of the many comments, the, it was thought that the LA fires should

[2:13:21] not affect JPI insurance rates, which I thought was an interesting thing to pass back.

[2:13:30] The, let's see, we've covered the other things, temporary water to existing lots coordinate.

[2:13:38] Do we have any, we're not responsible for roads, do we have any piping that was damaged

[2:13:47] in the, I always say it's fired, not that I'm aware of, but I'm aware of, no.

[2:13:52] We just had some appartances, air vacks, blowoffs and a few hiders.

[2:13:59] And they also recommended in this meeting, there was a discussion of the helicopter, which

[2:14:03] I know carries very interested in.

[2:14:08] And about COVID-19, we've talked about medication with the

[2:14:11] gardening, with the cap.

[2:14:13] One of the other interesting things I ran into this week

[2:14:15] was the fact that I watched a video about the discarded

[2:14:20] boats in the Bay Delta, which are a significant problem.

[2:14:25] The Controcostal County Sheriff is running around,

[2:14:28] he's taken over 3,000 boats out.

[2:14:30] Most of them are fiberglass, there are some bigger boats,

[2:14:33] And there has it that there are mess and never that's a real problem.

[2:14:37] I was surprised, but to my mind says, hey, we should build the pipes and have to worry

[2:14:44] about the degradation of the water that occurs from the boat burns, it puts all this toxins

[2:14:49] in the water.

[2:14:50] There were all kinds of issues.

[2:14:52] Well, last one, last one, at least, question or comment was, it's our...

[2:15:00] So, the system protected for, it's out there with grass on the, does it burn? What do we do about fire mitigation? And we keep the, we keep the weeds and the grass trimmed, pretty, pretty closely. In fact, that's part of the contract that the solar, the owner is required to do. That's OK. It's part of that. So it's a purchase pile purchase agreement. So last but not least, I missed it in talking about it.

[2:15:29] the cap, we're interested in putting another megawatt in. Where are we going to do this?

[2:15:34] So we're actually under construction right now for a solar and battery project at the

[2:15:41] composting facility. So it's actually the board approved that project.

[2:15:47] We're going to go to six megawatts so we can get five. So we're at five right here in the north

[2:15:55] that will be an additional one, so it makes six total.

[2:15:59] Ah, so we're on the construction right now,

[2:16:02] and where the battery's going.

[2:16:03] I think the battery's in the same facility.

[2:16:07] I don't know, do you want to share what type of battery they are?

[2:16:10] Hello, Darryl.

[2:16:11] Or Darryl.

[2:16:13] It's going to be a smaller battery

[2:16:15] within the substation at Rancho, so next to the maintenance shop,

[2:16:20] it'll be in there, it'll kind of like be an offset backup.

[2:16:23] But mainly it's going to be the solar panels that are in the north west section of that field.

[2:16:30] So if you were to drive up the road into Rancho, you'll see it kind of back off to the right.

[2:16:35] It's kind of in a depression for a catch basin, but they're above the elevation of it.

[2:16:42] It's on the smaller scale, kind of like our research on Omega-1, the other person's six.

[2:16:48] Yeah.

[2:16:48] So I'm going to ask it.

[2:16:49] Where will it be to?

[2:16:50] So excuse me, where will that power feed that that will directly power Rancho?

[2:16:56] One of the he we got together with Tera Verde who's our advisor on all of our solar and energy

[2:17:03] at gosh I think it was a Catholic conference and the CEO Ali told us that our

[2:17:10] the race that we locked on that project are among the very best in the whole state.

[2:17:17] Yeah, that's fantastic, Director Poland, I have a question, why won't the insurance rates

[2:17:22] go up on JPI?

[2:17:23] Didn't say it was one of my, I didn't think about asking that question on the board

[2:17:27] meeting.

[2:17:28] Okay, and then I, it was a comment was made by somebody who was from Paradise and then it

[2:17:33] was passed on to all the people, it's related to the market sector and so that the damage

[2:17:40] from the fires was primarily in the residential sector and in the insurance markets there's

[2:17:45] a difference and the commercial market is really where we are ensuring an AquaJPIA.

[2:17:52] So it's really the difference between the residential market and the commercial market.

[2:17:56] You know, I played Rugby back in college and the umpires on the sidelines are

[2:18:01] around with these yellow flags and I see a yellow flag with our

[2:18:11] and then one other question you said you would look into whether there's a recording of that meeting.

[2:18:16] Yeah, I will. I'll find out that's really good. All right. So assuming that all our

[2:18:22] comments are completed, moving on to item 12 public comments. Susan, are there any members

[2:18:28] of the public may now address the Board of Directors on matters not appearing on the agenda?

[2:18:32] But within this jurisdiction of the Board, no action shall be taken on any matters not appearing

[2:18:36] on the agenda. Are there any public comment cards? No comment. There are none. Okay. At this point,

[2:18:42] Item 13 is a closed session.

[2:18:44] I'm told by Susan that she needs only five minutes

[2:18:47] to prepare for this closed session.

[2:18:49] So I'm starting to now to her right now on my phone.

[2:18:51] We'll meet back in five minutes.

[2:18:53] Thank you, sir.

[2:18:54] I'm ready.

[2:18:54] Let's reconvene.

[2:18:56] Board met in closed session to discuss the item identified

[2:18:59] on the agenda as a potential on disclosed litigation.

[2:19:03] Board received a report from District Council,

[2:19:05] no reportable action took place.

[2:19:07] Mr. President, that includes a report.

[2:19:09] Thank you, Council.

[2:19:10] I would love it to adjourn this meeting at 1154.

[2:19:14] Somebody.

Feb 18, 2025 Las Virgenes MWD Board Meeting - Las Virgenes Municipal Water District

Agenda

Transcript