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Good morning, everybody. It's 9 o'clock. We'll get started unless you could Sophia lead us in the Pledge of Allegiance.

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Thank you, Sophia.

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Item number two, I didn't remember one roll call.

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Director Levine, Director Burns, Director Poland, Director Lewit, Director Kordewski,

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all present.

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Thank you, Fuzi.

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I don't know, number two, Dave, are there any changes to the agenda?

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No proposed changes, thank you.

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All right.

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Can I get a motion and a second, please?

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Motion to approve.

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Motion to approve.

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Second.

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I can't wait to hear.

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Fantastic.

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All those in favor say aye.

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All right, I'll lose again, say nay, are there any abstentions seeing none?

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Moving on, item number three, public comments, members of the public may now address the board of directors on matters not appearing on the agenda, but within the jurisdiction of the board.

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No actions shall be taken on any matter not appearing on the agenda.

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Josie, are there any public comment cards?

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And then at this time, but we have introduction of new employees.

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Let's go.

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Good morning, board.

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Today, I'd like to introduce Daniel Mendez.

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Daniel began working at TAPIA as a water reclamation plan operator and training.

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Before joining the team at TAPIA, Daniel worked as an environmental operator too at Trojan battery company, where he was responsible for operating the facilities on site industrial treatment plan.

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Daniel holds an operator and training certificate and a grade one water treatment operator certification.

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Daniel is an avid reader and enjoys music, above all Daniel values his time with his

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two-year-old daughter enjoys trips to Disneyland, playing at the park, and spending time at the

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beach together. Welcome, Daniel. Secondly,

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I like to introduce Donde Garza. Donde is our

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new water treatment operator at West Lake. Donde has previously worked at Monocito Water District

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while completing his associate's degree in water science. He is a Navy veteran served five years

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board to USS Oak Hill stationed out of Virginia Beach, Virginia.

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Donde is very passionate about water treatment and water quality and is looking forward to

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learning more about the district's treatment systems and pure water project.

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In his free time, Donde enjoys weightlifting and watching sports.

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Welcome, Donde.

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Welcome

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to both of you.

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So, I will introduce a new employee also, Jamie Heaton.

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He is a new field operations technician, Jamie's native California, and brings over 30 years of experience in the automotive industry, most recently serving at the Bureau of Automotive Repairs or regulatory investigator.

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He's been a dedicated to public service technical excellence and building strong relationships and looks forward to continue that commitment here at LVMWD.

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On a personal note, he's been married to his wonderful wife Pamela for 17 years and

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he caught her wonderful, so good job there.

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And they have two amazing children, Jacob and Celeste, so welcome Jamie.

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And then last but definitely not least, I'd like to introduce Sarah Matthews, who's joining

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us as our senior engineer within the engineering and facilities department.

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Sarah is a licensed civil engineer with 13 years of experience in design and project management of water and wastewater facilities.

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Sarah is attended the University of Pittsburgh where she's received her degree in civil engineering with an emphasis in water resources.

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After college, Sarah moved back home to enter a county where she's worked her entire career in the local water wastewater industry.

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Her project experience includes pump stations, pipelines, storage treatment, lift stations,

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and

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I really related and really benefits the district

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with her on our team.

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Sarah's also an active member

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in the Benzura County American Public Works Association

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and serves as a member of their executive board

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and is currently their treasurer.

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In 2019, Sarah was awarded the Benzura County APWA's

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Young Professional of the Year Award

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and was also awarded the 40 under 40

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champions of construction in 2021.

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on. In her previous role, she worked for the private sector, working for MKN and Associates

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Engineering and Phoenix Civil Engineering, both of which are consults that have worked

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on multiple projects for the district. So, Sarah has a lot of experience, projects related

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to the Kayegas-Loss version as interconnection, as well as some of the pipeline projects in

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Allabassus.

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Outside of work, Sarah enjoys traveling, cooking, camping,

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backpacking and has particular fullness

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for a good cup of coffee.

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So please let's give a warm welcome to Sarah.

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Welcome to you all.

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Moving on, item number four, consent calendar.

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Does anyone on the board wish to pull an item

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from the consent calendar?

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I do.

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I want to pull item four G, so I move to approve items

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for A through F and H and I.

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All right, and do you want to discuss?

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Second, first, and okay, so I'll do that.

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Second.

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Thank you, so we vote on that.

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All those in favor say aye.

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All those against say nay.

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Are there any abstentions?

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Fantastic.

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So on 4G, it talks about buying the astro-annual backflow supply

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of delivery of one-inch pressure regulators

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to authorize the general manager of one year purchase order of 120,670.

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So the question occurred to me, how often do we buy them?

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Do we use a lot of these 1-inch pressure regulators?

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I assume we have what, 20,000 connections, and we have 17 or 18,000,

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and the three-quartered connections,

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how many one's connections do we have?

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It raises a question in my mind.

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We know how many do we use a year?

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That's 120,000.

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We'll have Spencer answer that question.

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So we have 2,800 regulated services in the district.

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Start that from the beginning.

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We have 2,800 regulated services in the district

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And about 2,000 of those will use the one inch regulator.

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And that's areas where we have, we supply above 150 PSI.

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We have to regulate to protect our water meters.

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Okay.

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Great.

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How many, roughly, how many here do you replace?

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It does vary from year to year, but the key or the point is we need to catch up on replacing

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We've seen some of the regulators in the system that we have not a chance to and then also it's just with the regulator inspection program we have we really need to start replacing the ones that are over 10 years old.

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So with the price of them going up over time we haven't been able to purchase as many as we previously were years ago.

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Make sense.

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Sure.

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Thank you.

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Thank you.

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You're very much.

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All right.

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I had a brief question about the same thing.

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How much do they cost each?

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Because I don't see that any.

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And nor do I see the quantity, so I couldn't even divide.

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He's phoning a friend.

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And the other question is still there for us.

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So actually, the attachment to the board packet has the price table.

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So like for example, the one-inch pressure regulator was $219.90

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sense each and there's a total of 500 yeah okay and then my other question was are

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these the ones that go before the homes that we've had some issues where okay they go

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before our meter thank you all

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your questions answered Lynn yes fantastic can we have a

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motion and a second made a motion to move item 4g as published I'll second it all those

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in favor say aye.

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All right.

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All those against say nay.

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Are there any abstentions?

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Seeing none.

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Moving on.

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Item number five.

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Illustrative or verbal presentation agenda items

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the MWD representative report

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would vice president director Lueit provide the report.

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Yeah, so metropolitan, a couple of things I want to report on.

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Number one is, I don't know if you saw the news last Sunday,

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but the one on one freeway downtown was blocked off

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And that was exactly where Metropolitan was.

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So I got a call on Sunday that the meetings were going to be canceled for Monday and Tuesday because they felt there would be difficult for board members and staff to get to Metropolitan.

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And because it wasn't a three day notice, you couldn't have Zoom meetings unless the governor of California called an emergency which he didn't probably want to do because it would look like he doesn't have control of the state and would need the National Guard.

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So that was a non-starter.

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So bottom line is we had to cancel Monday and Tuesday's meetings and we were going to

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discuss the recruitment of the new general manager.

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So that got moved to Friday at Le Verne, which I drove down to, and then we started the

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meeting.

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It was going well, but then there was some information, redactions, that, not all the board

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saw and some letters, so we had to kind of postpone that.

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So we're reschedging all the meetings until Monday the 23rd and Tuesday the 24th, which is next week.

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So as far as the committees and all the work of the metropolitan, it's on delay.

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And then the other thing, the other part that I want to report back was last Wednesday,

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President Kordesky joined me along with 32 of our partners in advocating for

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the Delta conveyance project, and it wasn't just, it wasn't, we, Andy and I were representing

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Las Vegas, there were people there representing metropolitan, Modoc, Cyrus actually had both

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clients, us and Modoc, which is the municipal Orange County water district, so he was able

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to help us, and then a lot of the lobbyists came up also, and there was representatives

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from Eastern as well, the General Manager's Syvaji was there.

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And then also Ground Swal, which is an organization, I'm not sure if you've heard of,

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but it's a really powerful organization in California that there are people that live in Southern California,

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who have family and relatives outside the Southern California service area,

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think like Marino Valley or Palmdale, who don't have adequate water systems.

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And so a lot of these people that live in LA fight for their family and

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friends who live in the outskirts of Ella,

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he don't really have access to good, clean water,

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believe it or not.

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And so they came in some of our meetings

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and really made a difference with the electives up in Sacramento

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because they knew a lot of them.

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And so we had a really like an all-star team.

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There's four teams and we had an all-star team

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in each of our meetings and trying to get our electives

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to sign on to the Delta conveyance project.

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We had a meeting with Ben Allen,

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which I want to thank Jeremy for getting.

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I think we got the meetings with Jesse Gabriel's Chief of Staff, which I've never met with anyone from Jesse's office since I've been here since Jesse's been there.

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How long has Jesse been in power in Sacramento?

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Six years, I think it was our first meeting with Jesse's office, Jesse Gabriel, who's the budget chair.

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We had a meeting with Ben Allen in person and we had a meeting with Henry Stern's Chief of Staff, which is probably our best meeting of the day,

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along with the new Senate Pro Tem,

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Chantal Monique-Limon, who covers the Camarillo

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to Senate Barbaria, who's the new Senate Pro Tem,

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who's taken over from Aguayo, from Healdsburg.

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Pretty big deal.

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We met with the Camarillo, both the Cayegas folks too,

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which was great pairing with them.

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And we had a couple other meetings during the day,

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which were all really positive.

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It's still coming down to getting as many people,

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So many elected to son on to a letter which we have over 30 right now.

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And then eventually it's going to lead to the governor's office and he's going to negotiate with the head of the Senate and the head of the assembly on seeing if they'll support the DCP.

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It's funny, the governor has, and then talking to the consultants between the meetings, you kind of get the inside baseball, what really is going on.

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But my, my just, the just of it is the governor probably has six priorities.

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One of them is the DCP, one of my nose has to do with pharmacy and healthcare issue

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rates.

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And I know two of them are SQL with the LA Olympics, believe it or not, they can wave

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SQL.

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They wave SQL for stadiums.

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And now they're saying they can wave SQL requirements for the LA Olympics.

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So the end of the day it's going to come down to how much the governor wants the DCP.

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If he really wants it, he'll trade that chip for support, but he'll have to give up other places that the lawmakers may want somewhere else.

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So my gut is that the governor really wants this, I think it's really important to him, I've met with him personally, and he said so, and I believe him, we're taking for his word, he's really pushed us.

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We ran into the governor's point person, actually, in Sacramento, they told us, keep going, you guys are doing great, kind of motivating us.

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So I think at the end of the day the governor is going to get the supporting needs and I think this is going to pass and this is not the green like the project.

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This is just to get the data so metropolitan can make a decision by 2027 and if the trailer bill, which is what we're advocating for, doesn't pass, the Delta conveyance project as we know the tunnel will be put on a shelf for quite some time, who knows how long, but if it does pass and we'll know hopefully soon, maybe by the end of the month, not hopefully soon.

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thereafter, then it will just give us the data and will allow us to make a decision whether

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we want to move forward on this $20 billion project for this.

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State. So, it was just great advocate, it was like a campaign, in fact, talking to the

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Met Chair last night and making phone calls and even send a text this morning before the meeting, of course.

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But it's a campaign that we're trying to go one-by-one to get each of our electives up there on board.

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So I'll keep you posted, see how it goes, but I feel confident.

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I want to reach out, seriously, thank Cyrus for being such a great host and also for

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for all the work behind the scenes that he doesn't get any credit for, but I want to just open up

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if there's any questions or comments about what I'm doing up in Sacramento every week.

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I like your report, thank you.

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The thoroughness and depth and the accuracy, thanks.

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Thank you, Director.

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All right, seeing no more comments?

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Let's move on.

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Item B, Water Supply Conditions Update, I believe that's done Patterson.

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Sorry,

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my thing didn't move over to the agenda item as quickly as it hoped.

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The water supply condition update is located in your agenda packet.

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And since it's June, there's not much to report on as far as updates go.

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Water condition is pretty unchanged from last month, obviously, there's been some more

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snow melt.

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And conditions are still pretty good state wide as far as the reservoir levels go.

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The allocation has remained unchanged since my last report.

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Thank you.

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Thank you, Nott.

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Hold it.

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I got a question.

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A new chart has shown up on this report, bottom right hand corner, intentionally created surplus.

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And I'd like to discuss that a little.

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So I don't, could you give me a little background on that?

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You know, I think, can the general manager just shaking his head like,

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yeah, he can talk about it.

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So intentionally created surplus is water stored in like me that was part of

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the negotiations on the river.

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It came out of the quantification settlement agreement in 2003.

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Essentially what it allows and encourages is parties, water purveyors

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that have water rights on the river that they can leave water in Lake Mead, and there's

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a storage account called ICS, or intentionally created surplus, where that water sort

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of has their name on it. And so it has a benefit to keep water in Lake Mead to keep the water

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level higher than it otherwise would be, but then yet give the water right holder that certainty

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that that water is indeed held for their purpose.

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So how does that impact the city of Las Vegas,

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which had to drill a deeper hole to get their water?

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So can that water, is it being water being fungible?

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Does that mean that that water can be, if needed,

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given to, or to city of Las Vegas?

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I'm not.

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The sun in the bottle,

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the sun in the bottle of water was already.

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right? I'm not sure if that has any potentially created surplus in like me. So they may not have it,

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but because water is fundable, I guess that comes down to what happens at the time.

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Okay. Yeah. The purpose of this chart right here is to show that metropolitan is approaching the maximum

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amount potentially created surplus. So what they're showing is that they only have about

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77,000 acre feet remaining. The problem with that is that if they back up more water and lake

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mead, they no longer have sort of the mechanism to ensure that that water is held for their purposes.

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And so it kind of is another reason to illustrate the importance of coming to an agreement on

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the long-term operations on the river because they basically have this cup filled to its fullest and the rules as to how the additional amounts beyond that are handled are unwritten and so it creates uncertainty that's not helpful for all the parties.

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Thank you.

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It has like, and moving on, item C legislative and regulatory update.

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I believe that is our very own mayor pro-tem, Jeremy Wolfe.

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Thank you, and good morning.

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I am sharing screened, so there we go.

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Shout out to Debby Rosolis for telling me about the PDF, so I won't have the same mistake as last time.

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So, good morning, everybody.

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I'm going to start off on the federal level, not a lot going on in the federal level.

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the government, the President's pretty quiet.

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Last Thursday, though, Trump signed legislation

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overturning California's authority to enforce

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zero emission vehicle and truck regulations,

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revoking three EPA waivers that have been granted

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under the Biden administration.

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This move blocks California's mandates

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to phase out gas-powered cars and reduce truck emissions.

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So in response to this,

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This California Attorney General Rob Bonta filed a lawsuit joined by 10 other states arguing the rollback is illegal.

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Governor Newsom issued an executive order reaffirming the state's clean vehicle goals in directing agencies to strengthen EV support and enforce regardless of federal actions.

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He then directed the Air Resources Board to craft another mandate for cars and trucks to either bolster its existing mandates or replace them in case they lose the court case.

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Newsom also directed the State Air Resources Board to create a public list of automakers and truck manufacturers that are following California's emission rules and companies that take early action to convert fleets to zero emission regardless of the status.

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So to ignore federal law, this conflict centers around California's longstanding

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authority under the 1967 Clean Air Act to set stricter air policy standards.

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This is now being challenged through unprecedented use of congressional review.

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What does that mean for us at Las Vegas, that means that we're stuck in the middle

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of this federal state battle on what's going to happen with our fleet.

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So while there's nothing new to report, it just shows the complexity of where we are

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to move our fleet to zero admissions and the battle just went from the state level and is now much more complex.

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So we'll be following that really closely because this will have big input puts.

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And as we mentioned before, losing the federal mandate, what that means is that market forces aren't moving to increase technology.

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So for our water tenders and other critical vehicles, the technology's not there, but

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But we might still have to comply by it.

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And so that's going to have tremendous impacts on loss virgins.

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So we'll be following that really closely.

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I want to move on to the state level.

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I want to give a big shout out to Don Patterson.

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He was very involved in the lobby day last week.

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I think it was his first time up lobbying for loss virgins.

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So I'm going to turn it over to mention a few things that director Lueit might not have included, not on purpose.

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That's okay. So in addition to the representatives that Director Louis mentioned, I just wanted to highlight the name of the others that we met with, which is assembly member Rodriguez, who's from San Fernando, assembly member.

307
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who represent South LA and then assembly member Shiva who represents parts of the San

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Fernando Valley.

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And it was a really good trip, I think we did a good job bobbing for the hopefully

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support of the trailer bill and seemed like in general we got pretty positive results and

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I enjoyed spending time with Director Cordesci and Lewet and lobbying for the district.

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Nice, we enjoyed having you.

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Thank you, Dawn.

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And just to note, besides Assembly Member Irwin, who is already on board for the DCP,

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we met with our entire delegation who represents us in the legislature, because Assembly Member

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Siavo does have a portion of the unincorporated chat's worth.

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So it's great, we're covering all bases.

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This has been mentioned a few times now, but I just want to highlight that Senator Monique

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Lemone is going to be the speaker, Pro Tem, I mean, not the speaker, the Pro Tem of

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the Senate starting January 1 of 2026.

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And this is a big deal because it brings the power balance to Central and Southern California.

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And Senator Lemone is familiar with the region and covers most of Cayegas, and so that's

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is going to be really important for us to continue to develop a relationship with her.

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She currently serves as the chair of the Democratic Caucus and the Senate Banking Committee.

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And interestingly enough Senator McGuire, who was the former pro-tem, is terming out in 2026.

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And he's going to be running for insurance commissioner, a position I don't know why anyone would want to do.

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But that's part of the shuffle.

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So, more on Sacramento, we've talked about this a lot, but the legislature's budget came out last Friday.

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So, the California Assembly and Senate reached an agreement for the framework for the budget.

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And as expected, it did not include the Governor's trailer bill to streamline approvals for

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the Delta conveyance project. The Governor has stated that he will continue to fight for the inclusion of the DCP

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streamlining language in the final version, so the next two weeks will be critical as the

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administration and legislative leadership negotiate the budget, and we're confident

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this will get done. So this is not the final budget, but rather the legislatures opening

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position for negotiations with Governor Newsom. And how this budget differentiates from

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the one that was laid out in mid-May called the May Revise, is the legislature's plan addresses

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the significant, the plan rejects or delays some of the deeper cuts that Governor Newsom

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had proposed in areas like housing, social services, climate programs, and the legislative

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version is seen generally as less severe in its cuts to social safety net programs.

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The plan does avoid new taxes on individuals and businesses, so with the version that was passed by the legislature on Friday, they will now enter into final negotiations with the governor's office, so it's the Senate and the Assembly's agreement and the governor's agreement, and they have until July 1st to come up with the final budget.

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So these next two weeks are going to be really, really critical.

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Really quickly, I mentioned this yesterday, but Dave and I are traveling up to Sacramento tomorrow where Dave's lead testimony on SB 394, the Senator Allen bill where this bill will start its journey in the assembly side.

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We've passed the Senate, now we're going to go through the assembly and so Dave goes up there and it provides the testimony and we're confident that it will pass because there's been no issues raised in the committee and it's the assembly local government committee.

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The next topic I want to briefly touch on is that Los Virginis has joined the coalition

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that's being led by Metropolitan Water District for trailer bill language to address

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the invasive golden muscle. While the name might sound great, without legislative

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protection and funding, the presence of the golden muscle could jeopardize water supply reliability,

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severely restricting the ability of water suppliers to import water.

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For groundwater recharge, it can lead to the closure of lakes and reservoirs.

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The first known detection, the Golden Muscle, occurred actually in late last year in October

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in the Delta, and they're known to spread rapidly, creating problems for infrastructure and

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water quality, and damaging native ecosystem health.

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Similar to the Quagga Muscle, Golden Muscles attached to infrastructure and dense clusters,

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clogging water-convain systems, pipelines, pumps, filters, and hydropower, they also severely

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damage the food web and out-compete native species and severely impact fisheries.

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While they have not been detected in metropolitan local supply, metropolitan already implements

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So this will be effective for the Golden Muscle, but we need additional legislative

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and funding in order to effectively eradicate them.

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Director Luton, I want to put you on a spot, but is there anything on the Golden Muscle you want to?

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Now, you just want to say that the Quagga Muscle, which we know very well is from the Colorado,

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but the Golden Muscle is found in the State Water System, which is kind of scary, because

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We know how much attention we've spent on the quagga, but the state water is the first time it's been in the state water.

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And it's a big deal to stop, and there's no legislation.

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And also, we want to not just talk about golden muscles, but any other muscle, any other type of muscle like this would also be in the bill.

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Great, yeah, thank you for that.

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And so, Los Virginis has officially joined the coalition to request funding and legislative support.

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I'm sorry, Jeremy.

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And did you just say that there's going to be some language in a trailer bill?

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Well, they're advocating for language in the trailer bill.

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It's not as controversial as the DCP, so it's not getting anywhere near as much attention.

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But Metropolitan, I think they're second priority, is that right?

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Yeah, I mean, it's one of the three items we lobbied on before whoever knows the answer.

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How do they eradicate them or reduce them?

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I mean, one of the, I guess it's before gets in the pipes in the stage where beginning stages where

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I'm not sure what the right words were, they multiply our birth, like to kind of put some type of chlorine or some type of stuff.

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I don't know what it's called, but they put it in.

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Kind of eradicated so it doesn't spread and grow. Yeah, it's like a biocide. You can use chlorine. They're very difficult to eradicate though once they form their shell because they're their filter organisms. So they actually detect chlorine and they will close up and seal up for up to 30 days. But before they form their shell when they're in their larval form, chlorine will destroy them. And so the idea is you

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You add a chlorine or a bioside when they're still in their larval state before they form the shell.

379
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Any idea why this new one has appeared in California, in the state water?

380
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So the theory is that, so the quagga muscle is a variant and the quagga you see more in the quagga

381
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on the Colorado River system because that water is higher in mineral content.

382
00:30:54,280 --> 00:31:01,000
and that is an important element for the clogger to form their shell, but interestingly the golden

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00:31:01,000 --> 00:31:06,700
muscle seems to be a little bit different and so it is able to survive in the state water project

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which has lower mineral content which is concerning because one of the benefits of the clogger's

385
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need for those minerals is that it really wasn't viable or it hasn't been viable in the state water

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00:31:19,260 --> 00:31:24,480
a project, but this muscle seems to have adapted to deal with that.

387
00:31:24,660 --> 00:31:28,900
It's really, really difficult, if not impossible, to eradicate them once they take hold.

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So it's really, it becomes a control measure to control and reduce the spread of them.

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And so the legislation is really about providing protections in the event that you have a control

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00:31:42,520 --> 00:31:47,740
plan that's been approved by the state, that then you would be afforded certain protections

391
00:31:47,740 --> 00:31:52,180
from liability associated with the spread or transfer

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00:31:52,180 --> 00:31:54,140
of those muscles if that were to happen.

393
00:31:54,560 --> 00:31:58,800
I assume if they get past the chemical disinfection

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00:31:58,800 --> 00:32:00,760
that they attach to the sides of the inside

395
00:32:00,760 --> 00:32:03,000
of the hypes and there has to be some sort of rotor rotor

396
00:32:03,000 --> 00:32:03,440
to get rid of.

397
00:32:04,240 --> 00:32:04,320
Yeah.

398
00:32:04,960 --> 00:32:08,360
And I assume these are invasive in some way.

399
00:32:08,940 --> 00:32:10,720
Yes, they're from Southeast Asia

400
00:32:10,720 --> 00:32:13,480
and they were first detected in October of 24.

401
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So very invasive.

402
00:32:16,840 --> 00:32:25,640
Okay, moving on. My last item. Last week, the South Coast Air Quality Management District

403
00:32:25,640 --> 00:32:34,560
or SCAQMD Board voted seven to five to reject two proposed rules aimed at phasing out

404
00:32:34,560 --> 00:32:42,080
residential gas-powered water heaters and furnaces. The region's 10 million water heaters and furnaces

405
00:32:42,080 --> 00:32:46,420
are among the largest source of smog-causing gases in the LA basin.

406
00:32:46,840 --> 00:32:51,020
I actually learned that their water heaters are the third largest source of greenhouse

407
00:32:51,020 --> 00:32:58,260
gases, transportation being the first refineries being the second and water heaters being

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00:32:58,260 --> 00:32:58,660
the third.

409
00:33:01,200 --> 00:33:10,700
And so really quickly about what is SCA-QMD, it's authority extends over a vast 10,000 square

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00:33:10,700 --> 00:33:16,980
an air mile area that includes all of Orange County and urban portions of Los Angeles, Riverside, and San Bernardino counties.

411
00:33:17,260 --> 00:33:25,240
And this region known as South Coast Air Basin is geographically prone to trapping pollutants leading to significant air quality challenges.

412
00:33:27,300 --> 00:33:31,540
South Coast District is a regulatory agency that's responsible for

413
00:33:31,540 --> 00:33:38,640
monitoring and improving air quality for more than 17 million people living in one of the nation's most notoriously smoggy regions.

414
00:33:38,640 --> 00:33:46,800
established in 76 this powerful body sets and enforces some of the strictest air pollution standards in the United States.

415
00:33:47,220 --> 00:33:55,900
The board has 13 members, 10 are elected officials, of these four are county supervisors representing Los Angeles, Orange, Riverside, and San Bernardino counties.

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And some names we might know are a supervisor, Holly Mitchell, and Los Angeles City Council member, Nithya Rahman.

417
00:34:02,060 --> 00:34:08,700
But back to the decision, the decision represents a setback for regional smog reduction.

418
00:34:09,260 --> 00:34:17,940
The proposed rules were designed to curb nitrogen oxide emissions, a primary component of smog from what there's 10 million water heaters.

419
00:34:18,940 --> 00:34:23,280
And the water heaters are comparable to refineries, as I mentioned.

420
00:34:23,880 --> 00:34:26,860
So the proposal was not a direct ban or consumer mandate.

421
00:34:27,080 --> 00:34:31,020
Instead, manufacturers would have had to pay fees for selling natural gas units.

422
00:34:31,020 --> 00:34:35,600
It's with the revenues intended to subsidize the cost of zero emission alternatives.

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00:34:36,100 --> 00:34:40,100
So you guys might have heard of something called heat pumps that are the city of LA requires.

424
00:34:40,660 --> 00:34:43,020
And those are like electric water heaters.

425
00:34:44,220 --> 00:34:49,900
And so this decision is actually really interesting and it shows that the market's not ready for

426
00:34:49,900 --> 00:34:51,620
these type of big decisions.

427
00:34:51,740 --> 00:34:58,220
And the reason I talked about this is it's a government agency, but it's also dealing with water because it's heating and cooling the water.

428
00:34:58,220 --> 00:35:02,100
So, with that, that concludes my report, are there any questions from the board?

429
00:35:02,780 --> 00:35:03,140
Yes.

430
00:35:04,380 --> 00:35:11,640
You didn't touch on or maybe I missed the SCA-QMD and what their plan is, or are they

431
00:35:12,880 --> 00:35:19,640
thinking of sending the state rule requiring zero emission vehicles?

432
00:35:20,140 --> 00:35:27,960
Because I mean, as far as I know, there's no physical reality that there's a big

433
00:35:27,960 --> 00:35:31,740
a big truck that can hold dirt or do stuff like we need to do in the district.

434
00:35:32,140 --> 00:35:33,820
How are we going to solve this problem?

435
00:35:34,180 --> 00:35:44,880
So there's a piece of legislation, SB 594, I think that is going for municipalities would give them an exemption.

436
00:35:45,520 --> 00:35:49,560
However, this legislation is being stalled and it's now a two year bill.

437
00:35:49,980 --> 00:35:52,020
So I don't have a good answer to your question.

438
00:35:52,340 --> 00:35:57,100
It's we're in a really, we're in like a purgatory where we don't know what's going on.

439
00:35:57,100 --> 00:36:01,120
It's a catch 22, Dave, is there anything you want to add to that?

440
00:36:01,480 --> 00:36:05,260
Yeah, I'll just share, it's an ongoing issue that there's a lot of focus on it.

441
00:36:05,400 --> 00:36:09,100
It is a statewide issue, so it's not a South Coast AQMD, so

442
00:36:09,840 --> 00:36:14,640
their partner at the state level is CARB or the California Air Resources Board.

443
00:36:15,340 --> 00:36:20,340
There are two efforts underway among utility agencies.

444
00:36:20,800 --> 00:36:25,520
One through the California Municipal Utilities Association, which we're part of.

445
00:36:25,520 --> 00:36:33,220
and Aqua, and both groups are working with CARB to try to improve their exemption process.

446
00:36:34,000 --> 00:36:41,620
So the belief is this rule is probably going to go forward in some shape or form, and

447
00:36:42,130 --> 00:36:47,340
the thought process is to ensure that there's exemptions available for public agencies when

448
00:36:47,340 --> 00:36:53,680
a commercially available vehicle is not, when a vehicle for public use is not commercially

449
00:36:53,680 --> 00:36:59,920
available or if it is only commercially available from a single vendor where that price would

450
00:36:59,920 --> 00:37:06,400
be not competitive. So we haven't gotten there but that's really the goal is to get to

451
00:37:06,400 --> 00:37:11,140
a point where that can be shown and when you do that then you would be able to buy a conventionally

452
00:37:11,140 --> 00:37:19,040
powered vehicle. Does the governor have a couple of the multi-pronged questions? Does the governor

453
00:37:19,040 --> 00:37:25,060
to have authority to waive the requirements and be, he probably wouldn't or would he?

454
00:37:25,940 --> 00:37:27,520
So where does this stand?

455
00:37:28,880 --> 00:37:38,120
Well, I think he does have the ability to waive it, and I think he's going to because he really wants to push the zero emission vehicles across the board.

456
00:37:38,520 --> 00:37:44,600
But I think there will be legislation where exemptions are made for where the technology's not available.

457
00:37:44,600 --> 00:37:48,240
But I don't, this is an ongoing issue.

458
00:37:48,600 --> 00:37:52,860
CMUA is really taking the lead on the regulatory side of this.

459
00:37:53,580 --> 00:37:54,880
But does that answer your question?

460
00:37:55,260 --> 00:37:55,440
I know.

461
00:37:56,100 --> 00:37:56,780
Sort of.

462
00:37:57,760 --> 00:38:00,260
I don't have a good answer, is my answer.

463
00:38:00,460 --> 00:38:01,660
I know it's a tough question.

464
00:38:02,140 --> 00:38:03,640
I don't know what the answer is.

465
00:38:04,660 --> 00:38:04,880
Okay.

466
00:38:05,260 --> 00:38:05,940
Yeah, we're in limbo.

467
00:38:06,120 --> 00:38:06,860
That's the term I meant.

468
00:38:06,900 --> 00:38:08,280
It looks like you want to say something.

469
00:38:08,440 --> 00:38:12,060
Not to put you on the spot, but what's new with your favorite bill,

470
00:38:12,060 --> 00:38:16,480
So the met proxy or one bill, have you anything made?

471
00:38:17,160 --> 00:38:21,340
It's, they took the amendments and I believe it's now moved on to the Senate side.

472
00:38:21,440 --> 00:38:25,540
There was a Republican opposition, but it, on the assembly side, but

473
00:38:25,540 --> 00:38:31,760
it was, I think it passed something like, I think it was like 67 yes, six noes and

474
00:38:31,760 --> 00:38:33,220
then three absence.

475
00:38:33,660 --> 00:38:36,560
But now it's, it's starting its journey on the Senate side.

476
00:38:36,640 --> 00:38:39,000
So get ready to go up and provide testimony.

477
00:38:39,000 --> 00:38:39,180
Tony.

478
00:38:39,560 --> 00:38:39,840
Really?

479
00:38:40,300 --> 00:38:40,620
Probably.

480
00:38:40,920 --> 00:38:41,060
Yeah.

481
00:38:41,300 --> 00:38:42,700
I'll follow up on that today.

482
00:38:43,080 --> 00:38:44,380
And if you can keep us posted on that.

483
00:38:44,640 --> 00:38:44,900
I will.

484
00:38:45,020 --> 00:38:45,620
I'll include that.

485
00:38:46,660 --> 00:38:50,420
So it's a bill to allow Metropolitan to use proxies if I can't be at a meeting.

486
00:38:50,560 --> 00:38:52,200
I can give my proxy to another member.

487
00:38:52,280 --> 00:38:52,320
Right.

488
00:38:53,220 --> 00:38:53,580
Yeah.

489
00:38:53,980 --> 00:38:54,360
Board member.

490
00:38:54,620 --> 00:38:56,060
So Jackie, you're wonderful.

491
00:38:56,200 --> 00:38:56,640
It's Eastern.

492
00:38:56,800 --> 00:38:58,120
There's a lot of districts carrying the bill.

493
00:38:58,380 --> 00:39:00,640
And I actually went up to Sacramento to testify.

494
00:39:00,680 --> 00:39:03,420
Because they said it makes sense for someone in her district to be involved.

495
00:39:03,420 --> 00:39:05,160
So they asked me to testify.

496
00:39:06,260 --> 00:39:13,300
And the amendments were taken regarding the sunset and so, but now it's moving through

497
00:39:13,300 --> 00:39:13,980
the Senate process.

498
00:39:14,420 --> 00:39:14,520
Okay.

499
00:39:14,680 --> 00:39:15,740
Thank you.

500
00:39:15,740 --> 00:39:16,140
Thank you.

501
00:39:16,460 --> 00:39:17,740
I just want to make one comment.

502
00:39:17,900 --> 00:39:22,940
For years and years and years, the gas company promoted gas, the clean alternative and

503
00:39:22,940 --> 00:39:24,180
look at that we didn't know.

504
00:39:24,640 --> 00:39:32,220
And I suspect that these board is looking towards what Washington is looking at right now, which

505
00:39:32,220 --> 00:39:37,840
is to not put forth something like this that makes it very difficult on us as consumers

506
00:39:38,900 --> 00:39:44,300
and not get another argument with Washington who at this point is trying to remove all of

507
00:39:44,300 --> 00:39:49,360
these impediments. And it looks from what you wrote, and it's just going to increase the cost.

508
00:39:49,600 --> 00:39:55,200
We wouldn't, it wouldn't obviate gas. We just increased their cost for, because the last

509
00:39:55,200 --> 00:40:01,360
part of it is that it's for low income, it houses to be able to buy expensive electric

510
00:40:01,360 --> 00:40:07,400
Electric only, when we can't even provide enough electricity for the electric cars we don't have?

511
00:40:07,900 --> 00:40:16,080
Yeah, you make a good point and we would shift the burden, but it would also reduce greenhouse gas emissions, too, so it's a balancing act.

512
00:40:16,240 --> 00:40:21,660
Well, it takes many years, at least 20, probably for a water heater to cycle through.

513
00:40:22,940 --> 00:40:25,220
Thank you, Director Burns, good point.

514
00:40:25,640 --> 00:40:26,140
Thank you, Jeremy.

515
00:40:26,500 --> 00:40:26,900
Thank you.

516
00:40:26,900 --> 00:40:30,380
All right, moving on, item number six, charges report.

517
00:40:30,820 --> 00:40:33,840
Director Levine, would you please provide the report?

518
00:40:34,260 --> 00:40:36,420
Yeah, no crazy, unusual items.

519
00:40:36,860 --> 00:40:41,100
The big item was about $2.5 million for water to met.

520
00:40:41,880 --> 00:40:51,160
But I did have one question Don, if you know there was $10,000 to American business bank on a progress payment.

521
00:40:51,340 --> 00:40:56,000
I just kind of stood out, do you guys know what that is?

522
00:40:56,000 --> 00:41:03,720
as if now we figure it out offline, but Jessica, I answer that.

523
00:41:09,640 --> 00:41:13,040
Hi. That would be for the release of retention for the project.

524
00:41:13,340 --> 00:41:18,480
So after every payment, we have to release a payment so it invoices directly for American

525
00:41:18,480 --> 00:41:19,200
business bank.

526
00:41:20,240 --> 00:41:25,800
So is that, do we bank with American business bank, or is that just the European escrow account?

527
00:41:25,800 --> 00:41:31,940
So it's like on construction projects, it's practice, and it's part of the contract that we hold a retention amount.

528
00:41:33,300 --> 00:41:40,160
Under the contract, the contractor can request that those monies be held in an escrow account.

529
00:41:40,540 --> 00:41:43,340
They don't always do that, in fact, I would say it's less frequent.

530
00:41:43,980 --> 00:41:46,700
But some of the contractors do request that that be done.

531
00:41:46,960 --> 00:41:52,240
And then what happens is, with every progress payment, we make the payment to the contractor.

532
00:41:52,240 --> 00:41:55,740
and then a portion, is it 10%, does that sound right?

533
00:41:55,860 --> 00:41:58,860
Or 5%, a portion is made to an escrow account,

534
00:41:59,400 --> 00:42:01,040
and then when the project's completed

535
00:42:01,040 --> 00:42:03,920
and your board approves it and accepts the project,

536
00:42:04,100 --> 00:42:06,720
then we release that escrow account

537
00:42:06,720 --> 00:42:08,560
and the payments made to the contractor.

538
00:42:09,060 --> 00:42:10,260
Other, there's curious.

539
00:42:10,960 --> 00:42:13,740
Yeah, and the reason they do that, as Dave mentioned,

540
00:42:13,860 --> 00:42:15,100
it doesn't happen often,

541
00:42:15,720 --> 00:42:17,600
but especially for larger projects,

542
00:42:17,780 --> 00:42:19,900
that amount is able to accrue interest

543
00:42:19,900 --> 00:42:21,220
when it sits in the bank.

544
00:42:21,220 --> 00:42:24,200
So that's why the contractors sometimes prefer to do that.

545
00:42:25,420 --> 00:42:33,540
And to answer your question, typically the contractor specifies or requests that it be held as particular financial institution.

546
00:42:36,460 --> 00:42:37,680
Okay. Thank you.

547
00:42:37,900 --> 00:42:38,180
Thank you.

548
00:42:38,180 --> 00:42:39,160
Thank you very much.

549
00:42:39,800 --> 00:42:40,640
That's all I got.

550
00:42:42,080 --> 00:42:42,860
Thank you, Randy.

551
00:42:43,460 --> 00:42:43,900
Moving on.

552
00:42:44,060 --> 00:42:44,860
Item number seven.

553
00:42:45,280 --> 00:42:50,460
Seven A, the Aqua Statewide Position of President and Vice President and nomination in support of candidates.

554
00:42:50,460 --> 00:42:53,020
I believe Dave is on this one.

555
00:42:53,480 --> 00:42:53,900
Thank you.

556
00:42:54,640 --> 00:42:57,220
So this item involves two resolutions.

557
00:42:57,700 --> 00:42:59,600
Both of them are for Aqua.

558
00:43:00,200 --> 00:43:01,560
We're a member of Aqua.

559
00:43:02,100 --> 00:43:06,560
And as a member, we vote in the Aqua election.

560
00:43:07,160 --> 00:43:08,720
That occurs every two years.

561
00:43:09,380 --> 00:43:12,420
And the officers serve for two-year terms.

562
00:43:12,960 --> 00:43:15,780
So we are coming up to that election cycle.

563
00:43:16,320 --> 00:43:18,700
That will be the two-year term of 2026

564
00:43:18,700 --> 00:43:28,320
to the end of 2027 and as the candidates begin to run for office they request

565
00:43:28,320 --> 00:43:31,460
resolutions and they need they're required to have a certain number of

566
00:43:31,460 --> 00:43:37,260
resolutions from aqua members to support their candidacy for the office and

567
00:43:37,260 --> 00:43:42,860
so generally when those we have a relationship with those individuals they will

568
00:43:42,860 --> 00:43:47,980
ask us to consider adopting a resolution when we do that you essentially

569
00:43:47,980 --> 00:43:50,940
She expressed support for them early on in the process.

570
00:43:52,410 --> 00:43:56,360
The offices here are the offices of President and Vice President.

571
00:43:56,780 --> 00:44:01,160
For President, it's customary always for the Vice President to become President.

572
00:44:01,840 --> 00:44:07,540
And it's very unusual that there would be a candidate running against the current Vice President.

573
00:44:07,740 --> 00:44:09,700
And so that is the case this year.

574
00:44:10,360 --> 00:44:12,460
The Vice President is Ernie Avila.

575
00:44:13,280 --> 00:44:16,560
And Ernie is with the Contra Costa Water Agency.

576
00:44:16,560 --> 00:44:23,680
He's done a really great job as Vice President and actually already showing leadership to step into the president role.

577
00:44:24,380 --> 00:44:31,660
And so the first resolution, number 2657 is to nominate and support, actually it's the second resolution.

578
00:44:32,320 --> 00:44:37,340
Sorry, 2658 is to nominate and support Ernie Avila for president.

579
00:44:38,180 --> 00:44:40,760
The other resolution is for Vice President.

580
00:44:41,140 --> 00:44:44,440
This is normally the office that has contenders.

581
00:44:44,440 --> 00:44:48,220
This year, I'm not aware of any other candidates running.

582
00:44:48,900 --> 00:44:53,000
Carol Lee, Gonzalez Brady, is the candidate that we're recommending.

583
00:44:53,680 --> 00:44:55,140
We know Carol Lee really well.

584
00:44:55,580 --> 00:44:58,360
She is a director with the Rancho Cal-

585
00:45:00,000 --> 00:45:28,040
When you're water district, she represents Southern California water interests really well and has already shown a lot of leadership within aqua. And we think she would be a great candidate for vice president. And then that would set her up two years later to be the aqua president. So the recommendation is to pass approve and adopt two resolutions, resolution number 2657 in support of Carol Lee Gonzalez Brady.

586
00:45:28,040 --> 00:45:33,080
and also resolution number 265-8 in support of hernia-vila.

587
00:45:33,860 --> 00:45:36,920
Fantastic, and before we discuss, can we get a motion in a second, please?

588
00:45:37,080 --> 00:45:37,440
I'll make it.

589
00:45:37,960 --> 00:45:38,500
I'll second it.

590
00:45:39,080 --> 00:45:39,980
Fantastic, any discussion?

591
00:45:40,640 --> 00:45:45,140
Yeah, I just like to read into the end of our first paragraph right there.

592
00:45:45,620 --> 00:45:48,080
It's a pretty indicative of what Aqua does.

593
00:45:48,500 --> 00:45:53,300
Aqua region statewide may be different, but we can agree on one thing.

594
00:45:53,300 --> 00:45:58,220
And the need for prudent, sustainable water management in California is critical.

595
00:45:58,960 --> 00:46:04,560
And at the very beginning, she says, water issues are complex and we sometimes have different opinions on solutions.

596
00:46:04,980 --> 00:46:07,540
Seems like a very competent young lady.

597
00:46:08,480 --> 00:46:13,740
Just because it's on the agenda, I just like to chime in on this DCP, which I believe, and

598
00:46:13,740 --> 00:46:21,240
I'm sitting here in Southern California, and 27 and a half million people would benefit from this Delta conveyance project.

599
00:46:21,600 --> 00:46:23,160
that Aqua didn't take a position.

600
00:46:23,440 --> 00:46:26,840
And I think, you know, they say that we have northern interest and southern interest and

601
00:46:26,840 --> 00:46:31,400
delta interest, but I think for an organization to be statewide and be an advocate, I think

602
00:46:31,400 --> 00:46:34,300
at some point you have to take a position even though it might upset some of your members.

603
00:46:34,460 --> 00:46:39,600
So it's kind of makes me have like a, I think we need to figure out those of us.

604
00:46:39,600 --> 00:46:42,380
I think there's two of us, Don and Dave are both on the board of Aqua.

605
00:46:43,080 --> 00:46:47,140
I think you need to talk to them about where they're going to hold.

606
00:46:47,280 --> 00:46:50,800
If there's a major issue facing California and they're going to not take a position because

607
00:46:50,800 --> 00:46:52,580
as they have members who might not be in support,

608
00:46:53,280 --> 00:46:55,140
what kind of advocacy group is it?

609
00:46:55,680 --> 00:46:57,980
I get not taking the position on all the issues

610
00:46:57,980 --> 00:46:59,820
affecting the state, but when there's a big issue,

611
00:47:00,460 --> 00:47:01,980
that to me is so black and white

612
00:47:01,980 --> 00:47:03,860
and one side for the water community,

613
00:47:04,280 --> 00:47:06,740
to not take a position doesn't show leadership.

614
00:47:06,960 --> 00:47:09,260
So hopefully these two leaders, if they get elected,

615
00:47:09,980 --> 00:47:12,520
the board will let them know that as members,

616
00:47:13,000 --> 00:47:14,960
we really feel like they need to take a role

617
00:47:14,960 --> 00:47:16,800
in what's best for California water.

618
00:47:17,800 --> 00:47:19,320
So just to put that out there.

619
00:47:20,800 --> 00:47:22,440
not only at it, although you did say this,

620
00:47:22,760 --> 00:47:24,880
but that the DCP actually benefits

621
00:47:25,360 --> 00:47:27,820
both the central coast and the southern coast.

622
00:47:28,020 --> 00:47:29,580
And I think people are missing the fact

623
00:47:29,580 --> 00:47:31,880
that the farmers need that, as well as sites,

624
00:47:32,280 --> 00:47:34,700
because sites is actually supposed to help the central coast

625
00:47:34,700 --> 00:47:36,440
by taking all that extra water

626
00:47:36,440 --> 00:47:40,380
and giving it to the agriculture committees or farmers.

627
00:47:41,720 --> 00:47:43,080
So I think some of it is, yeah.

628
00:47:43,540 --> 00:47:44,300
You want to say something?

629
00:47:44,840 --> 00:47:46,620
I just responded to a comment even ago.

630
00:47:47,600 --> 00:47:52,680
I know Ernie, I've met Ernie a little over the years and I really like and support the

631
00:47:52,680 --> 00:47:52,900
man.

632
00:47:53,640 --> 00:47:58,080
I'm hoping this is news that there's no position on the DCP from off course.

633
00:47:58,520 --> 00:47:59,620
That's an important issue.

634
00:48:01,220 --> 00:48:05,500
I'd really like to see some movement if we can get it to happen.

635
00:48:06,780 --> 00:48:06,900
Yep.

636
00:48:07,340 --> 00:48:08,180
I agree with Len.

637
00:48:08,400 --> 00:48:09,540
I think Ernie's a great choice.

638
00:48:09,700 --> 00:48:11,240
I haven't met the Vice President.

639
00:48:11,240 --> 00:48:21,460
I mean, President Kennedy, but Ernie is a really positive and outgoing, and I think he's going to do a great job with that.

640
00:48:21,940 --> 00:48:24,460
Can we call a vote here? All those in favor say aye.

641
00:48:24,900 --> 00:48:25,140
Aye.

642
00:48:25,640 --> 00:48:26,720
All those against say no.

643
00:48:28,320 --> 00:48:29,400
Any abstentions?

644
00:48:29,800 --> 00:48:30,840
Hearing and seeing none?

645
00:48:31,520 --> 00:48:38,940
Moving on, item number eight, external affairs, 2025, Urban Water Management Plan Award.

646
00:48:47,680 --> 00:48:53,400
So why Craig is walking in here? Craig makes a dramatic entrance.

647
00:48:54,480 --> 00:49:02,440
So this item is for the 2025 Urban Water Management Plan, the award of contract. So the staff

648
00:49:02,440 --> 00:49:08,260
completed an RFP and Craig is going to tell you about the RFP and the recommendation.

649
00:49:08,260 --> 00:49:21,260
Questions, apologies, good morning, board, I make the mistake of having my fifth cup of coffee this meeting, so that explains.

650
00:49:21,680 --> 00:49:29,580
All right, yes, the item before you this morning, board members is the Urban Water Management Plan of 2025.

651
00:49:30,020 --> 00:49:38,240
So just some quick background, 1983 State of California established the Urban Water Management Planning Act.

652
00:49:38,240 --> 00:49:42,620
following the severe drought of 1976 and 1977.

653
00:49:43,560 --> 00:49:49,240
So this act effectively requires that urban water suppliers prepare urban water management

654
00:49:49,240 --> 00:49:54,440
plans every five years to evaluate long-term water supply and demand.

655
00:49:54,980 --> 00:50:01,540
These plans aid in long-term resource planning evaluate the reliability of our local supplies

656
00:50:01,540 --> 00:50:07,600
or lack thereof, outlined demand management strategies and document progress towards reducing

657
00:50:07,600 --> 00:50:09,360
being per capita water consumption.

658
00:50:10,380 --> 00:50:15,200
So basically these plans are critical to local regional and statewide water planning initiatives

659
00:50:15,200 --> 00:50:22,600
and help ensure that Californians, California's urban water suppliers can provide reliable water supplies

660
00:50:23,020 --> 00:50:27,700
during normal dry and successive or multiple dry years.

661
00:50:28,600 --> 00:50:34,300
And again, it is something that is required out of the California water code.

662
00:50:34,920 --> 00:50:41,620
and so a couple of concepts or components, if you will, of an urban water management plan.

663
00:50:42,240 --> 00:50:48,980
As we're looking at water use, water supplies. In other words, our projected water supply availability.

664
00:50:49,700 --> 00:50:58,040
This does look out over a 20-year timeframe. And so in other words, we'll look back as an example

665
00:50:58,040 --> 00:51:02,100
how reliable was the water supply during the drought of 21-22?

666
00:51:02,660 --> 00:51:09,220
We'll look at water use targets, how has our per capita water use changed since 2020?

667
00:51:10,140 --> 00:51:11,660
And it has changed dramatically.

668
00:51:12,760 --> 00:51:20,540
We'll relook at our water shortage contingency plan and see how well and effective it functioned

669
00:51:20,540 --> 00:51:22,480
for us and then supply assessment.

670
00:51:22,480 --> 00:51:45,100
So getting to this report and the recommendation before you today, so on March 31st, staff issued a request for proposals through Open Gov in preparation for this report that will be, by the way, will come back to you and about this time next year have a public hearing and formalize this, it's due July 1 of 26.

671
00:51:45,100 --> 00:52:05,100
So we received two competitive proposals, and we obviously put together a committee reviewed these proposals and unanimously ranked stand-tech consulting services incorporated as the most qualified, so as a result we're accepting that we're

672
00:52:05,100 --> 00:52:16,520
We're, excuse me, recommending that you accept the proposal from Stantec in the amount of 101,460 to prepare the 25, 20, 25, urban water management plan.

673
00:52:16,620 --> 00:52:18,700
So let me read the formal recommendation before you this morning.

674
00:52:19,800 --> 00:52:25,000
Please accept the proposal from Stantec Consulting Services Incorporated and

675
00:52:25,000 --> 00:52:32,260
authorize the general manager to execute a professional services agreement in the amount of $101,460 for

676
00:52:32,260 --> 00:52:36,860
more preparation of the 2025 urban water management plan.

677
00:52:38,280 --> 00:52:38,800
Fantastic.

678
00:52:39,440 --> 00:52:41,220
Can we have a motion in a second, please?

679
00:52:42,780 --> 00:52:43,640
I'll make the motion.

680
00:52:46,300 --> 00:52:46,860
All right.

681
00:52:47,340 --> 00:52:48,740
Any questions for Greg?

682
00:52:52,890 --> 00:52:53,690
I guess you covered it all.

683
00:52:53,990 --> 00:52:54,150
I'm happy.

684
00:52:54,570 --> 00:52:59,730
I guess there was one comment having lived through a couple of cycles of the urban water management

685
00:52:59,730 --> 00:53:00,230
plan.

686
00:53:00,230 --> 00:53:08,890
It's usually written and adopted after long after it's required and we are almost in a default position.

687
00:53:09,110 --> 00:53:14,190
We have to adopt the plan that's been in fact basically.

688
00:53:15,190 --> 00:53:21,310
Is there any use you've seen in this plan, does it have any effect on us?

689
00:53:22,590 --> 00:53:24,610
It is a planning document.

690
00:53:24,610 --> 00:53:31,930
So I mean, I think to your point, director Pullen, sometimes, and we see this from 2020 to now, things change, right?

691
00:53:32,510 --> 00:53:32,670
Yes.

692
00:53:32,670 --> 00:53:37,530
The planning document and all of a sudden, the landscape looks considerably different.

693
00:53:38,210 --> 00:53:45,570
I think we're in a good shape, though, with everything that the district is investing in in terms of our water supply diversification study.

694
00:53:45,870 --> 00:53:51,170
The goal to your point is to make sure that all these extra pieces were doing dovetail.

695
00:53:51,170 --> 00:53:54,990
So it is a document that can hopefully withstand time.

696
00:53:55,790 --> 00:53:56,450
Thank you.

697
00:53:56,730 --> 00:53:57,430
You're welcome.

698
00:53:58,170 --> 00:54:00,270
I'll be sure to be late every time then.

699
00:54:02,170 --> 00:54:03,150
Thanks for your patience.

700
00:54:03,310 --> 00:54:03,670
Thank you guys.

701
00:54:04,410 --> 00:54:05,090
All right, fantastic.

702
00:54:05,370 --> 00:54:06,050
Let's go ahead and vote.

703
00:54:06,450 --> 00:54:07,710
All those in favor say aye.

704
00:54:08,090 --> 00:54:08,590
All right.

705
00:54:09,010 --> 00:54:09,950
All those against say nay.

706
00:54:11,030 --> 00:54:11,990
Any abstentions?

707
00:54:12,630 --> 00:54:13,350
Seeing none.

708
00:54:13,550 --> 00:54:14,130
Moving on.

709
00:54:14,370 --> 00:54:14,770
Thank you, Craig.

710
00:54:16,070 --> 00:54:18,650
Number 9a, Finance and Administration.

711
00:54:18,650 --> 00:54:25,390
And you'll review the district's investment, financial and debt management policies, and I believe Brian Ritchie is our.

712
00:54:25,950 --> 00:54:27,150
Yes, good morning.

713
00:54:27,590 --> 00:54:30,350
President Kordesky, and members of the board.

714
00:54:31,610 --> 00:54:32,890
Let me share my screen.

715
00:54:50,060 --> 00:54:51,920
Okay, here we go.

716
00:54:52,520 --> 00:55:02,400
So today, I'm here to give a brief presentation to request the approval of an updated debt management policy.

717
00:55:02,400 --> 00:55:06,100
and also just to give a brief update on the investment

718
00:55:06,100 --> 00:55:09,100
and financial policies of the district.

719
00:55:11,630 --> 00:55:14,030
So starting out with the investment policy.

720
00:55:14,510 --> 00:55:19,070
On June 13th, 2017, the board adopted its investment policy

721
00:55:19,070 --> 00:55:23,110
and section 18 of the policy requires an annual review

722
00:55:23,110 --> 00:55:26,350
with any recommended changes to be presented to the board.

723
00:55:26,930 --> 00:55:29,110
The policy is focused on the principles

724
00:55:29,110 --> 00:55:31,330
of safety, liquidity, and yield,

725
00:55:31,330 --> 00:55:38,090
and meets the standards established by the State Treasurer's Office and the California Government Code.

726
00:55:38,550 --> 00:55:46,750
The district has historically favored a more restrictive policy than provided for by state law, and

727
00:55:46,750 --> 00:55:52,430
its buy and hold strategy has provided greater stability through fluctuating market conditions.

728
00:55:53,510 --> 00:55:58,590
So typically we review these policies as part of our two year budget process,

729
00:55:58,590 --> 00:56:01,690
which will be coming up in December and January.

730
00:56:02,390 --> 00:56:05,950
And so at this time, staff proposes no revision

731
00:56:05,950 --> 00:56:09,370
to the investment policy and to leave it as is.

732
00:56:11,010 --> 00:56:12,830
Next, financial policy.

733
00:56:13,130 --> 00:56:16,290
So the board has approved 11 financial policies

734
00:56:16,290 --> 00:56:18,210
that established guidance related

735
00:56:18,210 --> 00:56:20,830
to the financial management of the district.

736
00:56:21,350 --> 00:56:23,570
The policy is to find how the district manages

737
00:56:23,570 --> 00:56:27,090
its restricted cash and budget, establishes reserves

738
00:56:27,090 --> 00:56:32,470
and prefers to pay for capital projects and use funds and access of reserve balances.

739
00:56:33,370 --> 00:56:38,070
The financial policies are designed to be long-lasting and provide clarity to staff,

740
00:56:38,810 --> 00:56:40,890
the public, and municipal market investors.

741
00:56:41,770 --> 00:56:47,970
So as also with the investment policy, we plan to incorporate the update of this,

742
00:56:47,970 --> 00:56:51,430
if any, into the upcoming two-year budget process.

743
00:56:51,430 --> 00:56:57,210
And at this time, staff proposes no revision to the financial policies.

744
00:56:58,090 --> 00:57:01,490
Now, finally, the debt management policy.

745
00:57:02,510 --> 00:57:09,430
So on April 7th, 2020, the board adopted a debt management policy that outlines when

746
00:57:09,430 --> 00:57:15,690
debt financing would be considered the types of debt to be evaluated and related debt management

747
00:57:15,690 --> 00:57:16,630
responsibilities.

748
00:57:16,630 --> 00:57:24,290
The district has a long-standing preference for pay-as-you-go funding of capital improvement projects.

749
00:57:25,010 --> 00:57:32,970
However, it is necessary at times to debt finance large capital improvement projects that have an extended, useful life

750
00:57:33,370 --> 00:57:41,210
to ensure that adequate revenues are maintained for operations, maintenance and emergencies, for example with the Pure Water Project.

751
00:57:41,210 --> 00:57:52,550
So the debt management policy outlines when debt financing is to be considered the types of debt to be evaluated and related debt management responsibilities.

752
00:57:53,150 --> 00:58:05,130
A comprehensive review and update of the debt management policy was recently completed by staff in collaboration with the district's municipal advisers, PFM.

753
00:58:05,930 --> 00:58:09,430
So now I'd like to go over briefly some of those changes.

754
00:58:09,430 --> 00:58:13,930
So here's summary of changes.

755
00:58:14,810 --> 00:58:18,730
The new management policy that we have in 2025,

756
00:58:19,510 --> 00:58:22,530
explicitly integrates the multi-year CIP

757
00:58:22,530 --> 00:58:26,490
with the debt policy, ensuring projects are prioritized

758
00:58:26,490 --> 00:58:29,650
and financed in alignment with loan term planning.

759
00:58:30,130 --> 00:58:34,070
The previous policy did not specifically reference the CIP.

760
00:58:35,590 --> 00:58:39,650
Second, the new policy has expanded debt instruments

761
00:58:39,650 --> 00:58:41,210
and financing alternatives.

762
00:58:41,730 --> 00:58:45,850
So the 2025 policy details a broader range of debt instruments,

763
00:58:46,290 --> 00:58:48,470
including capital leases, variable rate debt,

764
00:58:49,210 --> 00:58:52,270
which is capped at 20% of the outstanding debt.

765
00:58:52,850 --> 00:58:55,710
SRF loans, so state revolving funds.

766
00:58:56,090 --> 00:58:59,430
I don't want to put a dollar in the jar and with ya.

767
00:58:59,910 --> 00:59:03,170
So water infrastructure, financing, innovation at loans,

768
00:59:04,010 --> 00:59:04,950
and commercial paper.

769
00:59:05,490 --> 00:59:08,730
The 2020 policy focused on traditional loans,

770
00:59:08,730 --> 00:59:15,070
bonds and lines of credit, and it did not specify variable rate debt or commercial paper within.

771
00:59:16,370 --> 00:59:21,110
The third change, debt structure and coverage requirements.

772
00:59:21,810 --> 00:59:28,430
So the 2025 policy now sets, and this actually aligns with our rate study principles as well,

773
00:59:28,990 --> 00:59:34,690
and now sets a target minimum debt service coverage ratio of 1.5

774
00:59:34,690 --> 00:59:40,010
for planning purposes and introduces an additional bonds test for new issuances.

775
00:59:40,730 --> 00:59:48,730
The 2020 policy required annual debt service not to exceed 15% of each enterprises annual operating revenue,

776
00:59:48,730 --> 00:59:55,590
but it did not specify a coverage ratio mark of 1.5 or additional bonds test.

777
00:59:57,070 --> 00:59:59,510
and the 4th and last change.

778
01:00:00,000 --> 01:00:29,360
The new updated policy, we are requiring that there be a review at least every five years, and this was not specifically mentioned in the prior policy, although we do make it a practice to come to the board annually and present a review of these policies. Actually, I'll just chime in on a couple of things with the debt policy. If you look at the red line version, you'll see it's mostly red. A lot of it is because we move things around.

779
01:00:29,360 --> 01:00:30,660
to different orders.

780
01:00:31,280 --> 01:00:36,300
So the highlights that Brian made are really the significant changes in the debt policy.

781
01:00:37,100 --> 01:00:42,300
And then the recommendations also came from your financial advisor, Darren Hodg,

782
01:00:42,560 --> 01:00:47,380
PFM, and I are serving on a committee with the California Municipal Treasures Association

783
01:00:47,380 --> 01:00:50,500
Developing Standards for Debt Policies that's almost done.

784
01:00:50,700 --> 01:00:54,480
So we incorporate a lot of those recommendations into our proposed debt policy.

785
01:00:57,640 --> 01:00:58,440
Are you finished?

786
01:00:58,440 --> 01:01:13,420
Let's go on one last slide, sorry, staff proposes that the board make no changes to the current investment in financial policies and approve the updated management policy effective today, June 17th.

787
01:01:13,480 --> 01:01:13,760
All right.

788
01:01:13,820 --> 01:01:17,440
Well, before we have any discussion, let's go ahead and have a motion and a second please.

789
01:01:19,820 --> 01:01:20,780
I'll make the motion.

790
01:01:21,320 --> 01:01:21,600
Second.

791
01:01:22,700 --> 01:01:25,020
Fantastic. I believe, Len, you have a question?

792
01:01:25,320 --> 01:01:27,080
Am I the only one?

793
01:01:27,180 --> 01:01:27,800
No, you're not.

794
01:01:28,240 --> 01:01:28,480
All right.

795
01:01:28,480 --> 01:01:38,860
Right, two questions, Brian, at least on the page 317 that that district step management policy includes utilizing grants for into fund borrowing.

796
01:01:39,700 --> 01:01:43,740
I didn't understand what I have kind of vague idea.

797
01:01:44,780 --> 01:01:46,140
Sure, so let it out.

798
01:01:46,400 --> 01:01:53,180
Yeah, yeah, so the district has three enterprises, so the potable water, recycled water and sanitation.

799
01:01:53,180 --> 01:01:57,800
And typically we do not want to use any funds

800
01:01:57,800 --> 01:02:00,980
because within between those different enterprises

801
01:02:00,980 --> 01:02:03,880
because they're essentially their own operations.

802
01:02:04,200 --> 01:02:07,220
So what this allows for is for loans

803
01:02:07,220 --> 01:02:09,480
in short-term circumstances to be made

804
01:02:09,480 --> 01:02:13,040
between the enterprises but they must be paid back

805
01:02:13,040 --> 01:02:14,600
within those enterprises.

806
01:02:15,040 --> 01:02:17,200
So that's what the interfund borrowing is.

807
01:02:17,500 --> 01:02:19,580
So under a product 218 you can't span

808
01:02:19,580 --> 01:02:24,600
and like potable water funds on the sanitation activities.

809
01:02:25,340 --> 01:02:30,240
And the Interfund borrowing provides for a written defined mechanism to do that.

810
01:02:30,420 --> 01:02:32,900
They would have to be approved by the board prior to it happening.

811
01:02:33,420 --> 01:02:33,940
Okay.

812
01:02:35,180 --> 01:02:39,760
Item one, second item was bans, bond anticipation notes.

813
01:02:41,100 --> 01:02:45,080
I was puzzled by that, too, it's a new instrument.

814
01:02:45,080 --> 01:02:49,120
Yeah, so it's a short-term financing source.

815
01:02:49,340 --> 01:02:56,480
So essentially how it works is we would issue these bans, bond anticipation notes for short-term front financing.

816
01:02:56,900 --> 01:03:03,500
And then when we're ready to issue longer-term financing, we would repay back those bans with the obligation.

817
01:03:03,700 --> 01:03:06,860
And essentially it's to get a more favorable interest rate.

818
01:03:07,460 --> 01:03:13,620
And also when you issue municipal bonds, you typically have to spend the bond proceeds within three years.

819
01:03:13,620 --> 01:03:18,320
So, typically have to spend bond proceeds within three years.

820
01:03:18,940 --> 01:03:24,840
So if you have a longer term project, you often have to issue bond anticipation that

821
01:03:24,840 --> 01:03:28,920
it's in order to time the full bond issuance.

822
01:03:29,380 --> 01:03:34,060
So there's a couple of different reasons interest rates and also just timing the market for

823
01:03:34,060 --> 01:03:37,140
when you'll be able to spend on the bond proceeds for a larger issuance.

824
01:03:39,340 --> 01:03:48,640
Okay. And I want to compliment the report because either you or Chat GPT spelled out every

825
01:03:48,640 --> 01:03:51,600
an acronym ahead of time. That was me.

826
01:03:54,990 --> 01:03:57,150
I don't want to lose money. I mean, you know.

827
01:03:58,770 --> 01:04:05,430
One question, you mentioned increasing the coverage ratio to 1.5. So we locked into that or

828
01:04:05,430 --> 01:04:06,430
is that a recommended?

829
01:04:07,310 --> 01:04:15,590
With the approval of the updated policy, we would make that part of our coverage ratio

830
01:04:15,590 --> 01:04:20,250
that we would need to meet, and it would align with what we've established, which was

831
01:04:20,250 --> 01:04:25,430
actually already approved as a principle for when we're setting rates as well.

832
01:04:26,570 --> 01:04:29,610
That would be a coverage ratio that we maintain at all times.

833
01:04:30,030 --> 01:04:30,810
Sorry, Brian.

834
01:04:31,330 --> 01:04:32,430
It's better than that, too.

835
01:04:32,430 --> 01:04:42,330
So, required to, I think, is the key question that's so each of our loans and our bonds have a required coverage ratio.

836
01:04:43,810 --> 01:04:50,770
Like, for example, if he has like 1.2, so you can't dip below that or things can happen.

837
01:04:51,210 --> 01:05:01,890
The 1.5 coverage ratio is the districts adopted target which provides flexibility and also having a higher coverage ratio increases.

838
01:05:01,890 --> 01:05:06,430
is the likelihood of getting a higher rating decrease in burn costs over the long term.

839
01:05:09,100 --> 01:05:15,600
Okay, so if we're not locked into, like if we run into an issue, we're not going to be in violation.

840
01:05:16,580 --> 01:05:20,620
Because we put this restrictive covenant in the policy.

841
01:05:20,920 --> 01:05:27,180
Right, so like if many of our debt, how's a 1.5 coverage and like say, got to like 1.45?

842
01:05:27,180 --> 01:05:44,880
You know, we would want to take actions to increase it to the board's adopted target and policy, but there would it be the negative consequences like if you dip below the debt coverage requirement of a particular loan or issuance.

843
01:05:45,920 --> 01:05:55,220
And is there a state man, is there a mandated red line you can't cross the 1.2 or something like that?

844
01:05:55,340 --> 01:06:00,440
Well, the red line you can't cross as whatever is in your loan or bond issuance.

845
01:06:01,160 --> 01:06:03,980
I don't recall ever seeing one below 1.2.

846
01:06:07,640 --> 01:06:10,980
Yeah, can I ask what was the impetus for the change in their debt?

847
01:06:10,980 --> 01:06:24,920
So, I believe it's more so because we're going to be going into financing with WIFIA and SRF and want to make sure that we have our policy updated to accommodate any specifications within the requirements.

848
01:06:25,480 --> 01:06:31,420
So, our policies align more with those big loans that we're going to get.

849
01:06:31,660 --> 01:06:36,700
And it's also in line with my mention that we were developing standards that we were trying to implement.

850
01:06:36,700 --> 01:06:39,600
That's, uh, this is a line with, uh, emerging standards.

851
01:06:39,800 --> 01:06:40,160
I'll call them.

852
01:06:40,460 --> 01:06:40,820
I like it.

853
01:06:41,120 --> 01:06:41,580
I like it.

854
01:06:41,600 --> 01:06:42,140
We're ahead of the game.

855
01:06:42,600 --> 01:06:46,960
And since this is a red line version, and you usually come back to us another meeting

856
01:06:46,960 --> 01:06:50,740
with vinyl material, are we going to get a vinyl copy that's clear, clear, clear?

857
01:06:51,080 --> 01:06:54,260
So I believe the clean version was also attached on it.

858
01:06:54,260 --> 01:06:56,220
It has a clean version and a red line.

859
01:06:56,960 --> 01:06:57,360
Okay.

860
01:06:58,140 --> 01:07:01,360
We were thinking twice about the red line because there's so many red lines.

861
01:07:01,880 --> 01:07:02,100
Yes.

862
01:07:02,700 --> 01:07:04,100
We thought it'd be helpful for you to have it.

863
01:07:04,100 --> 01:07:07,980
We'll share to the debt policy is somewhat new to the district for many years.

864
01:07:08,100 --> 01:07:17,760
We didn't even have a debt policy primarily because we didn't issue any debt, but it is a good business practice to have a debt management policy.

865
01:07:18,120 --> 01:07:26,980
And it is something that will change from time to time because of changing government standards and laws and practices around issuance of debt.

866
01:07:27,260 --> 01:07:31,260
And actually, sorry, it's required now under SB 1029.

867
01:07:33,340 --> 01:07:34,460
All right,

868
01:07:36,640 --> 01:07:38,480
very good. Any more questions or comments?

869
01:07:39,980 --> 01:07:43,160
Seeing none, let's vote on it. All those in favor say aye.

870
01:07:43,600 --> 01:07:47,300
All those again say nay. Are there any objections?

871
01:07:48,220 --> 01:07:55,980
Seeing none, moving on. Let's see, item B, CalPERS, pension and other post-employment benefit liabilities update.

872
01:07:55,980 --> 01:07:59,420
Brian Richie again, Brian, no one he took yesterday.

873
01:08:00,980 --> 01:08:02,380
Howdy, you're ready, huh,

874
01:08:04,420 --> 01:08:08,720
the here, pull up this next slide here, there we go.

875
01:08:19,080 --> 01:08:26,180
So, yeah, so this will be a presentation that I'm going to give regarding an update of our

876
01:08:26,180 --> 01:08:27,480
pension and op-ed plans.

877
01:08:28,240 --> 01:08:36,080
So, just a little background, every year on our annual comprehensive financial report, we

878
01:08:36,080 --> 01:08:42,900
We have to list what's called our net pension liability and our net OPEB liability and essentially

879
01:08:42,900 --> 01:08:48,920
what it is starting with the pension first is we take our total pension liability which

880
01:08:48,920 --> 01:08:58,780
currently as of June 30, 2024, so year back is $131.1 million and we have assets that are

881
01:08:58,780 --> 01:09:08,080
invested by CalPERS as part of a pooled investment that have accumulated now to 103.1 million.

882
01:09:08,580 --> 01:09:14,400
So that net amount, that total liability, less the actual assets that have been invested,

883
01:09:14,900 --> 01:09:23,160
is recorded on our annual Comprehensive Financial Report with a net pension liability of 28.0 million.

884
01:09:23,160 --> 01:09:32,420
So, for CalPERS so far, this past year, the investment earnings for CalPERS was 9.3% and

885
01:09:32,940 --> 01:09:39,400
if you compare that to what they've been earning over the last 20 years, it's around 6.7%.

886
01:09:39,400 --> 01:09:42,400
So, last year it was a good year in terms of their investments.

887
01:09:42,980 --> 01:09:47,580
They have increased their allocation over time into more private equities.

888
01:09:47,580 --> 01:10:00,360
So that's to earn a higher return on the investments, but over 20, 10, even five years it's sort of been between that six to seven percent mark that they've been earning with the exception being this last year.

889
01:10:02,750 --> 01:10:04,310
So where are we today?

890
01:10:04,970 --> 01:10:11,530
So as I mentioned, the measurement date of our pension liabilities is actually always a year behind.

891
01:10:11,530 --> 01:10:23,350
So they measured it as of June 30th, 2024, and as of that time frame we were a 78.66, 79% funded.

892
01:10:24,230 --> 01:10:32,690
It's sort of been around that number the last, I would say three to four years, sort of between 78 to 80% funded on the pension liability.

893
01:10:32,690 --> 01:10:40,030
for this upcoming year, the estimated contribution rate is 31.81%.

894
01:10:40,030 --> 01:10:43,830
So what that means is out of all of our payroll at the district,

895
01:10:44,650 --> 01:10:51,690
approximately a little under a third of it is related, the cost is related to our pension funding.

896
01:10:52,370 --> 01:10:58,390
So the estimated contribution rates are projected to stay in that range until around 2032,

897
01:10:58,390 --> 01:11:06,310
and then decrease the 19% and then, therefore, the projection is 8% annually.

898
01:11:07,110 --> 01:11:13,030
So by 2031-32, which is around six years, where it estimated to be at 90% funded,

899
01:11:13,790 --> 01:11:18,730
these percentages can go up and down based on assumption changes.

900
01:11:19,410 --> 01:11:26,490
So typically, if you can get to 90% funded, it's seen as essentially fully funded at that point in time

901
01:11:26,490 --> 01:11:31,370
because of the variation that can occur, so that's sort of the goal post that we're looking at.

902
01:11:32,910 --> 01:11:38,710
So I don't know if you can really see this slide as well, but what I'm attempting to show here

903
01:11:38,710 --> 01:11:46,730
is the correlation between employer contributions and the funded status. So in the red line,

904
01:11:46,850 --> 01:11:53,110
that's the contribution percentage that the district is making. And you'll notice that it will

905
01:11:53,110 --> 01:12:00,110
Trin down, that's the whole point over time to go from 31% at the height, eventually down to 8%.

906
01:12:00,110 --> 01:12:03,750
And you'll see that corresponding blue line, that's the funded status.

907
01:12:04,450 --> 01:12:11,710
So we're inching up and you can see where they cross, that's at the 90% mark, and that's at 2032.

908
01:12:12,230 --> 01:12:18,910
So we're essentially looking to get to that cross mark by 2032 when it would be 90% funded.

909
01:12:18,910 --> 01:12:20,090
Okay,

910
01:12:22,460 --> 01:12:26,760
I'm going to keep going here, update on OPEB, other post-employment benefits.

911
01:12:28,080 --> 01:12:33,540
So, same thing, this gets shown on our act for along with our net pension liabilities,

912
01:12:33,700 --> 01:12:34,940
our net OPEB liability.

913
01:12:35,360 --> 01:12:41,480
So we take the total OPEB liability currently for the district is 21.4 million as of June

914
01:12:41,480 --> 01:12:42,940
30th, 2024.

915
01:12:43,400 --> 01:12:48,920
The value of the assets that have been invested with the California Employment Retirement

916
01:12:48,920 --> 01:12:55,240
benefit trust is 17 million and so the net open liability the difference

917
01:12:55,240 --> 01:12:59,800
remaining is 4.4 million which is outstanding and we're going to talk a little

918
01:12:59,800 --> 01:13:05,100
bit about why that is. So the current total liability once again is 21

919
01:13:05,100 --> 01:13:11,620
million as a fiscal year 2425 the trust balance is 16 million that leaves us with a

920
01:13:11,620 --> 01:13:18,440
funded status of 79.3% versus prior year, it was 68.66.

921
01:13:19,360 --> 01:13:21,900
Now, that's quite a jump from year to year.

922
01:13:22,340 --> 01:13:24,320
We're gonna discuss in a little bit why that is.

923
01:13:24,880 --> 01:13:28,180
The net opa liability remaining is 4.4 million

924
01:13:28,580 --> 01:13:31,100
as of the reporting date, which this will actually show

925
01:13:31,100 --> 01:13:36,320
on the June 30th, 2025 annual comprehensive financial report.

926
01:13:38,660 --> 01:13:41,780
So this is basically a schedule of changes

927
01:13:41,780 --> 01:13:45,100
is showing how the net OPEB liability moves.

928
01:13:45,840 --> 01:13:47,820
And so essentially, there's a lot of detail here,

929
01:13:48,060 --> 01:13:51,340
but it's reiterating what I've already stated that,

930
01:13:51,740 --> 01:13:54,680
if you look at the last two total OPEB liability,

931
01:13:55,300 --> 01:13:57,020
it's shifted, it's actually decreased

932
01:13:57,020 --> 01:14:02,820
a little bit year over year, from 21.7 million to 21.4 million.

933
01:14:03,640 --> 01:14:05,200
The plan for do sharing net position,

934
01:14:05,320 --> 01:14:07,000
that's just the assets, they're investing.

935
01:14:07,240 --> 01:14:09,420
So that's gone from 14 million,

936
01:14:09,420 --> 01:14:15,740
it's increased to 16 million. There's a reason for that. And then the Net OPEB liability has gone

937
01:14:15,740 --> 01:14:22,980
down. So from 6.8 million last year to now it's going to be reported at 4.4 million.

938
01:14:24,260 --> 01:14:29,520
So an overview of how the account's been doing. So this just gives a stage view of how

939
01:14:30,300 --> 01:14:38,680
of initially when we started. So the contribution started with this plan in 2009 with 328,000.

940
01:14:38,680 --> 01:14:42,820
There's been additional contributions of about 13 million since that time.

941
01:14:43,400 --> 01:14:47,120
You have to subtract out some administrative expenses from the trust.

942
01:14:48,200 --> 01:14:55,320
We have investment earnings of about 5 million and that has given us a new total as of March 31st.

943
01:14:55,360 --> 01:14:58,060
So this is a little bit later than the actual reporting of it.

944
01:15:01,620 --> 01:15:29,480
And so, if you look at that last section there, it shows an annualized net rate of return, is 5% roughly over the time. So, OPEB historical funding status. This is one that I really want to emphasize. So, starting in 2013, you'll see that the funded status was only 3% for the OPEB trust. But by the time we get to 2025,

945
01:15:29,480 --> 01:15:36,240
it's at 79%. So there's a major change that happened to increase the funding

946
01:15:36,240 --> 01:15:42,160
status and I'd like to go over that next. So this chart right here has a couple

947
01:15:42,160 --> 01:15:47,380
of blue lines, so I'm going to focus on the light blue line here. If you notice

948
01:15:47,380 --> 01:15:54,200
at around 2020, if you look at that light blue line, you'll start to see that

949
01:15:54,200 --> 01:15:59,640
But that trend of it, it's sort of level from my 2016 to 2020, not really moving.

950
01:16:00,100 --> 01:16:05,800
And then all of a sudden, it goes down, 21, 22, 23, 24, 25.

951
01:16:06,420 --> 01:16:11,960
And what occurred there was we started making additional contributions into the OPEP trust.

952
01:16:12,420 --> 01:16:21,560
The board understood that it would be a good idea to increase contributions, to update the funding status more aggressively for the OPEP trust.

953
01:16:21,560 --> 01:16:23,860
and that has really been effective.

954
01:16:24,460 --> 01:16:28,000
So in 2020, the trust was funded at 31%,

955
01:16:28,260 --> 01:16:31,320
and now it's funded at nearly 80%.

956
01:16:31,320 --> 01:16:34,240
So a big change over the last four to five years

957
01:16:34,240 --> 01:16:36,140
in terms of getting our OPEPS status

958
01:16:36,140 --> 01:16:38,960
to a very healthy funding status.

959
01:16:40,260 --> 01:16:41,240
So with that being said,

960
01:16:41,820 --> 01:16:44,780
the recommendation today is to continue this,

961
01:16:45,040 --> 01:16:46,760
continue contributing additional funding

962
01:16:47,120 --> 01:16:51,200
to the California Employment Retirement Benefit Trust,

963
01:16:51,200 --> 01:17:00,880
and the form of quarterly payments of actualarily determined contributions in addition to the monthly pay go retiree health contributions.

964
01:17:01,120 --> 01:17:10,180
So what that means is the ADC is the amount over and above what we normally would be paying for our retirement health contributions anyways.

965
01:17:10,740 --> 01:17:17,380
So the recommendation is for that additional $706,803 to be approved.

966
01:17:17,380 --> 01:17:25,280
And this is included in our fiscal year 2526 budget that will be coming up next for adoption.

967
01:17:25,740 --> 01:17:27,400
So that completes my report.

968
01:17:27,880 --> 01:17:28,260
Thank you, Brian.

969
01:17:28,480 --> 01:17:29,680
Can we get a motion in a second?

970
01:17:32,400 --> 01:17:32,920
I'll move it.

971
01:17:33,620 --> 01:17:34,400
I'll second it.

972
01:17:34,880 --> 01:17:35,280
Fantastic.

973
01:17:35,620 --> 01:17:36,640
Just a quick question.

974
01:17:41,820 --> 01:17:48,000
It's more conservative, obviously, to have more of this paid off than not a higher percentage

975
01:17:48,000 --> 01:17:49,160
of this being funded.

976
01:17:49,160 --> 01:17:56,480
But do we know what, I mean, other water districts generally are at?

977
01:17:56,900 --> 01:17:59,100
Are we ahead of, are we behind or are we?

978
01:17:59,440 --> 01:18:01,120
So, that's a great question.

979
01:18:01,480 --> 01:18:08,060
On the pension side, I would say that we're a little bit ahead of them, but not much.

980
01:18:08,320 --> 01:18:13,760
I mean, on average, I would say low 70s is where most agencies are at with their pension.

981
01:18:14,520 --> 01:18:18,180
And the district is at high 70s, close to 80.

982
01:18:18,180 --> 01:18:24,600
So I'd say we were ahead of the game on that and in terms of the OPEB, I would say a similar situation

983
01:18:24,600 --> 01:18:29,740
We're definitely, you know, I think we were a little bit behind if you go back four years

984
01:18:29,740 --> 01:18:35,880
But the initiatives that the board took at that time have really paid off dividends and now we're in a good place

985
01:18:35,880 --> 01:18:40,740
In terms of the funded status. Good. Thank you. Yeah, so no surprise

986
01:18:40,740 --> 01:18:44,680
I probably look at the world a little bit different than some of you guys. So

987
01:18:45,880 --> 01:18:47,900
That's a good thing. Yeah, so

988
01:18:47,900 --> 01:18:56,200
So, so a few questions, number one, do I, am I read this, am I reading this right that the service cost?

989
01:18:57,080 --> 01:19:07,260
Is that the cost of CalPERS, administrating the plan, which was about 2.2 million or about 180 basis points?

990
01:19:07,440 --> 01:19:11,360
So, is that, I'm just not sure what that cost is.

991
01:19:11,360 --> 01:19:12,260
Yeah,

992
01:19:21,280 --> 01:19:24,360
so that's that's the administrative cost for it.

993
01:19:24,780 --> 01:19:27,860
This is the OPEB slide, but the service cost is.

994
01:19:27,860 --> 01:19:29,220
So the service cost of the ministry of cost.

995
01:19:29,640 --> 01:19:46,260
So yes, so I did the math, it's about 180 basis points, which is, I mean, I assume that CalPERS is CalPERS, you're not negotiating with CalPERS, I don't know, but to manage assets, financial assets, 180 basis points is egregious.

996
01:19:48,240 --> 01:19:50,380
So, which period of time is that over?

997
01:19:50,820 --> 01:19:55,630
I would say that was over fiscal year 2325.

998
01:19:55,650 --> 01:19:56,870
I assume it was for the year.

999
01:19:57,090 --> 01:20:05,250
Yeah, so a couple of things, so with OPEB, you don't have to use CalPERS.

1000
01:20:05,830 --> 01:20:14,590
So OPEB is through a CalPERS-mage trust a few years ago, probably four or five years ago,

1001
01:20:14,590 --> 01:20:22,030
We looked at some other alternatives to the CalPERS benefit trust program.

1002
01:20:22,790 --> 01:20:28,150
And at that time, CalPERS was still the best option for banning the OPEP trust.

1003
01:20:28,390 --> 01:20:32,910
I mean, we could, again, in the future, look at other options for the OPEP.

1004
01:20:33,030 --> 01:20:35,490
The CalPERS, we can't go somewhere else.

1005
01:20:35,550 --> 01:20:37,510
CalPERS has to be CalPERS for the pension side.

1006
01:20:37,890 --> 01:20:41,050
But for the OPEP, there is alternatives to the trust that we can review.

1007
01:20:41,550 --> 01:20:47,510
So the 122 million, that's CalPERS or the OPEB?

1008
01:20:48,130 --> 01:20:50,170
The 131 million?

1009
01:20:50,330 --> 01:20:51,990
We're 131 of those on one side.

1010
01:20:52,630 --> 01:20:53,670
Yeah, that's the CalPERS.

1011
01:20:54,070 --> 01:20:56,750
Yes, so that's the one we can't do anything about that.

1012
01:20:56,930 --> 01:20:58,590
No, but the OPEB we can.

1013
01:20:58,830 --> 01:21:02,050
I just, is, is, is staggering.

1014
01:21:02,430 --> 01:21:03,830
I can't even feel my arms right now.

1015
01:21:03,830 --> 01:21:04,910
Should we go back to that slide?

1016
01:21:05,710 --> 01:21:08,670
What is, what is just reasonable number?

1017
01:21:08,670 --> 01:21:13,110
That should be on that amount of funds should be under 50 basis points.

1018
01:21:13,570 --> 01:21:19,730
Let's check, I think what we ought to do, I think you're referring to the service cost line here that's $323,000.

1019
01:21:19,850 --> 01:21:20,970
No, no, no, no, it's 2.2 million.

1020
01:21:20,970 --> 01:21:23,210
Where the A's looking for the pension one, though, Dave.

1021
01:21:23,650 --> 01:21:27,070
Oh, I don't have a slide that shows that you're talking about in the report.

1022
01:21:27,470 --> 01:21:28,750
It was in the report.

1023
01:21:29,270 --> 01:21:31,350
It was 2.2 million.

1024
01:21:31,690 --> 01:21:37,370
Well, I would suggest let's find out what that includes and consists of because I would agree that seems awfully high

1025
01:21:37,370 --> 01:21:39,950
if it's just simply to manage the trust.

1026
01:21:40,290 --> 01:21:43,110
I have a feeling that there's more to it than that.

1027
01:21:43,170 --> 01:21:44,030
I think so.

1028
01:21:45,170 --> 01:21:48,250
But I think it's worth us checking on to really find out

1029
01:21:48,250 --> 01:21:51,210
what is covered under that service fee.

1030
01:21:51,730 --> 01:21:53,650
But you would be right, there's not really,

1031
01:21:53,890 --> 01:21:55,570
there's no negotiation with CalPERS.

1032
01:21:55,770 --> 01:21:57,930
They are a massive organization,

1033
01:21:58,610 --> 01:22:00,650
and there's not really an alternative, so.

1034
01:22:01,350 --> 01:22:03,470
But I would agree those numbers seemed high

1035
01:22:03,470 --> 01:22:05,470
if that's just to administer the assets.

1036
01:22:05,470 --> 01:22:07,970
That's, I think it has to be more than that.

1037
01:22:08,290 --> 01:22:10,870
Yeah, and I'll just add, so with the OPEP trust,

1038
01:22:11,070 --> 01:22:13,170
it has to be a 157 trust.

1039
01:22:13,790 --> 01:22:17,190
So there's only a handful of companies in the manage.

1040
01:22:17,770 --> 01:22:20,910
157 trust, the two most common ones are PARs.

1041
01:22:21,770 --> 01:22:23,990
Public, I forget what it's the answer for.

1042
01:22:24,990 --> 01:22:29,550
PARs is a company and then the CalPERS trust are the two big ones.

1043
01:22:30,830 --> 01:22:33,750
Eastern municipal created their own,

1044
01:22:33,750 --> 01:22:38,290
which is just not even practical for an agency of our size.

1045
01:22:39,450 --> 01:22:46,310
So really, when we looked five years ago, we were comparing pars to the CalPERS CalTrust

1046
01:22:46,310 --> 01:22:46,650
one.

1047
01:22:48,990 --> 01:22:53,770
So that also limits the options that we have, because it has to be somebody who could

1048
01:22:53,770 --> 01:22:55,390
manage a 157 trust.

1049
01:22:56,030 --> 01:23:00,690
Yeah, and so for the service cost, let me actually explain that a little bit more.

1050
01:23:00,690 --> 01:23:03,610
So that's not just the administrative amount.

1051
01:23:03,790 --> 01:23:09,250
That's actually the amount to fund, that's actually the cost to fund the pensions.

1052
01:23:09,870 --> 01:23:15,250
So we have obviously people that are retired and the cost to administrative those payments.

1053
01:23:15,430 --> 01:23:17,450
That's part of the service cost.

1054
01:23:17,790 --> 01:23:18,830
Yeah, that's really important.

1055
01:23:18,950 --> 01:23:22,650
So that's actually making payments to retirees for their pension.

1056
01:23:22,990 --> 01:23:24,390
So it's actually making the payments.

1057
01:23:24,390 --> 01:23:30,870
What, isn't that in the 7.4 million benefit payments, including refunds of employee contributions?

1058
01:23:32,790 --> 01:23:40,390
So I think we might be lucky at CalPERS and OPEB at the same time here.

1059
01:23:41,230 --> 01:23:43,190
I'm looking at the CalPERS.

1060
01:23:43,790 --> 01:23:47,030
Page 404 of the packet.

1061
01:23:55,090 --> 01:23:57,110
Is there a line item that you're looking at?

1062
01:23:57,110 --> 01:24:07,450
I was looking at page 405, and there's an item under the description on that page that says service cost, and it adds to 2,248,000.

1063
01:24:07,490 --> 01:24:11,410
Same number, it's taken from 404.

1064
01:24:11,410 --> 01:24:23,270
Yeah, and it appears that that is the payments, right, made to the retired employees for their pensions during that measurement period.

1065
01:24:23,270 --> 01:24:27,230
Yeah, because it's got the interest right under it at the $8.6 million.

1066
01:24:27,870 --> 01:24:29,710
So this is just for that one year.

1067
01:24:30,750 --> 01:24:37,150
Well, so if you look on page 404, what is the $7.4 million?

1068
01:24:37,810 --> 01:24:38,690
Let's take a look.

1069
01:24:39,770 --> 01:24:42,690
OK, are you looking at the middle column, column B?

1070
01:24:43,210 --> 01:24:45,610
Yeah, that's in the actual asset side there.

1071
01:24:45,930 --> 01:24:47,990
OK, and I see it on the total pension.

1072
01:24:48,090 --> 01:24:48,750
That's a good payment.

1073
01:24:55,150 --> 01:25:00,530
Yeah, those are the payments going out to the actual

1074
01:25:00,530 --> 01:25:04,350
employees, which seems different than the service cost.

1075
01:25:05,290 --> 01:25:07,050
So why did I suggest this?

1076
01:25:07,910 --> 01:25:10,170
We'll get you a specific.

1077
01:25:11,330 --> 01:25:13,990
So we could, we could get you a specific definition for

1078
01:25:13,990 --> 01:25:15,810
service cost, but again, under CalPERS,

1079
01:25:16,030 --> 01:25:18,550
I mean, there's no negotiating and there's nothing that we

1080
01:25:18,550 --> 01:25:18,730
could do.

1081
01:25:18,730 --> 01:25:23,750
We can do differently, but we could get, send you a concise definition of service cost.

1082
01:25:24,110 --> 01:25:26,070
Of what it is, yeah, I just have no idea.

1083
01:25:26,410 --> 01:25:31,910
I mean, we could also check and make sure that that number's correct, even though we don't

1084
01:25:31,910 --> 01:25:33,430
can't negotiate it with CalPERSM.

1085
01:25:33,430 --> 01:25:36,570
I mean, we can make sure that number is indeed correct.

1086
01:25:37,150 --> 01:25:43,010
Yeah, yeah, yeah, we'll start with looking under the hood and seeing what's making up the total see if it's anything other than

1087
01:25:43,010 --> 01:25:52,290
And the administration when they say service costs, that's the cost of their charging, which again, at 180 basis points would be like outrageous.

1088
01:25:52,650 --> 01:25:54,790
But I see there's also an administrative expense.

1089
01:25:54,970 --> 01:25:57,930
It's quite a bit lower, 79,222.

1090
01:25:58,270 --> 01:26:02,670
So I think what we ought to do is just get a better understanding of what these different numbers reflect and mean.

1091
01:26:03,190 --> 01:26:04,110
Yeah, I don't know, sounds good.

1092
01:26:04,570 --> 01:26:06,670
One other thing I'll add, that's helpful.

1093
01:26:07,050 --> 01:26:08,870
We may not have explicitly said it.

1094
01:26:08,870 --> 01:26:12,870
When we say other post-employment benefits, what that is talking about is retirement,

1095
01:26:13,930 --> 01:26:17,810
retirement medical benefits are medical benefit for the retirees.

1096
01:26:18,130 --> 01:26:23,370
The other thing on this that is important is although we talk about these as liabilities,

1097
01:26:23,930 --> 01:26:28,410
they're really accrued, actuarial liabilities.

1098
01:26:28,650 --> 01:26:34,250
And so the assumption inherent in all of these is that all of the employees would be retired

1099
01:26:34,250 --> 01:26:36,250
at once and take all of their benefits.

1100
01:26:36,250 --> 01:26:51,330
That's not really what happens, people retire over time, so it's important to point that out, and that is the reason why at any given time you don't have to be at 100% funded because we don't expect tomorrow all the employees to retire.

1101
01:26:52,650 --> 01:27:03,610
But of course, by the same token, you don't want to use that as a rationale not to fund your pension and your other post-employment benefits.

1102
01:27:03,610 --> 01:27:11,070
So it's kind of the practice finding the sweet spot and as Brian explain that's we feel like right about 90 percent.

1103
01:27:11,350 --> 01:27:21,450
No, I would agree with that. So, right, I'm looking on page 407 and am I reading, I think I'm understanding it, but I want to make sure.

1104
01:27:23,150 --> 01:27:31,770
If you look at the net pension liability, which is kind of almost all the way down at the bottom of the table.

1105
01:27:31,770 --> 01:27:36,710
Yep, I'm with you. Right. So in 2021, there was 8.9 million.

1106
01:27:37,870 --> 01:27:40,650
And in 2024 is 27 million.

1107
01:27:47,810 --> 01:27:49,690
We're on page 407.

1108
01:27:50,270 --> 01:27:53,070
Okay, I see the 27 million. Yep.

1109
01:27:53,410 --> 01:27:55,990
And in 2021, there was 8.9 million.

1110
01:27:56,370 --> 01:27:58,190
So the way I look at it is.

1111
01:27:58,510 --> 01:28:03,930
Yeah, we went from about 9 million to almost 28 million in a few years.

1112
01:28:04,410 --> 01:28:06,850
Which is to me as a massive problem.

1113
01:28:07,570 --> 01:28:10,010
Yeah, so let me explain that one a little bit.

1114
01:28:10,130 --> 01:28:10,830
Oh, let me finish.

1115
01:28:10,930 --> 01:28:11,270
Oh, okay.

1116
01:28:12,110 --> 01:28:16,730
And taking into account, in 2024,

1117
01:28:17,310 --> 01:28:20,310
you had like $9 million of earnings,

1118
01:28:20,310 --> 01:28:23,290
which was like probably as bad as good as you're ever gonna do.

1119
01:28:24,490 --> 01:28:27,570
So explain to me, to me, that's a big problem, but you.

1120
01:28:28,310 --> 01:28:31,650
Yeah, so it's looking at it on a net basis.

1121
01:28:32,590 --> 01:28:36,190
So that net number, it's taking the total liability,

1122
01:28:36,190 --> 01:28:44,810
which is up here in 2021 is 112 million and it's comparing it to the 131 million in 2024,

1123
01:28:45,230 --> 01:28:49,870
but it's netting off the assets. So the assets were...

1124
01:28:53,230 --> 01:28:56,510
That's what we're talking about, right? The unfunded...

1125
01:28:57,450 --> 01:29:04,250
Right, so the unfunded, so there's a high investment

1126
01:29:06,010 --> 01:29:11,950
benefits during that year before those pension, net pension amounts came out.

1127
01:29:12,250 --> 01:29:13,650
So it was a very good investment year.

1128
01:29:13,790 --> 01:29:21,050
So what that ended up doing was when we reported it or when CalPERS reported it, it reduced the net liability significantly.

1129
01:29:21,550 --> 01:29:25,730
But if you notice in the next year, the very next year, it had a C-song effect.

1130
01:29:26,370 --> 01:29:29,470
So it went, so, and I don't know, 2020's here, let me see.

1131
01:29:31,410 --> 01:29:38,070
You've seen the fluctuations and the volatility in the portfolio, the CalPERS investment portfolio.

1132
01:29:39,010 --> 01:29:44,010
Right, it went from $21 million to $9 million into $22 million.

1133
01:29:44,450 --> 01:29:46,970
It typically is in the $20 million range.

1134
01:29:47,410 --> 01:29:52,550
That was actually an anomaly that year because we had a really high investment year CalPERS did.

1135
01:29:52,550 --> 01:29:59,630
And so what what they actually did as a result of that too is they reduced the discount rate that we measure the liability

1136
01:30:01,340 --> 01:30:28,180
So, before that time, the discount rate was 7.15, and we had that high investment earnings that you reduced it down to 6.9, but that was purely an anomaly. And our remember, even we presented it at the strategic workshop, and we sort of said it with a caveat like, hey, don't get your hopes up too high on this, because it may see saw back the other way the next year, and it ended up doing that.

1137
01:30:28,180 --> 01:30:40,100
So that's why we sort of make the point that if you get to 90% that's, you know, it's a good mark because of that fluctuation that can happen from your deal.

1138
01:30:40,320 --> 01:30:47,420
I'll add, I recall even at that time, as Brian said, we noted that this is, we felt like it was sort of an anomaly.

1139
01:30:47,420 --> 01:30:54,340
We actually even wrote a letter to CalPERS because our former director, Charlie Caspery,

1140
01:30:54,800 --> 01:30:59,520
had concerns about how aggressive their investment strategy is.

1141
01:31:00,240 --> 01:31:05,380
And we wrote a letter to CalPERS actually encouraging them to be more conservative in their

1142
01:31:05,380 --> 01:31:10,540
portfolio, which they disregarded as that.

1143
01:31:10,540 --> 01:31:12,660
But at least we're on record.

1144
01:31:13,820 --> 01:31:18,080
The issue is we do enjoy the benefits

1145
01:31:18,080 --> 01:31:20,540
when the portfolio performs really well,

1146
01:31:20,540 --> 01:31:23,860
but also it presents a risk when that portfolio

1147
01:31:23,860 --> 01:31:25,460
and the market doesn't perform well.

1148
01:31:25,880 --> 01:31:28,780
And CalPERS invests in instruments

1149
01:31:28,780 --> 01:31:31,900
that we would never consider.

1150
01:31:32,760 --> 01:31:35,800
And also that are sometimes not,

1151
01:31:36,940 --> 01:31:39,660
we don't have a lot of transparency around.

1152
01:31:39,660 --> 01:31:46,540
and that's primarily private equity and we had some concerns about that, whether that was wise

1153
01:31:46,540 --> 01:31:52,640
and really in the public interest where CalPERS was making investments in private equity

1154
01:31:52,640 --> 01:32:00,760
where there was essentially no public information about the safety of those investments.

1155
01:32:00,760 --> 01:32:10,840
What my sense is that, and I'll say everybody's entitled their own opinion, but the 6.8 right now is going to, no way we're going to hit that next year.

1156
01:32:11,800 --> 01:32:16,280
And if you listen to all the economists and all this, and especially if they're overly invested in private equity,

1157
01:32:18,870 --> 01:32:29,350
the biggest thing booming right now is secondaries, because they're buying from CalPERS and other endowments, private equity funds that aren't going to get realized.

1158
01:32:29,350 --> 01:32:31,130
in times that are shutting down the funds,

1159
01:32:31,630 --> 01:32:32,610
they're selling at a discount.

1160
01:32:34,050 --> 01:32:41,910
So, you know, my recommendation would be to take a look

1161
01:32:41,910 --> 01:32:43,650
with CalPERS is, could we,

1162
01:32:45,570 --> 01:32:47,090
and I'm not an expert on CalPERS

1163
01:32:47,090 --> 01:32:49,390
and these kinds of things at all, right?

1164
01:32:49,750 --> 01:32:52,890
But what I believe you can do is,

1165
01:32:53,490 --> 01:32:54,890
for at least new employees,

1166
01:32:55,250 --> 01:32:56,550
set up some kind of tearing

1167
01:32:56,550 --> 01:33:04,230
something that would help us over the long term, right, not have such high of an

1168
01:33:04,230 --> 01:33:11,130
unfair because if we don't hit that 6.8% it's going to continue to go the wrong

1169
01:33:11,130 --> 01:33:15,690
direction. One of the things we've done over the years in part to address this is

1170
01:33:15,690 --> 01:33:20,250
we have we have a number of different tiers of retiree benefits and you know

1171
01:33:20,250 --> 01:33:24,790
there was quite an effort on retirement what are called you know defined

1172
01:33:24,790 --> 01:33:34,810
benefit pension programs and sort of limiting the benefit provided. It was the pension reform

1173
01:33:34,810 --> 01:33:44,510
and what year was that? 2015 or 2013? Sorry. So there was quite a big change and reform

1174
01:33:44,510 --> 01:33:49,350
around that and we actually went through the process, we negotiated with our employee group

1175
01:33:49,350 --> 01:33:54,770
so there's actually a tiered set of benefits and so part of the purpose of that was to reduce

1176
01:33:54,770 --> 01:33:58,830
to use the exposure to this long term unfunded?

1177
01:33:58,970 --> 01:34:05,310
So under a CalPERS, so there's two different things.

1178
01:34:05,630 --> 01:34:13,350
So under a CalPERS, the district always did what was called the classic 2% 55 formula.

1179
01:34:13,670 --> 01:34:23,290
In 2013, there was the Pension Employee Reform Act, which reduced the amount of pension available for new employees.

1180
01:34:23,290 --> 01:34:30,870
It limits it every year, based on a dollar amount, and also it increased the retirement age to 62.

1181
01:34:32,490 --> 01:34:35,250
So that, we can't negotiate that.

1182
01:34:35,610 --> 01:34:41,290
So that is defined by CalPERS, we participate in CalPERS agencies that have tried to leave CalPERS.

1183
01:34:41,710 --> 01:34:48,570
Have found that it's not financially able to leave CalPERS because the cost is astronomical.

1184
01:34:49,790 --> 01:34:53,830
So as more and more employees fall under the new tier,

1185
01:34:54,370 --> 01:34:58,370
you'll see over the long term that unfunded liability and

1186
01:34:58,370 --> 01:35:03,610
the pension liability go down, currently over 50% of our employees are under the lower new tier.

1187
01:35:04,170 --> 01:35:14,450
The other thing that the district did affect in the optional post employment benefits was the district used to provide employee plus one,

1188
01:35:15,350 --> 01:35:20,070
basically fully paid medical insurance upon retirement at the PPO rate.

1189
01:35:20,510 --> 01:35:28,730
We now have three tiers on medical retiree benefits that were negotiated over time, that reduce that amount.

1190
01:35:29,650 --> 01:35:42,050
I believe General Manor's General Manager Peterson was the first one under tier three, and I was the second one under tier three, which reduces that benefit to 75% of the cost of

1191
01:35:45,630 --> 01:35:55,390
So, those two steps together over multiple years and decades will significantly reduce the liability of the district.

1192
01:35:55,930 --> 01:36:02,670
But under the CalPERS plan, we can't negotiate different things than everybody else in the state.

1193
01:36:02,710 --> 01:36:07,430
Under the optional post-employment benefits, the retiree health we can.

1194
01:36:07,430 --> 01:36:08,410
So

1195
01:36:10,840 --> 01:36:14,120
when did we do the retiree health?

1196
01:36:14,740 --> 01:36:29,200
It varied by the bargaining unit and started in 2013 with Dave and then me and then I believe the last tier three unit was about two negotiations ago, so roughly five or six years ago.

1197
01:36:29,200 --> 01:36:30,100
Well,

1198
01:36:35,450 --> 01:36:44,570
interesting discussion for me, I think it's a good discussion, it's a really important item and actually we had it on consent.

1199
01:36:44,830 --> 01:36:47,570
I felt like it was worth having a discussion about it.

1200
01:36:47,650 --> 01:36:51,430
We spent a fair amount of time on it but I do think it's an important item.

1201
01:36:52,070 --> 01:37:01,370
You know, you'll frequently see in the news, you know, City XYZ is on the brink of bankruptcy and usually the reason is this unfunded liability.

1202
01:37:01,370 --> 01:37:05,690
a huge issue. The idle companies all have the same issue.

1203
01:37:06,390 --> 01:37:09,050
Oh, City of Los Angeles is bankrupt technical.

1204
01:37:09,770 --> 01:37:16,530
The last thing I just offer, so when Dave mentioned that we were lobbying to encourage

1205
01:37:16,530 --> 01:37:23,590
CalPERS to have a more transparent, realistic investment portfolio, it was only us in the city

1206
01:37:23,590 --> 01:37:25,050
of Pasadena that provided comments.

1207
01:37:27,150 --> 01:37:30,570
So Randy, can I go?

1208
01:37:32,010 --> 01:37:36,370
So my question is tangential, and I don't

1209
01:37:36,370 --> 01:37:39,690
know if it's even answerable, because I'm

1210
01:37:39,690 --> 01:37:43,250
concerned about the liability of the volatility

1211
01:37:43,250 --> 01:37:49,350
of the current investment world, given the tariffs

1212
01:37:49,350 --> 01:37:59,210
and the challenges it presents is the, I guess the brain trust feel that they're doing

1213
01:37:59,210 --> 01:38:05,330
the best they can is it a good, we don't have a choice in the back, we have to invest

1214
01:38:05,330 --> 01:38:06,430
with them, that's the law.

1215
01:38:07,510 --> 01:38:08,890
So how's this working out?

1216
01:38:09,210 --> 01:38:15,710
It was, it was, when puzzling me is, we're reporting these rates, that's history.

1217
01:38:16,510 --> 01:38:18,450
So does anybody know what's going on today?

1218
01:38:21,600 --> 01:38:24,600
Is it, it's not possible, is that, is that the bottom line?

1219
01:38:24,620 --> 01:38:29,760
In terms of, if you ask how the assets performing, are they maintaining their value?

1220
01:38:30,040 --> 01:38:31,340
So this is my question.

1221
01:38:31,680 --> 01:38:34,500
Yeah, this past year it was a nine, nine percent.

1222
01:38:34,840 --> 01:38:36,740
That was past year, this past year, this past year.

1223
01:38:37,400 --> 01:38:39,660
This year, that I don't know.

1224
01:38:40,280 --> 01:38:40,760
Yeah, that's my question.

1225
01:38:41,020 --> 01:38:46,560
The ultimate way to influence this is to run for election on the CalPERS board

1226
01:38:46,560 --> 01:38:50,940
and the Board of Investments, and they are elected positions from the membership.

1227
01:38:51,940 --> 01:38:55,800
So it is, this crossed my mind before when they didn't respond to our letter.

1228
01:38:56,420 --> 01:39:00,440
And part of it is they have so many members, they're a multi-billion dollar fund.

1229
01:39:00,980 --> 01:39:06,360
And they enjoy a certain amount of autonomy for that.

1230
01:39:06,440 --> 01:39:10,800
But they do report to an elected board that is made up of members.

1231
01:39:10,800 --> 01:39:17,240
And so, you know, theory, any current or even retired CalPERS member could run for the board,

1232
01:39:18,100 --> 01:39:20,520
and ultimately be placed on the board of investments.

1233
01:39:20,900 --> 01:39:23,640
So, I thought that might be a good job for Don at some point.

1234
01:39:24,140 --> 01:39:25,440
I didn't have to kill.

1235
01:39:25,880 --> 01:39:34,460
Interestingly, Don serves on the board of our camp fund, which is a different fund,

1236
01:39:35,160 --> 01:39:40,420
but he does serve on the board of that organization where we invest some of our own funds.

1237
01:39:40,420 --> 01:39:44,900
So, it is something that we could consider in the future.

1238
01:39:45,260 --> 01:39:50,620
It's a fairly significant role and it actually requires a campaign to run for office.

1239
01:39:50,800 --> 01:40:00,560
It's not an easy post to get and it's also pretty sought after given the large dollar amount under, you know, management.

1240
01:40:01,280 --> 01:40:06,340
The other thing I have noticed, they seem to change their chief investment officer frequently.

1241
01:40:07,100 --> 01:40:15,800
So they seem to only last a couple of years at best and then they have a new investment officer.

1242
01:40:16,020 --> 01:40:20,420
Do they send interim reports on how the portfolio is doing?

1243
01:40:21,860 --> 01:40:24,900
I just see the annual reports but-

1244
01:40:24,900 --> 01:40:29,040
They, CalPERS is, well, how do I want to say they're not the most transparent.

1245
01:40:29,800 --> 01:40:34,900
We get reports, you know, pretty far significantly after the end of the fiscal year, reflect

1246
01:40:34,900 --> 01:40:39,780
in the previous fiscal year. There is some information on their website on their investments

1247
01:40:39,780 --> 01:40:46,460
that we can look at. But again, we have spent a lot of effort on that, compared to other

1248
01:40:46,460 --> 01:40:49,140
things because there's nothing we can really do about it.

1249
01:40:52,070 --> 01:40:57,290
So someone can correct me if I'm wrong, but if I remember correctly 20 years ago or so,

1250
01:40:57,730 --> 01:41:02,830
they were running a deficit and that's why they started to invest in more risky investments

1251
01:41:02,830 --> 01:41:10,590
because there was major concern that they wouldn't be able to cover the benefits that they were promising, and that's probably why you saw that.

1252
01:41:11,570 --> 01:41:26,630
Yeah, if you just really brief history lesson, I guess, if you go back to the 90s, CalPERS was running a surplus, and then a lot of agencies not lost Virginess offered richer benefits and richer benefit formulas.

1253
01:41:26,630 --> 01:41:30,230
because luckily the, well, from a financial perspective,

1254
01:41:30,410 --> 01:41:31,770
luckily the district did not do that.

1255
01:41:32,330 --> 01:41:38,850
And then that led ultimately to the deficits that caused the 2013 Pension Reform Act,

1256
01:41:38,850 --> 01:41:44,170
which reduced future benefits for employees hired after 2013.

1257
01:41:44,550 --> 01:41:49,570
So they went from surplus to increased benefits to a pretty significant deficit.

1258
01:41:50,030 --> 01:41:51,450
And then the Pension Reform Act.

1259
01:41:51,450 --> 01:41:51,610
All

1260
01:41:54,170 --> 01:41:56,290
right, any other questions or comments?

1261
01:41:57,510 --> 01:41:58,990
Randy, I'm glad you're on this board.

1262
01:42:01,070 --> 01:42:03,270
Let's go ahead and take a vote.

1263
01:42:04,070 --> 01:42:05,130
All those in favor say aye.

1264
01:42:06,430 --> 01:42:06,770
Aye.

1265
01:42:07,330 --> 01:42:08,230
All those against say nay.

1266
01:42:09,490 --> 01:42:10,690
I'm going to abstain.

1267
01:42:13,120 --> 01:42:14,060
And all those abstain?

1268
01:42:14,240 --> 01:42:15,440
Apparently, Len is abstaining.

1269
01:42:16,380 --> 01:42:18,140
Moving on to the next item.

1270
01:42:18,520 --> 01:42:23,520
Item C. Brian, once again, the fiscal year 2025-26.

1271
01:42:26,160 --> 01:42:29,050
It's like looking in a mirror.

1272
01:42:29,170 --> 01:42:31,550
Good morning, I figure I'd give Brian a little bit of a break.

1273
01:42:33,490 --> 01:42:38,770
And you're going to be discussing the year 25 and 26 proposed budget adoption.

1274
01:42:39,110 --> 01:42:39,930
I certainly am.

1275
01:42:40,190 --> 01:42:43,530
Thank you, President Cordesky, and good morning directors.

1276
01:42:44,310 --> 01:42:50,630
We're seeking the adoption of the proposed budget for fiscal year 2526.

1277
01:42:51,590 --> 01:42:58,890
Excuse me, this budget has presented on the May 20th board meeting represents a continuation

1278
01:42:59,290 --> 01:43:04,410
of the biennial budget plan that was approved in June 2024.

1279
01:43:07,800 --> 01:43:19,320
The total fiscal year 2025-26 budget is $153.5 million, which is an increase of $500,000

1280
01:43:19,320 --> 01:43:20,940
over the approved plan.

1281
01:43:20,940 --> 01:43:21,920
The

1282
01:43:26,340 --> 01:43:27,780
total operating budget

1283
01:43:32,100 --> 01:43:39,720
is $69.3 million, which is 45% of the total budget.

1284
01:43:42,050 --> 01:43:53,070
The net operating income is budgeted at $16.9 million, which is the working capital that is used to fund capital improvement projects.

1285
01:43:55,370 --> 01:44:02,150
In June 2024, the Board approved the phase implementation of the organizational study,

1286
01:44:02,530 --> 01:44:09,490
which resulted in some shifting of funding between departments in order to accomplish that.

1287
01:44:10,150 --> 01:44:20,530
And then the other $500,000 was the approval of the reimbursement agreement on the revenue

1288
01:44:20,530 --> 01:44:28,710
new side and the Ocean Well study that was approved, I believe it was in January of 2025.

1289
01:44:31,170 --> 01:44:40,110
For capital improvement projects, staff took a look at what was originally included for

1290
01:44:40,110 --> 01:44:47,530
the programs within the two-year budget and through some reallocation of resources and

1291
01:44:47,530 --> 01:44:54,990
re-prioritization of projects, they were able to reallocate those resources.

1292
01:44:55,210 --> 01:44:59,650
One of the things that Eric and his staff did, take a deeper look at is the

1293
01:45:00,000 --> 01:45:29,860
There are possible effects of tariffs on any of our programs. There are projects that we have planned in the next couple of years. On the sanitation side, I do just want to mention that this is the less virginest portion of the projects only. So if you do recall some of these projects included in the JPA budget, you'll see these numbers might be a smaller amount. And with that, our recommendation is to adopt the proposed 25

1294
01:45:29,860 --> 01:45:33,840
of 26th budget, establish a control systems technician

1295
01:45:33,840 --> 01:45:38,720
program, sorry, position, add a salary range of OU 52

1296
01:45:38,720 --> 01:45:43,280
on the office unit salary schedule, reclassify an existing

1297
01:45:43,280 --> 01:45:47,940
network and security technician position, salary range OU 52

1298
01:45:48,300 --> 01:45:54,840
to a network and security analyst position, salary range SP 65

1299
01:45:54,840 --> 01:45:57,920
on the supervisor, professional and confidential unit,

1300
01:45:57,920 --> 01:46:27,300
SPU, salary schedule, approve a change in the bargaining units and salary range for an existing resource conservationist specialist one and two position from general unit to SPCU, salary range SP 59.65 respectively, and approve a change in the bargaining units and salary range for the existing existing executive assistant clerk.

1301
01:46:27,300 --> 01:46:31,260
of the board position for management unit to SPCU,

1302
01:46:31,400 --> 01:46:37,740
salary range SP70, effective upon the position becoming vacant.

1303
01:46:38,320 --> 01:46:40,480
And these were all included in the presentation

1304
01:46:40,480 --> 01:46:43,180
that we gave to you on May 20th.

1305
01:46:43,220 --> 01:46:45,860
So with that, I'm happy to answer any questions.

1306
01:46:46,480 --> 01:46:47,060
Thank you very much.

1307
01:46:47,200 --> 01:46:49,820
And before any questions, can we have a motion?

1308
01:46:49,940 --> 01:46:50,540
And a second, please.

1309
01:46:51,880 --> 01:46:52,680
I'll make the motion.

1310
01:46:53,040 --> 01:46:53,320
Second.

1311
01:46:53,960 --> 01:46:54,640
That's okay.

1312
01:46:54,700 --> 01:46:55,220
Any questions?

1313
01:46:55,620 --> 01:46:55,960
We're Veronica.

1314
01:46:57,560 --> 01:46:58,500
Debbie, sorry.

1315
01:46:58,940 --> 01:46:59,080
Debbie.

1316
01:46:59,100 --> 01:46:59,440
That's okay.

1317
01:46:59,660 --> 01:47:00,220
We look alike.

1318
01:47:04,800 --> 01:47:06,340
It's like looking at a mirror, right?

1319
01:47:06,760 --> 01:47:07,060
Exactly.

1320
01:47:11,860 --> 01:47:17,220
So this doesn't include the JPA, which then doesn't include the pure water project.

1321
01:47:17,220 --> 01:47:25,120
It includes the less virginest or the portion that less virginest will be paying for the

1322
01:47:25,120 --> 01:47:26,080
pure water project.

1323
01:47:27,460 --> 01:47:34,980
On the significant changes for capital projects, these are all just the changes from one project

1324
01:47:34,980 --> 01:47:35,620
to the other.

1325
01:47:35,760 --> 01:47:37,180
They don't include all of the projects.

1326
01:47:37,840 --> 01:47:43,140
But an answer to your question, director Poland, is that the budget does include less virginist

1327
01:47:43,140 --> 01:47:44,480
portion for pure water.

1328
01:47:48,570 --> 01:47:48,950
Thank you.

1329
01:47:49,430 --> 01:47:56,250
That's why it's $153 million and this is a one year, this is a budget from $25 to $26.

1330
01:47:56,690 --> 01:47:57,430
Yes, that is correct.

1331
01:47:57,530 --> 01:48:01,310
It used to be $60, $70 million, so that's the differential.

1332
01:48:01,750 --> 01:48:02,310
That is correct.

1333
01:48:03,650 --> 01:48:04,350
Thank you.

1334
01:48:08,540 --> 01:48:09,080
Anybody else?

1335
01:48:09,560 --> 01:48:10,300
So look at me.

1336
01:48:10,480 --> 01:48:10,940
Yes, go ahead.

1337
01:48:11,240 --> 01:48:12,880
All right, fantastic.

1338
01:48:13,380 --> 01:48:15,880
Seeing that there's no more comments, let's take a vote.

1339
01:48:16,300 --> 01:48:17,320
All those in favor say aye.

1340
01:48:17,840 --> 01:48:18,220
Aye.

1341
01:48:18,680 --> 01:48:19,560
All those against say nay.

1342
01:48:20,800 --> 01:48:22,000
Are there any abstentions?

1343
01:48:22,960 --> 01:48:24,780
Seeing none, moving on.

1344
01:48:24,900 --> 01:48:25,320
Thank you.

1345
01:48:27,900 --> 01:48:28,920
Item D.

1346
01:48:30,000 --> 01:48:35,640
2025 rate study, cost of service analysis and proposed rates, I believe they call this the main event.

1347
01:48:36,540 --> 01:48:36,740
All right.

1348
01:48:37,300 --> 01:48:37,680
Brian.

1349
01:48:37,960 --> 01:48:38,280
All right.

1350
01:48:38,900 --> 01:48:39,680
The fund continues.

1351
01:48:43,160 --> 01:48:43,800
Okay.

1352
01:48:50,850 --> 01:49:01,230
So today I am here with our consultant, Sanjay Gower, to present to you the 2025 cost of service analysis.

1353
01:49:01,230 --> 01:49:05,570
and proposed rates for 2026 through 2030.

1354
01:49:06,530 --> 01:49:09,290
So today, there will not be an approval of anything.

1355
01:49:09,770 --> 01:49:12,810
It's essentially to give a review of where we're at in the process,

1356
01:49:13,490 --> 01:49:16,730
and to receive any feedback you may have for us.

1357
01:49:19,270 --> 01:49:24,350
So this just gives a brief overview of what's occurred so far.

1358
01:49:24,590 --> 01:49:30,590
So we brought the board policy principles back in November of 2024

1359
01:49:30,590 --> 01:49:35,790
work to set the stage for how we wish to develop these rates.

1360
01:49:36,750 --> 01:49:44,930
We then came back in February and presented a financial plan which took all of the different

1361
01:49:44,930 --> 01:49:51,830
revenue assumptions, expense assumptions, and reflected what we would require for revenues

1362
01:49:51,830 --> 01:49:55,650
to meet those expense assumptions that we had at the time.

1363
01:49:55,650 --> 01:50:03,750
And then we had a cost of service analysis that was recently completed by WRE, who was here today.

1364
01:50:04,650 --> 01:50:11,750
And now here we are today to present to you our proposed rates on 17th.

1365
01:50:12,470 --> 01:50:18,810
Further after that, we're going to have public workshops, so we're going to be meeting with our cities in the district,

1366
01:50:19,330 --> 01:50:24,250
as well as having other outreach related to the rates.

1367
01:50:24,250 --> 01:50:31,730
We're going to be setting a public hearing on August 5th, 2025, and that will to be to present

1368
01:50:32,110 --> 01:50:34,910
the actual rate study at that time.

1369
01:50:35,830 --> 01:50:41,970
And then we're going to be presenting for adoption the actual rates on October 9th, 2025, so in the fall.

1370
01:50:42,850 --> 01:50:46,550
And then the rates would become effective January 1st of 2026.

1371
01:50:47,150 --> 01:50:54,050
and then annually will come back to the board to confirm the rates between 2027 and 2030.

1372
01:50:54,530 --> 01:51:00,790
What that means is we're setting rates at the highest possible, but if circumstances change

1373
01:51:00,790 --> 01:51:07,230
and we don't require those rates to be at that level, we can come back to the board and those rates can be reduced.

1374
01:51:11,230 --> 01:51:17,790
Well, previous boards at board actions, so this just gives an outline of what came to the board on November 13th,

1375
01:51:17,790 --> 01:51:20,050
which are our policy principles here.

1376
01:51:20,730 --> 01:51:23,790
The fifth one was actually a new one that wasn't part

1377
01:51:23,790 --> 01:51:27,090
of the previous rate study and this was mentioned also earlier

1378
01:51:27,090 --> 01:51:30,090
in the policy updates where we were proposing rates

1379
01:51:30,090 --> 01:51:31,770
that allow the district to meet a minimum

1380
01:51:31,770 --> 01:51:35,230
debt service coverage ratio of 1.50.

1381
01:51:38,620 --> 01:51:42,680
And also this just gives an overview of what our assumptions were

1382
01:51:42,680 --> 01:51:46,260
that went into the actual revenue requirements analysis

1383
01:51:46,260 --> 01:51:49,680
that was presented to the board on February 18th.

1384
01:51:50,220 --> 01:51:54,380
So our operating expenses, we had capital expense assumptions,

1385
01:51:54,760 --> 01:51:59,260
including our latest 10-year IIP that was approved by the board

1386
01:51:59,260 --> 01:52:00,060
in November.

1387
01:52:00,920 --> 01:52:04,580
We're including fully funded reserves and all of our assumptions.

1388
01:52:05,420 --> 01:52:08,400
And of course, we have that service projections

1389
01:52:08,400 --> 01:52:12,760
that are primarily related to the pure water project.

1390
01:52:13,280 --> 01:52:13,680
Hey, Brian.

1391
01:52:14,200 --> 01:52:14,300
Yes.

1392
01:52:14,540 --> 01:52:15,980
Can you go back to the last slide first?

1393
01:52:15,980 --> 01:52:16,100
Yes.

1394
01:52:16,480 --> 01:52:17,420
This one or the one before?

1395
01:52:17,540 --> 01:52:17,880
The one before?

1396
01:52:18,180 --> 01:52:18,420
Sure.

1397
01:52:23,670 --> 01:52:24,810
I'm just asking the question.

1398
01:52:25,170 --> 01:52:33,470
On number three, with all these lawsuits regarding the budget rates, right?

1399
01:52:34,410 --> 01:52:44,330
Do we want that in there, from the standpoint of a lot of these lawsuits where the rulings

1400
01:52:44,330 --> 01:52:51,230
were that you can have budget rates without a problem but not to, not for conservation purposes

1401
01:52:51,230 --> 01:53:01,810
right. So I don't know if that, does that create any issues having that as a, as a principle?

1402
01:53:11,140 --> 01:53:18,120
I'll try to address that directly being the, the way the course look at this it really becomes

1403
01:53:18,120 --> 01:53:25,200
comes a question of do the rates exceed the cost of service and what is that cost of service?

1404
01:53:25,500 --> 01:53:28,880
So I think every agency has competing demands, right?

1405
01:53:28,980 --> 01:53:34,680
You want to make sure that what you're not overcharging, but we're being forced in some ways

1406
01:53:34,680 --> 01:53:37,940
through other legislation to promote conservation statewide.

1407
01:53:38,540 --> 01:53:45,560
And so to the extent that you can maintain an adequate and prudent reserve and meet your cost

1408
01:53:45,560 --> 01:53:52,640
to service, I don't see a problem into having a policy statement that we're going to promote

1409
01:53:52,640 --> 01:53:58,160
conservation as well. I don't think it can be your sole motivation. I don't think these

1410
01:53:59,600 --> 01:54:05,700
principles support it being the sole motivation, but that'd be my view on it. But as you know,

1411
01:54:06,200 --> 01:54:10,160
there's, wish there were black and white answers to this stuff in the case law because the

1412
01:54:10,160 --> 01:54:20,460
In case the case decisions are sometimes variance, but I think having this saying that it will promote conservation is not an illegal concept.

1413
01:54:21,900 --> 01:54:23,980
Okay, as long as you're comfortable.

1414
01:54:25,180 --> 01:54:25,820
Thank

1415
01:54:28,510 --> 01:54:29,110
you.

1416
01:54:29,810 --> 01:54:30,190
No problem.

1417
01:54:32,050 --> 01:54:34,970
Okay, so, here we go.

1418
01:54:34,970 --> 01:54:41,310
So, also at the previous board, we came to the board with proposed revenue adjustments.

1419
01:54:42,250 --> 01:54:47,410
And so, you can sort of see the impact here in the top column, potable water and sanitation,

1420
01:54:48,110 --> 01:54:58,270
combined impact, 5.5 percent, 2026, then 5, 5, 5, and 4, or combined potable and sanitation

1421
01:54:58,270 --> 01:54:58,830
impact.

1422
01:55:00,780 --> 01:55:11,800
And then, um, Director Lewett, we included in a slide in here that wanted to basically show the impact of the pure water project.

1423
01:55:12,400 --> 01:55:18,760
And so essentially what we have in the top section here is a life without the pure water project.

1424
01:55:18,980 --> 01:55:27,980
Essentially, if we, if we, if we didn't do the pure water project, the rates, you can see for the first three years, we would not actually need to increase.

1425
01:55:27,980 --> 01:55:35,160
or we wouldn't need revenue adjustment for those years and the out years it would be about 2%.

1426
01:55:35,840 --> 01:55:40,960
And then on average if you see in that very far right column it's a little under 3%

1427
01:55:41,560 --> 01:55:43,980
over that 10 year horizon there.

1428
01:55:46,180 --> 01:55:50,060
The second section the green section is what we currently have

1429
01:55:50,060 --> 01:55:55,920
with the pure water project that actually reflects our rates as they would be our revenue need sorry

1430
01:55:55,920 --> 01:56:03,080
as they would be. And so you can see if you go across that top column, five and a half, five, five, five, four,

1431
01:56:03,400 --> 01:56:09,100
then if you go all the way to the very end, it's a little under five percent. So 4.6 percent

1432
01:56:09,840 --> 01:56:18,140
over that horizon from 2026 to 2035. So a little under two percent differential there

1433
01:56:18,140 --> 01:56:20,680
between pure water project with or without.

1434
01:56:21,200 --> 01:56:32,340
I think it's for it to highlight that the 0% for the no-pair water project or because we would be spending the on the pay go amount that we've been saving for the last five years.

1435
01:56:33,000 --> 01:56:37,930
So, Brian, are you saying that the average,

1436
01:56:40,040 --> 01:56:43,020
I understand this, $11.36?

1437
01:56:44,140 --> 01:56:46,100
Yeah, let me explain that.

1438
01:56:46,100 --> 01:56:59,000
So what that's saying is from that $263 in 2026, over to $375 in 2035, that's the increase for an average bill.

1439
01:56:59,780 --> 01:57:06,940
What it's saying is that's $11 per month per year, so month-per-year.

1440
01:57:06,940 --> 01:57:08,080
Per month per year, yeah.

1441
01:57:08,080 --> 01:57:18,870
So can I, so if I understand this, average monthly bill is an ab, what can you, what is this?

1442
01:57:19,190 --> 01:57:20,010
There's some asterisk.

1443
01:57:20,070 --> 01:57:20,910
Yeah, yeah.

1444
01:57:21,110 --> 01:57:25,110
So the average monthly bill were essentially very small asterisks, huh?

1445
01:57:25,610 --> 01:57:25,650
Yeah.

1446
01:57:25,790 --> 01:57:26,150
Yeah.

1447
01:57:27,110 --> 01:57:27,590
Intentionally.

1448
01:57:28,050 --> 01:57:28,750
Intentionally small.

1449
01:57:28,990 --> 01:57:29,790
Nothing to see here.

1450
01:57:30,230 --> 01:57:31,130
No, no, no.

1451
01:57:31,270 --> 01:57:31,930
No work.

1452
01:57:32,970 --> 01:57:34,210
It's just like an abstraction number.

1453
01:57:34,370 --> 01:57:35,490
Are you on besides the screen?

1454
01:57:35,490 --> 01:57:38,370
Oh, this is just in the PowerPoint, yep.

1455
01:57:39,750 --> 01:57:44,950
So we're essentially, as we know, we have various customers that usage and everything

1456
01:57:44,950 --> 01:57:45,450
is different.

1457
01:57:46,070 --> 01:57:51,230
And so we're using our average customer, the amount that's being used as part of this

1458
01:57:51,230 --> 01:57:58,250
study is 29 HCF, 100 cubic feet of water for that customer.

1459
01:57:58,650 --> 01:58:00,510
And so that's what we're facing this off.

1460
01:58:00,510 --> 01:58:11,450
If they use 29 HCF and their landscaping we have a landscaping of, I think the average was 77,600.

1461
01:58:11,850 --> 01:58:13,310
We're taking that into consideration.

1462
01:58:13,310 --> 01:58:14,970
We're sort of plugging it all in.

1463
01:58:15,410 --> 01:58:20,610
That average bill for 2026 would be $263.

1464
01:58:21,730 --> 01:58:27,690
And then if you extrapolate that forward with the revenue adjustments that we're proposing,

1465
01:58:27,690 --> 01:58:40,290
By the time you get to 2030, the bill would be around 317, and then looking forward from that, it would be 375 and 2030.

1466
01:58:40,350 --> 01:58:44,310
So in 10 years it's going from 263 a month to 375 a month?

1467
01:58:44,450 --> 01:58:44,670
Correct.

1468
01:58:45,290 --> 01:58:46,890
And that's because of pure water.

1469
01:58:47,850 --> 01:58:50,390
Well partly, I mean, we have other costs as well.

1470
01:58:50,550 --> 01:58:54,590
The pure water impact is the variance between that top portion.

1471
01:58:54,590 --> 01:59:01,710
So it would have gone from 250 to 307, and now it's going from 263 to 375.

1472
01:59:01,950 --> 01:59:08,210
Okay, and then still the average bill is kind of, I don't know what that means.

1473
01:59:08,470 --> 01:59:10,810
I mean, I like it broken down.

1474
01:59:11,150 --> 01:59:16,870
So if someone, we encourage people to be efficient, whether you have a huge house and

1475
01:59:16,870 --> 01:59:21,570
you can get more water or a small house and you can get less water, we want someone to be efficient.

1476
01:59:22,470 --> 01:59:27,370
So what I'd like to know is if you're efficient and

1477
01:59:28,190 --> 01:59:31,730
what percent is your, so if you're efficient and

1478
01:59:32,400 --> 01:59:35,890
you're efficient in your water bills $100 a month and you're efficient.

1479
01:59:41,040 --> 01:59:46,800
In 2030, what is your bill go to and then in 2036,

1480
01:59:47,740 --> 01:59:48,940
what is your bill go to?

1481
01:59:49,040 --> 01:59:52,420
Let's say it's $100 as a go to, and then if you're

1482
01:59:52,420 --> 01:59:57,640
inefficient and you're a huge water user but you're inefficient where does your bill go to?

1483
01:59:57,900 --> 01:59:59,900
Sure, no that's a great question and we actually have a

1484
02:00:00,000 --> 02:00:29,720
I'd a little bit later that Sanjay has as part of his presentation that shows the same efficient customer that we're showing here, but also what it would be for inefficient, what it would be for excessive and show what that different choice there. And then another thing is that we're actually, we actually created a bill calculator that's going to be live fairly soon where customers will be able to go in and type in, excuse me, all of their inputs and see what

1485
02:00:29,720 --> 02:00:35,600
that impact it has on their bill from 2025 to 2026, which will be, I think, really helpful.

1486
02:00:35,980 --> 02:00:40,580
And then the whole time messaging that this is not our choice, it was regulation driven,

1487
02:00:40,740 --> 02:00:46,200
but also we're going to get 30% more water into our portfolio.

1488
02:00:46,640 --> 02:00:46,980
Absolutely.

1489
02:00:47,480 --> 02:00:49,020
And just one other thing I want to.

1490
02:00:49,220 --> 02:00:54,420
So the revenue needs, we have all of our financial models now got 10 years.

1491
02:00:54,880 --> 02:00:57,660
So the revenue needs financial model goes out 10 years.

1492
02:00:57,660 --> 02:01:03,440
The rate design only goes out five years because the rate design we only do with the rate study.

1493
02:01:04,060 --> 02:01:10,960
So after 2030, the board will give us policy direction and could redistribute those costs differently.

1494
02:01:11,540 --> 02:01:17,360
So to show the difference between now and 2030 is what Sanjay is going to show.

1495
02:01:17,660 --> 02:01:22,340
But then after 2030, they'll be a whole nother rate study, a whole nother rate design.

1496
02:01:22,700 --> 02:01:26,120
And it could change depending on the board and its policy at the time.

1497
02:01:26,120 --> 02:01:29,940
But I think the rates will want to go down.

1498
02:01:30,740 --> 02:01:39,900
I never said that, but I will remind the board that there was a couple times where we

1499
02:01:39,900 --> 02:01:41,140
brought back to the board.

1500
02:01:41,140 --> 02:01:46,900
One was pretty significant where we did not recommend moving forward with the entire

1501
02:01:46,900 --> 02:01:53,720
Prop 218 approved rate increase because we do review it annually and sometimes if we don't

1502
02:01:53,720 --> 02:01:58,860
need it? Well, recommend something lower than the Prop 218 notice, which is the maximum increases.

1503
02:02:00,400 --> 02:02:05,480
Thank you. But I do like this graph, though. I think, you know, it says over the next 10 years,

1504
02:02:06,080 --> 02:02:11,580
without the pure water projects, the average bill would increase by about 50 bucks, and with the

1505
02:02:11,580 --> 02:02:19,300
pure water project, it's going to increase about 100 bucks. So it's 50 bucks a month. It's a good way to look at it.

1506
02:02:20,920 --> 02:02:47,640
All right, and so now, I'm actually going to try to go up one moment, I keep studying this because it wasn't in here, I mean if you look at it, it's 5% a year, 5, 10, 15, 20, 24, 28, 32, I can add up, this is, I can, this is very significant increase to be paying $375 a month for your average water.

1507
02:02:47,640 --> 02:02:50,980
I can see where, I mean, I'm a repair myself.

1508
02:02:53,760 --> 02:02:55,740
What were those 10 years ago?

1509
02:02:56,540 --> 02:02:58,640
It just seems very, very, very high.

1510
02:02:59,100 --> 02:03:04,700
So one thing to keep in mind, so we don't add those numbers in that way in an arithmetic sum.

1511
02:03:05,020 --> 02:03:11,060
But I realize you could, but you have to keep in mind that we're not, the cost of money is not the same.

1512
02:03:11,320 --> 02:03:13,640
So we're experiencing inflationary impacts.

1513
02:03:13,640 --> 02:03:18,760
And so you really have to think about that, everything is costing more every year.

1514
02:03:19,600 --> 02:03:30,340
And so I would encourage you to think of it in that term as compared to the effective inflation on utility operations.

1515
02:03:30,580 --> 02:03:39,040
Well, I know that my bill 10 years ago was maybe 80 and my summer bill was 110 and my summer bill was now 160 to 200.

1516
02:03:39,240 --> 02:03:42,920
And I'm low compared to many other people who use a lot more water.

1517
02:03:42,920 --> 02:03:53,660
So but still 375 point out it's a $57 increase by the way Brian might have I think shared this but what we're talking about here

1518
02:03:53,660 --> 02:04:00,080
too is the combined the combination of both water and sewer so we're about $70 million that we're financing

1519
02:04:00,080 --> 02:04:04,820
ourselves on the pure water project at this moment if I remember the graph from the other day is that about right

1520
02:04:06,280 --> 02:04:12,780
We had about yeah roughly right so what else can we do is board to find more funding

1521
02:04:14,160 --> 02:04:34,820
I think it's also important to note that the municipal bond portion is one portion that we're going to have to pay back, we have to pay back with FIA, we have to pay back SRF, we have to pay back the water recycling loan, so the majority of how pure waters being finances with loans, so all of that has to be paid back.

1522
02:04:34,820 --> 02:04:44,380
One other thing I'll add, it might be helpful, let Brian and Sanjay go through the presentation because they're going to show the actual impact to certain types of customers.

1523
02:04:45,120 --> 02:04:57,780
And then let's just keep this, we can always come back to this, but I think that analysis is actually more insightful than this because it actually shows how the changes would affect a different customer types.

1524
02:04:57,780 --> 02:05:03,140
I realize I was a little bit ahead, but I'm also questioning what are other water districts

1525
02:05:03,140 --> 02:05:05,860
all throughout the state and certainly in our local area?

1526
02:05:06,020 --> 02:05:10,840
What are their torches going currently and going to be, because I don't really have

1527
02:05:10,840 --> 02:05:11,640
that kind of graph.

1528
02:05:12,060 --> 02:05:16,500
Yeah, and I think that would be, Sanjay can speak to that a bit because Sanjay I'll share

1529
02:05:16,500 --> 02:05:23,860
is doing right studies for many, many different agencies, but I'll also say that it very significantly

1530
02:05:23,860 --> 02:05:28,180
depending on the circumstances, but there's tremendous pressure,

1531
02:05:28,420 --> 02:05:30,820
rate pressure on water rates.

1532
02:05:31,240 --> 02:05:36,180
And this is not something that hasn't received a lot of, you know,

1533
02:05:36,320 --> 02:05:38,640
press, you know, metropolitan San Diego.

1534
02:05:39,560 --> 02:05:44,140
I mean, all of the major water agencies are experiencing the need

1535
02:05:44,140 --> 02:05:48,420
to make significant investments in water because of a changing climate,

1536
02:05:48,880 --> 02:05:52,460
aging infrastructure, and the escalating cost of operations.

1537
02:05:52,940 --> 02:05:58,240
Just one brief question. We mentioned yesterday in the strategic planning that Malibu was very expensive.

1538
02:05:58,620 --> 02:06:01,640
Do you have some idea for what the average number was there when you were mentioning that?

1539
02:06:02,580 --> 02:06:11,780
Yes. We know, in fact, we have a rate comparison chart that Joe does every year and actually it will show how our rates compare to others.

1540
02:06:12,000 --> 02:06:16,360
And you will always find District 29 on the far right, which is the highest.

1541
02:06:17,620 --> 02:06:20,380
And it's not even close, as I recall.

1542
02:06:21,700 --> 02:06:27,300
But I also think you need to remember that we are the only district that's being forced

1543
02:06:27,300 --> 02:06:30,280
to put in an AWP, the Peerwater project.

1544
02:06:30,580 --> 02:06:36,280
And so that is the driver of any different, most of the differential in price.

1545
02:06:37,020 --> 02:06:39,060
So we have no choice but to do it.

1546
02:06:39,700 --> 02:06:43,540
I don't know why you would compare against neighboring districts since they are not being

1547
02:06:43,540 --> 02:06:44,300
forced to do it.

1548
02:06:45,000 --> 02:06:54,040
I would imagine that DWP will have quite, for example, a very expensive water due to

1549
02:06:54,040 --> 02:06:57,900
their pure water project, and that was San Diego, as very expensive water due to their

1550
02:06:57,900 --> 02:06:59,120
pure water project.

1551
02:07:00,320 --> 02:07:06,360
So I'm not sure what the benefit would be to compare against another district.

1552
02:07:06,800 --> 02:07:14,200
It might be helpful to go through the presentation and get to San Drays, and then we can see

1553
02:07:14,200 --> 02:07:17,480
see what the impacts would be on customers and in general,

1554
02:07:18,300 --> 02:07:22,880
subject can mention how our proposed increases compared to other water districts in general.

1555
02:07:23,020 --> 02:07:24,560
I think you'll find them very favorable.

1556
02:07:26,060 --> 02:07:30,920
If you look at this chart, for example, I may have inflation averages 3%,

1557
02:07:30,920 --> 02:07:33,380
we're not that much above that.

1558
02:07:34,280 --> 02:07:38,000
And accomplishing water security, diversification,

1559
02:07:38,740 --> 02:07:43,040
replacing age and infrastructure, increased met costs, there's a lot of pressures.

1560
02:07:43,040 --> 02:07:59,300
and I should also, we'll also highlight that from 2027 on these, the rates that are going to be charged are shown do not reflect the MWD wholesale pass through that the board has authorized in our code.

1561
02:07:59,840 --> 02:08:00,960
You want to take it on?

1562
02:08:00,960 --> 02:08:05,660
Sure, I will, at this time, turn it over to Sanjay.

1563
02:08:06,820 --> 02:08:08,320
Sorry, one last slide.

1564
02:08:08,580 --> 02:08:15,300
So Sanjay is going to be reviewing the cost of service results, proposed changes to the

1565
02:08:15,300 --> 02:08:19,780
rate structure in the proposed rates of 2026 to 2030.

1566
02:08:21,280 --> 02:08:26,200
And I'll add that, although many other water districts aren't being forced to, and MWD is

1567
02:08:26,200 --> 02:08:30,540
not necessarily being forced to, they're all putting in pure water plants throughout

1568
02:08:30,540 --> 02:08:32,200
California and the whole country.

1569
02:08:35,000 --> 02:08:37,320
Brian, thank you. President, board member, staff and

1570
02:08:37,320 --> 02:08:43,220
public. It's my pleasure to be here to go over the rate study. We have a comprehensive

1571
02:08:44,760 --> 02:08:48,660
presentation. During my presentation, if you have any comments, definitely interrupt me. Let's

1572
02:08:48,660 --> 02:08:53,120
make sure we're all on the same page. I don't think I need to say that, but we just want to say that

1573
02:08:53,120 --> 02:08:57,900
anyways. So our agenda today is to talk about the rate study process. How do we do this rate studies?

1574
02:08:58,060 --> 02:09:01,940
What are the things we look at? Then we go over the rate structure changes. There is quite a

1575
02:09:01,940 --> 02:09:08,160
bit of changes we are proposing on the water side, so there'll be a last step on me over.

1576
02:09:08,520 --> 02:09:14,380
Through that, the good news is no real change on sanitation recycled, so the heavy lifting is on water.

1577
02:09:14,600 --> 02:09:20,600
So we're going to do a lot of really good stuff, I believe, to take us to the next level, but there are some changes.

1578
02:09:21,100 --> 02:09:26,720
And then we're going to talk about the impacts of the customers, because that's a really important factor as discussed earlier.

1579
02:09:26,720 --> 02:09:31,580
So we want to really understand what as to do our customers, discussions, and next steps.

1580
02:09:32,600 --> 02:09:33,760
So what's the goal of the study?

1581
02:09:33,900 --> 02:09:35,360
The goal of the study is a couple of fold.

1582
02:09:35,720 --> 02:09:39,940
First, as mentioned, to develop this 10-year financial plan that's non-mentioned.

1583
02:09:40,380 --> 02:09:43,940
And we really look at the financial health of those three enterprises.

1584
02:09:44,660 --> 02:09:47,860
Financial health are always coverage ratios and reserve targets.

1585
02:09:48,320 --> 02:09:49,540
Then we do the cost of service.

1586
02:09:49,560 --> 02:09:55,280
The cost of service is not proportionality as discussed earlier about, what is the cost

1587
02:09:55,280 --> 02:09:58,380
to provide that service to that individual parcel.

1588
02:09:59,680 --> 02:10:02,840
Based on that information, then we can do the proposed rate,

1589
02:10:02,960 --> 02:10:04,220
which is the five year rate schedule.

1590
02:10:04,660 --> 02:10:07,000
We are also going to be looking at capacity fees

1591
02:10:07,000 --> 02:10:08,940
and miscellaneous fees, capacity fees

1592
02:10:08,940 --> 02:10:10,740
are the one-time fee for development to occur.

1593
02:10:11,160 --> 02:10:13,160
Not as much development is happening in our service area,

1594
02:10:13,320 --> 02:10:14,720
but we want to update that.

1595
02:10:15,100 --> 02:10:17,260
Miscellaneous fees are the voluntary fees

1596
02:10:17,260 --> 02:10:19,300
if I'm going somewhere for the summer.

1597
02:10:19,560 --> 02:10:20,920
I want my meter to be shut off.

1598
02:10:21,280 --> 02:10:22,000
How much would that cost?

1599
02:10:22,300 --> 02:10:24,780
We're going to do those two parts of that study

1600
02:10:24,780 --> 02:10:28,740
after we get this major chunk, so we're not going to really talk that much about it today.

1601
02:10:29,680 --> 02:10:33,880
Throughout the process, education outreach, we're going to be doing that very extensive

1602
02:10:33,880 --> 02:10:34,680
over the summer.

1603
02:10:35,160 --> 02:10:36,760
Brian can talk more about that.

1604
02:10:37,260 --> 02:10:41,800
And the next successful rate of adoption is the goal, ultimate goal of the study.

1605
02:10:42,380 --> 02:10:47,640
So the Rates Day process, a couple of fold, first we want to understand the policy framework

1606
02:10:47,640 --> 02:10:49,780
and what are we trying to achieve in our Rates Study.

1607
02:10:49,780 --> 02:10:54,500
Now this is a sense of matter as discussed earlier with Prop 218 and the legal framework.

1608
02:10:55,160 --> 02:10:58,980
So whatever we do, we want to make sure it's cost-bases.

1609
02:10:59,280 --> 02:11:03,080
So if you remember, if you're reading, it took any public policy classes.

1610
02:11:03,380 --> 02:11:07,600
There's the VIN diagram where you have cost of service, the first circle.

1611
02:11:07,940 --> 02:11:09,260
And then you have these different policies.

1612
02:11:09,440 --> 02:11:12,480
And we want to make sure we hit that place where it overlaps.

1613
02:11:13,080 --> 02:11:18,220
So that's how we meet cost of service and conservation programs and

1614
02:11:18,220 --> 02:11:19,220
other goals and objectives.

1615
02:11:19,800 --> 02:11:22,960
We do the financial plan, Excel model that's been developed,

1616
02:11:23,240 --> 02:11:25,560
staff has a copy of that non-proprietary.

1617
02:11:26,000 --> 02:11:28,560
They're going to do the cost of service, which is a proportionality,

1618
02:11:29,080 --> 02:11:31,020
rate design, which we're going to be talking about today.

1619
02:11:31,520 --> 02:11:35,860
And then the next step in our process after today's board meeting is a documentation,

1620
02:11:36,240 --> 02:11:36,760
it's the report.

1621
02:11:37,320 --> 02:11:41,660
The report will be lengthy, it's legal defense, but it shows all the math.

1622
02:11:41,920 --> 02:11:46,520
So if somebody has any question, we recommend that the report is available to the public.

1623
02:11:46,520 --> 02:11:59,240
We are, I believe, going to be taking into account the 60-day rules of the Prop. 18, so there's a 45-day rule that we have to do that in the 60-day rule to give us two weeks for people to ask questions.

1624
02:11:59,860 --> 02:12:07,300
So we want to take that into account because no one asks any questions. That means everyone is saying they're fine with the right study and then they can't sue us.

1625
02:12:07,600 --> 02:12:12,220
So if they have a question or concern, it's an opportunity for them to speak up in the process.

1626
02:12:12,220 --> 02:12:15,400
And that's a new assembly bill that we want to take advantage of.

1627
02:12:16,300 --> 02:12:22,520
And it basically limits the ambulance chasing that has occurred in this service area, unfortunately.

1628
02:12:23,460 --> 02:12:26,220
So there's two concepts I want to make sure we understand.

1629
02:12:26,580 --> 02:12:29,140
Unfortunately, these words get interchanged quite a bit.

1630
02:12:29,640 --> 02:12:31,900
There's financial plan and cost of service.

1631
02:12:32,480 --> 02:12:37,620
Financial plan is really about the revenue adjustment that we use these are really specific word revenue adjustments.

1632
02:12:37,620 --> 02:12:42,020
And it's about how much revenue we need to collect on an annual basis to pay for

1633
02:12:42,020 --> 02:12:43,960
a specific project such as pure water.

1634
02:12:44,400 --> 02:12:49,880
So we're looking at how we're going to fund that, how much cash, how much debt, reserves, coverage ratio.

1635
02:12:50,300 --> 02:12:54,980
The metaphor I like to use is how many pizzas I need to order for Super Bowl Sunday.

1636
02:12:55,600 --> 02:12:57,060
That's the revenue requirement.

1637
02:12:57,560 --> 02:13:01,280
Cost of service is about how do we allocate the cost.

1638
02:13:01,920 --> 02:13:05,900
So we're looking at the business of providing service, looking at your budget,

1639
02:13:05,900 --> 02:13:10,220
We're looking at your customers, how they use the system, and we connect that thought.

1640
02:13:10,480 --> 02:13:11,580
We make a rationality.

1641
02:13:12,020 --> 02:13:16,260
And that's where the judge is and the cost of service, and that's where it gets hits the road.

1642
02:13:16,380 --> 02:13:19,880
Because if we don't have a logic and a rationality, then we're attacks.

1643
02:13:21,240 --> 02:13:25,680
And so we need to show, we're not attacked, we're a fee for service, so we need to show that proportionality.

1644
02:13:26,080 --> 02:13:31,740
And that's what we've done through this analysis, and that's what we'll be documenting after today's board meeting.

1645
02:13:32,420 --> 02:13:38,460
So, the metaphor, again, with the pizza is, do I do single cuts, do I do bigger cuts

1646
02:13:38,460 --> 02:13:43,300
for the pizza, you know, do I make square slices, et cetera, so that's how do we slice

1647
02:13:43,300 --> 02:13:43,680
the pie?

1648
02:13:46,020 --> 02:13:50,760
So, one of the things, as we go through the step, the first step of analysis is, I always

1649
02:13:50,760 --> 02:13:55,040
ask myself, is, where are we with the revenues that we collect that are fixed and variable?

1650
02:13:56,020 --> 02:14:01,860
In the past, as a water community, we've been trying, like, you know, 20 years or 30 years

1651
02:14:01,860 --> 02:14:05,180
We put more of the costs on the variable and less on the fix.

1652
02:14:05,900 --> 02:14:11,460
That achieves our objectives, but exposed us to droughts and decrease in demand.

1653
02:14:11,700 --> 02:14:12,920
And we saw that happen to us.

1654
02:14:13,160 --> 02:14:19,200
And you heard that story about when droughts occur, customers complain, you asked me to cut back and my bill goes up.

1655
02:14:19,660 --> 02:14:25,620
And so as an agency, we want to over time increase our fixed charge because it actually helps our customers.

1656
02:14:25,620 --> 02:14:30,040
There is a short term cost, but in the long term, it's better financial resiliency.

1657
02:14:30,040 --> 02:14:31,660
And that's where we're trying to achieve.

1658
02:14:31,860 --> 02:14:36,560
And we're trying to also change the mindset that we are providing a service, not a commodity.

1659
02:14:37,100 --> 02:14:39,720
So currently you collect 70% of your costs or fix.

1660
02:14:40,600 --> 02:14:44,840
And if we look at your fixed costs, you're only collecting 50%, ideally we collect more.

1661
02:14:45,560 --> 02:14:48,440
And that's what we're trying to, that's what our objective of the study.

1662
02:14:48,560 --> 02:14:52,560
One of the things we've noticed when we went through our analysis is that you do have a fixed

1663
02:14:52,560 --> 02:14:56,200
cost by metropolitan water district, readiness to serve charge.

1664
02:14:56,660 --> 02:14:59,360
And it makes sense for that charge to be a fixed charge.

1665
02:14:59,360 --> 02:14:59,760
some metrics.

1666
02:15:00,000 --> 02:15:04,200
Pallot in charge of that. You as a fixed charge. That's also charged that to the customer,

1667
02:15:04,420 --> 02:15:08,760
but to the Paul tenant, and this to it on meter size, by doing that, we slightly increase

1668
02:15:08,760 --> 02:15:14,260
the fixed charge. Now we're covering 60% of our fixed cost and that helps with that financial

1669
02:15:14,260 --> 02:15:19,080
resiliency. You know, one could argue that maybe we shouldn't go more aggressive, and while

1670
02:15:19,080 --> 02:15:23,040
that makes sense, there is also a balance act of affordability. So we feel like this is

1671
02:15:23,040 --> 02:15:29,380
the sweet spot here where we have a very simple story to explain to the customers.

1672
02:15:29,380 --> 02:15:33,400
We help with financial resiliency and we still maintain affordability.

1673
02:15:35,580 --> 02:15:39,180
The next one, this is a new charge and this is a private fire lines.

1674
02:15:39,780 --> 02:15:45,440
So one of the things, as you know, when we manage a water system, is we deal with fires, right, unfortunately.

1675
02:15:46,000 --> 02:15:50,300
And, or fortunately, I should say, we're in the sense that we make sure we mitigate it.

1676
02:15:50,580 --> 02:15:52,880
So the system is sized for fire conditions.

1677
02:15:53,480 --> 02:15:56,040
And there's two types of fires, if you think about, there's public fires.

1678
02:15:56,200 --> 02:15:57,540
Those are the public fire hydrants.

1679
02:15:57,540 --> 02:16:00,540
and there's private fires, these are the fire sprinklers.

1680
02:16:01,220 --> 02:16:04,340
So, all these commercial establishments have fire sprinklers

1681
02:16:04,340 --> 02:16:07,660
and there's an idle capacity there needed,

1682
02:16:07,820 --> 02:16:09,320
if needed, if a fire occurs.

1683
02:16:10,100 --> 02:16:12,120
And that capacity you built for them.

1684
02:16:13,000 --> 02:16:15,140
So, what we're trying to do is, is cover that cost.

1685
02:16:15,820 --> 02:16:17,540
So, we're not charging them for a fire.

1686
02:16:18,140 --> 02:16:20,420
You know, we're charging for the capacity

1687
02:16:20,820 --> 02:16:24,000
to have that water available if a fire occurs.

1688
02:16:25,080 --> 02:16:25,680
That's what we're doing.

1689
02:16:25,680 --> 02:16:29,600
And they actually benefit from fire sprinklers because their insurance actually goes down

1690
02:16:29,600 --> 02:16:31,760
when you show that requirement.

1691
02:16:32,260 --> 02:16:35,860
So there is a methodology with developing private fire lines.

1692
02:16:36,200 --> 02:16:38,260
We look at the cost of providing fire service.

1693
02:16:38,720 --> 02:16:43,740
We figure out how much is hydrants, how much are private fire lines.

1694
02:16:43,880 --> 02:16:45,320
We look at the diameters of the meters.

1695
02:16:45,820 --> 02:16:51,000
We develop a ratio based on that and then we develop the cost based on the fire line.

1696
02:16:51,180 --> 02:16:52,220
So it's not a fire meter.

1697
02:16:52,780 --> 02:16:54,740
These individuals don't have meters or a line.

1698
02:16:54,740 --> 02:16:56,200
They're actually the diamond of the lines.

1699
02:16:56,520 --> 02:17:01,320
I'm going to pause there because that's a lot of information and basically it collects $239,000.

1700
02:17:01,800 --> 02:17:07,100
But it will be only on commercial or institutions that have fire sprinklers.

1701
02:17:08,140 --> 02:17:09,560
What about question?

1702
02:17:10,140 --> 02:17:15,860
I was going to say that we, you know, we're not, we have to help out with a wildfire which is not

1703
02:17:15,860 --> 02:17:21,900
sprinklers or hydrants. I guess it's some hydrants, but do we have a cost associated with that?

1704
02:17:21,900 --> 02:17:27,600
because I know it's non-revenue water we don't charge or get paid for but that's a cost that we have to incur and it seems like it's

1705
02:17:28,220 --> 02:17:32,460
So that's a cost that everyone pays for that's the public benefit of providing fire service

1706
02:17:32,460 --> 02:17:33,520
So those are the

1707
02:17:34,240 --> 02:17:40,340
hydrants and any storage facilities that you have for instantaneous needs. So that's factored into this. Yeah

1708
02:17:40,340 --> 02:17:47,540
Matt is a cost that everyone pays. So that's the public cost and the private cost public cost everyone pays and then in current

1709
02:17:48,420 --> 02:17:49,340
residential construction

1710
02:17:49,340 --> 02:17:54,730
and codes, a house over a certain size required

1711
02:17:54,730 --> 02:17:55,850
to have fire sprinklers.

1712
02:17:56,310 --> 02:17:56,570
Correct.

1713
02:17:56,830 --> 02:18:00,890
So it's going to filter down slowly, but I mean,

1714
02:18:01,170 --> 02:18:03,050
my house is 2,400 square feet.

1715
02:18:03,390 --> 02:18:05,150
I doubt I'll have to need a fire sprinkler system.

1716
02:18:05,310 --> 02:18:07,430
But nevertheless, there's a huge amount.

1717
02:18:08,450 --> 02:18:09,470
So how do you?

1718
02:18:11,140 --> 02:18:12,400
Yes, so don't strip me that cost.

1719
02:18:12,800 --> 02:18:12,940
Correct.

1720
02:18:13,080 --> 02:18:14,400
So those people are upsized.

1721
02:18:15,460 --> 02:18:17,200
Usually, as new development occurs,

1722
02:18:17,700 --> 02:18:19,440
instead of getting a 5-8-3-4-inch meter,

1723
02:18:19,580 --> 02:18:20,580
they'll get a 1-inch meter.

1724
02:18:20,580 --> 02:18:30,900
Yeah, and does anyone want maybe comment on the one inch meter policy of private fire for residential? I can't recall what you

1725
02:18:33,310 --> 02:18:35,830
Sorry, I didn't mean to put anything. Do you want do you want to take the sir?

1726
02:18:37,510 --> 02:18:43,130
Yeah, I could as mentioned I think historically in the past when we do have a

1727
02:18:43,710 --> 02:18:48,310
Need for sprinkler at homes. There is an increase in the meter size

1728
02:18:48,310 --> 02:18:52,390
But there is a larger capacity that that meter can provide.

1729
02:18:53,270 --> 02:18:57,870
More recently we have looked at alternatives as well for new construction.

1730
02:18:58,950 --> 02:19:06,990
And one of the benefits there is we would have the capacity for domestic service could still be maintained through a smaller meter.

1731
02:19:07,890 --> 02:19:16,530
Three quarter inch for example, let's say in the situation with a branched system for providing fire protection in the form of sprinklers.

1732
02:19:16,530 --> 02:19:23,670
So we are we have looked at different opportunities as well that actually benefits our customers and our rate payers

1733
02:19:23,670 --> 02:19:29,630
So they're not paying potentially for a larger capacity fee for water that's not being used

1734
02:19:30,330 --> 02:19:37,770
Hope that answers the question. Can I add that you know, this is really this really has more to do with commercial fire because residential

1735
02:19:39,290 --> 02:19:46,030
Most if not almost all residential has a single service where they branch off their own

1736
02:19:46,870 --> 02:19:51,130
fire sprinkler system. So we're looking at this slide, a new private fire

1737
02:19:51,130 --> 02:19:55,830
line charge. That's typically for your large commercial with six, eight inch

1738
02:19:55,830 --> 02:19:58,410
diameter, separate fire services.

1739
02:19:59,030 --> 02:20:04,530
Yeah, but if you have, let's see, Nathan Hills, how many houses have sprinkler

1740
02:20:04,530 --> 02:20:11,770
systems? I'll bet half of them, close to it, so it's not an insignificant number.

1741
02:20:14,070 --> 02:20:18,110
Yeah, I think agreed, you know, all new homes actually by code are required to have fires

1742
02:20:18,110 --> 02:20:19,790
regardless of the size.

1743
02:20:20,810 --> 02:20:26,810
But I think as Joe pointed out, in the residential market, it's very unusual that you would

1744
02:20:26,810 --> 02:20:30,990
have a separate fire line to the residential property.

1745
02:20:31,150 --> 02:20:35,770
This is something that you see in commercial facilities, you know, you're familiar with seeing

1746
02:20:37,350 --> 02:20:43,830
in the FDC and so I think it's really not a residential issue.

1747
02:20:44,950 --> 02:20:54,070
And right now, so the LV lost purchase is one of the few districts that doesn't have a private line charge.

1748
02:20:55,090 --> 02:21:02,150
So this actually, I think, better puts that charge on those that are benefiting from it.

1749
02:21:02,150 --> 02:21:07,950
because right now, this $203,000, $9,000 is being paid for in part by every single customer.

1750
02:21:08,690 --> 02:21:18,010
So under the philosophy of Prop 218, this is a stronger way to charge those that have

1751
02:21:18,010 --> 02:21:19,290
this service for that service.

1752
02:21:23,890 --> 02:21:30,470
So the next thing I want to talk about is a new case law that just occurred in Kozioch versus

1753
02:21:30,470 --> 02:21:39,210
OTI. This is one of those laws that was discussed a bit earlier today about how the judge did not

1754
02:21:39,210 --> 02:21:46,170
like first using industry numbers. Standard, he wanted the agency to use specific data from

1755
02:21:46,170 --> 02:21:52,310
that billing system, which is what we do, and I used general information. He also didn't like

1756
02:21:52,310 --> 02:21:59,150
the idea of, for just regarding Prop 18 and just focusing on conservation or affordability.

1757
02:22:00,010 --> 02:22:03,970
So our argument is that we can achieve cost of service.

1758
02:22:04,150 --> 02:22:09,210
We can still do that, and achieve these other objectives, but those other objectives can't be the sole priority.

1759
02:22:09,930 --> 02:22:15,730
So we want to make sure everything is cost-bases, but we also want to achieve these different objectives.

1760
02:22:16,370 --> 02:22:27,370
Now one of the things about this case law that it did, as we talked about and discussed, is it gave us an opportunity we feel like to better develop a story behind our rate structure.

1761
02:22:28,310 --> 02:22:29,850
and simplify it actually.

1762
02:22:30,590 --> 02:22:33,770
And so we were recommending is a three tiered rate structure

1763
02:22:33,770 --> 02:22:36,030
where all customer class has the same tiers.

1764
02:22:36,250 --> 02:22:38,150
So it sort of simplifies the story of credit right now.

1765
02:22:38,450 --> 02:22:40,030
We have different tiers and different prices.

1766
02:22:40,550 --> 02:22:43,470
This will be a much more easier story to explain to customers

1767
02:22:44,230 --> 02:22:46,110
where tier one is deficient water,

1768
02:22:46,290 --> 02:22:47,290
which is the indoor and outdoor.

1769
02:22:47,890 --> 02:22:49,710
Tier two is 50% above that.

1770
02:22:50,170 --> 02:22:52,550
And then tier three is anything above that amount.

1771
02:22:53,330 --> 02:22:54,670
So it simplifies the story.

1772
02:22:54,670 --> 02:22:56,770
it's consistent with all your customer classes.

1773
02:22:58,790 --> 02:23:03,510
The other thing, so just as with portable rate structure, as I mentioned, we're looking

1774
02:23:03,510 --> 02:23:04,170
at three tiers.

1775
02:23:04,370 --> 02:23:07,790
We're looking at the private fire lines, and the last thing we're looking at is the residential

1776
02:23:07,790 --> 02:23:08,650
indoor budget.

1777
02:23:09,050 --> 02:23:11,950
So residential indoor budget is currently at 55 gallons.

1778
02:23:12,410 --> 02:23:19,210
The state is mandating a new conservation actually already took in place to 47 gallons, so

1779
02:23:19,210 --> 02:23:23,130
we're suggesting that our rate structure water budget takes that into account, and we're assuming

1780
02:23:23,130 --> 02:23:26,170
that that's a reduction in water use that's that will occur.

1781
02:23:28,900 --> 02:23:29,960
So as I mentioned there's a lot of

1782
02:23:29,960 --> 02:23:35,300
changes on water. So my apologies is the last slide on the change and the last one is pure water.

1783
02:23:35,720 --> 02:23:41,940
So as we all know pure water will be coming online in 2029. We want it and it will be taking place

1784
02:23:41,940 --> 02:23:47,840
in the five-year horizon. So we want to take that into account in our study. So what and the thing

1785
02:23:47,840 --> 02:23:52,760
about pure water is two things. One is that you aren't going to receive from metropolitan credit for

1786
02:23:52,760 --> 02:23:57,000
developing that. We want to take that into account in the rate structure. That will reduce

1787
02:23:57,000 --> 02:24:01,720
the cost of purchasing a metropolitan water, which should be reflected in Tier 1. And then

1788
02:24:01,720 --> 02:24:06,200
the cost of pure water should be reflected in higher tiers, Tier 2 and 3. So, we are

1789
02:24:06,200 --> 02:24:11,260
actually looking at the amount of water that pure water will produce, how much will residual

1790
02:24:11,260 --> 02:24:15,860
you have from metropolitan, which will be in Tier 1 and 2. And then Tier 2 and 3 will be the

1791
02:24:15,860 --> 02:24:19,400
remainder of pure water. So, that was also reflected in the rate structure.

1792
02:24:19,400 --> 02:24:24,200
Just a quick question, would we looked at some rates earlier and there was an average rate?

1793
02:24:24,320 --> 02:24:25,400
Would that be in peer 2?

1794
02:24:26,400 --> 02:24:29,440
The average rate customer would be in tier 1.

1795
02:24:30,140 --> 02:24:35,300
So they would benefit from the metropolitan reduction because tier 1 is the budget.

1796
02:24:35,740 --> 02:24:36,180
It's the 29.

1797
02:24:36,420 --> 02:24:37,840
And that example would be 29.

1798
02:24:39,460 --> 02:24:43,680
So on that example that we saw earlier, is that reflected?

1799
02:24:44,180 --> 02:24:46,060
No, because that one didn't have pure water yet.

1800
02:24:46,600 --> 02:24:48,680
So pure water is going to happen in 2029.

1801
02:24:49,160 --> 02:24:52,420
So that was just next year, and I'm going to show you the rate schedule in a second.

1802
02:24:52,700 --> 02:24:52,940
All right.

1803
02:24:53,160 --> 02:24:54,040
So Jay, sorry.

1804
02:24:54,220 --> 02:24:54,320
Yeah.

1805
02:24:54,500 --> 02:24:57,320
I just wanted to make sure that this point was clear.

1806
02:24:57,480 --> 02:24:59,720
So Tier 1 is 100% MWD water.

1807
02:25:00,020 --> 02:25:00,240
Mm-hmm.

1808
02:25:00,300 --> 02:25:08,300
Tier 2, based on our water usage is 29 and 30 is a blend between metropolitan and pure water.

1809
02:25:08,780 --> 02:25:12,300
And then Tier 3 is 100% pure water based on anticipated production.

1810
02:25:12,500 --> 02:25:12,740
Mm-hmm.

1811
02:25:17,460 --> 02:25:20,080
So as I meant, so we, that was the heavy lifting.

1812
02:25:20,400 --> 02:25:21,660
So thank you for your patience, Sarah.

1813
02:25:21,660 --> 02:25:24,500
So recycling, as I mentioned, no change, sanitation, no change.

1814
02:25:25,200 --> 02:25:33,440
So the summary of changes that we've talked about, because as I mentioned, there's a bunch on water is that we're putting the MWD fixed charge on the meter.

1815
02:25:34,180 --> 02:25:37,580
We're establishing the private fire line, because that's something new.

1816
02:25:38,120 --> 02:25:41,520
We're reducing the indoor budget from 55 to 47.

1817
02:25:42,120 --> 02:25:45,220
We're creating a consistent three tiers for all customer class.

1818
02:25:45,220 --> 02:25:51,660
We are including the pure water in 2029 in Outward and we've also updated the elevation

1819
02:25:51,660 --> 02:25:57,800
surcharge, just some miscellaneous stuff, and as mentioned no change in recycled sanitation.

1820
02:25:58,600 --> 02:26:02,400
So this information is consistent with Brian just showed you that these are the percentages

1821
02:26:02,400 --> 02:26:03,500
that we're looking at.

1822
02:26:03,880 --> 02:26:09,080
So I do want to comment on Director Burns, your comment about the percentage increase, you

1823
02:26:09,080 --> 02:26:15,000
are correct what you're saying in that in California and I work specifically in California.

1824
02:26:15,000 --> 02:26:28,880
So I suspect this is national, but I know 100% say this in California is what your observation is correct water prices have increased significantly in California is just not only you and there's a lot of factors why that's occurring.

1825
02:26:29,200 --> 02:26:41,200
One of the major one is the aging infrastructure. The metaphor I always like to give is that you have a 50 year old, 60 year old car, you've done a great job maintaining it, but the brakes need to be changed.

1826
02:26:41,200 --> 02:26:45,560
the engine needs to be changed, and there's a lot more cost, a lot more to do it.

1827
02:26:45,820 --> 02:26:50,880
In addition, water use has been reduced, which we think would be a great thing, but as

1828
02:26:50,880 --> 02:26:53,060
we all know, we collect our revenue on the water use.

1829
02:26:53,600 --> 02:26:58,620
So we have a double whammy there, because if just basic math, the denominator, numerator

1830
02:26:58,620 --> 02:27:01,680
has gone up, denominator has gone down, so now we have a double whammy.

1831
02:27:02,020 --> 02:27:06,240
And on top of that, we have also new requirements, so you're forced to do pure water.

1832
02:27:06,240 --> 02:27:12,420
So that's something, other agencies are dealing with PFAS issues, they're dealing with

1833
02:27:12,420 --> 02:27:14,960
other contaminant issues, and then you also have conservation.

1834
02:27:15,660 --> 02:27:20,580
So you have a bunch of factors, unfortunately, that's creating this, in financial world

1835
02:27:20,580 --> 02:27:24,920
we call it the Black Swan, right, in fact, you're creating this fact that we're seeing and

1836
02:27:24,920 --> 02:27:25,840
it's going to be rippling out.

1837
02:27:26,360 --> 02:27:32,340
So as a person of bear of bad news, unfortunately, this ride that we're going through this tidal

1838
02:27:32,340 --> 02:27:39,380
wave of increase will continue. Unfortunately, I'm sorry to say that. And that's just the nature

1839
02:27:39,380 --> 02:27:44,640
of this beast. So that's why it's so important for water agencies to really talk about the

1840
02:27:44,640 --> 02:27:50,620
value you provide in your community. You provide life, right? And so it's really important for

1841
02:27:50,620 --> 02:27:55,340
us to start talking about that more and more and the challenges that we face. Because this

1842
02:27:55,340 --> 02:27:59,600
is going to be a significant challenge. Now, the good news, I do have one good news, is

1843
02:27:59,600 --> 02:28:03,460
is that these percentages increases are mild compared to other agencies.

1844
02:28:03,720 --> 02:28:08,500
So a lot of agencies I'm working with right now are seeing 20%, 30% increase.

1845
02:28:08,800 --> 02:28:12,400
They even have one agency I've been working with, I'll be out there public hearing next week.

1846
02:28:13,640 --> 02:28:18,540
They had rates adopted, but because of the drought and because of other factors, capital costs,

1847
02:28:18,740 --> 02:28:21,700
they had to redo a prop to 18 notice.

1848
02:28:22,400 --> 02:28:25,680
And now they're looking at significant rate increases because of that.

1849
02:28:25,680 --> 02:28:29,480
So, so these are mild compared to a lot of other agencies.

1850
02:28:29,700 --> 02:28:30,460
So that's the good news.

1851
02:28:30,660 --> 02:28:33,060
So that shows stewardship, leadership and stewardship,

1852
02:28:33,380 --> 02:28:35,560
that you've been able to navigate these challenges,

1853
02:28:35,680 --> 02:28:37,440
because what's happened is that we had COVID,

1854
02:28:37,880 --> 02:28:39,620
a lot of agencies did not do rate increase,

1855
02:28:40,120 --> 02:28:41,480
we had reduction in demand,

1856
02:28:41,900 --> 02:28:44,740
and then we had all the inflationary costs that we saw last three years.

1857
02:28:46,180 --> 02:28:49,620
I have one question on what you just went over in the summary.

1858
02:28:50,060 --> 02:28:53,180
Why are the elevation cost allocations going off this?

1859
02:28:53,180 --> 02:28:54,540
is it costing more to punks?

1860
02:28:57,920 --> 02:28:58,160
Okay.

1861
02:28:58,740 --> 02:28:59,960
What was the answer, Dowell?

1862
02:29:00,060 --> 02:29:00,360
Energy.

1863
02:29:00,980 --> 02:29:04,820
Energy and other costs to move the water up higher in elevation.

1864
02:29:05,920 --> 02:29:11,740
And, Dom, when you said, and I remember from something yesterday, I think, even though the allocation

1865
02:29:11,740 --> 02:29:17,480
is pure MWD for tier one and blended, it's not actual water that's that way.

1866
02:29:17,980 --> 02:29:19,400
It's a blend all the time.

1867
02:29:19,640 --> 02:29:21,100
It's just that we're apportioning the cost.

1868
02:29:21,300 --> 02:29:22,940
And I think the consumers need to know that.

1869
02:29:22,940 --> 02:29:25,060
So you are crying brought it up.

1870
02:29:26,180 --> 02:29:27,700
So the quick comment, you know what,

1871
02:29:27,780 --> 02:29:31,000
by some of the places are raising 20%.

1872
02:29:31,000 --> 02:29:33,740
A lot of our city council, you know,

1873
02:29:33,780 --> 02:29:35,700
it's been one of us to, they don't want

1874
02:29:35,700 --> 02:29:37,620
to announce that they go years and years

1875
02:29:37,620 --> 02:29:40,180
without any raises and they realize

1876
02:29:40,180 --> 02:29:41,260
all we have to raise rights.

1877
02:29:41,740 --> 02:29:42,860
So they raise and we've raised

1878
02:29:42,860 --> 02:29:44,040
not a longer avoid that.

1879
02:29:44,120 --> 02:29:44,440
Exactly.

1880
02:29:44,800 --> 02:29:46,660
But you can go back one slide.

1881
02:29:46,860 --> 02:29:49,200
Just we know 55 gallons per day.

1882
02:29:49,980 --> 02:29:52,120
We, we went through lobbying pretty hard

1883
02:29:52,120 --> 02:29:56,780
to have an exception because of our pure water because our pure water rates are based on

1884
02:29:56,780 --> 02:29:59,820
55 and if we have to have 47 gallons, I think I'll reach...

1885
02:30:01,700 --> 02:30:30,380
So we wait in, we were, we wait in heavily on that bill. It was a Hertzberg bill, as I recall, and Friedman, yes. And it actually included two step-downs, the first to 47 and the second to 42. And the bill passed, the bill, we asked for the governor to either veto it or to call for a study to be done.

1886
02:30:30,380 --> 02:30:37,320
on when he signed the bill he did in his signing memo called on the Department of Water

1887
02:30:37,320 --> 02:30:42,880
Resources in the State Water Board to prepare a study to evaluate the impacts of the lower

1888
02:30:43,380 --> 02:30:46,760
number, the 42, before it actually is enacted.

1889
02:30:47,020 --> 02:30:48,680
So that study is actually happening.

1890
02:30:49,500 --> 02:30:53,840
A number of our associations including Water Reuse are working on that and we've been following

1891
02:30:53,840 --> 02:30:54,060
it.

1892
02:30:54,060 --> 02:31:00,380
So there's a possibility that before that 42 is enacted, that there could be a

1893
02:31:00,380 --> 02:31:04,560
relook at the number and whether that's actually a realistic and viable number.

1894
02:31:05,320 --> 02:31:10,400
The 47 though, it wasn't really sort of, I would say held up by that.

1895
02:31:10,880 --> 02:31:15,480
It was really the 42 being linked to this study.

1896
02:31:15,760 --> 02:31:18,140
So it's going to go to 47.

1897
02:31:18,560 --> 02:31:20,460
So the 47 has been in place.

1898
02:31:20,880 --> 02:31:23,500
Yeah, it's actually, it's already gone to 47.

1899
02:31:23,500 --> 02:31:25,040
We have an effective January 1st.

1900
02:31:25,120 --> 02:31:27,860
So we have, we have affected all of our pure water numbers based on that.

1901
02:31:29,160 --> 02:31:31,320
We are adjusting those figures, yeah.

1902
02:31:32,340 --> 02:31:37,720
All of our latest projections, so we have two different financial models.

1903
02:31:37,840 --> 02:31:41,100
You know, we have the PFF-1 and the water resource economics ones.

1904
02:31:41,320 --> 02:31:44,560
They are in sync at this time, so they're the same.

1905
02:31:44,880 --> 02:31:46,680
And things based on 47 correct.

1906
02:31:47,040 --> 02:31:52,780
And one thing to keep in mind about this and it's, this is all complex but the law does

1907
02:31:52,780 --> 02:31:56,780
does not require every customer to only use 47 gallons.

1908
02:31:56,980 --> 02:32:02,900
It doesn't actually even require that we ensure that our indoor usage is 47 for all the customers.

1909
02:32:03,400 --> 02:32:07,840
It just means when you develop a budget and they develop a budget for the whole district,

1910
02:32:08,240 --> 02:32:13,960
that they only allocate us for 47 gallons per person per day for the indoor usage.

1911
02:32:14,700 --> 02:32:18,320
So we can have customers that continue to use 55,

1912
02:32:18,320 --> 02:32:22,480
But we'll have to sort of make up the difference in the outdoor usage.

1913
02:32:23,280 --> 02:32:25,900
So there is flexibility around this.

1914
02:32:27,480 --> 02:32:31,340
And it's important to make that point because it doesn't mean we have to tell every customer

1915
02:32:31,340 --> 02:32:32,480
you can only use 47.

1916
02:32:32,480 --> 02:32:38,120
And you know, when you use the 48th gallon, you know, you're going to be sort of cut off.

1917
02:32:38,860 --> 02:32:43,520
Oh, and I'm not talking about being cut off, but we're being charged more for using 48.

1918
02:32:43,980 --> 02:32:45,120
Yeah, they will be higher.

1919
02:32:45,120 --> 02:32:48,000
They will be allocated that in terms of the billing.

1920
02:32:48,120 --> 02:32:53,960
And yes, the Trump administration has removed the two and a half gallon requirement on showers and other areas.

1921
02:32:54,260 --> 02:32:59,660
So in one hand, we're telling them, go ahead and you never take a great shower in the other hand, we're telling them not to.

1922
02:33:00,100 --> 02:33:08,180
So in the development of the rates, we thought it was important to have our rates reflect the requirements in the state law and have consistency.

1923
02:33:08,580 --> 02:33:14,420
And we think that as we're out discussing the proposed rates in the summer, it's an easier message.

1924
02:33:14,420 --> 02:33:21,040
if we could point to something beyond our control like in the state law that ties back

1925
02:33:21,040 --> 02:33:24,020
to what we're proposing to charge.

1926
02:33:29,200 --> 02:33:34,920
So now I'm going to go through a series of tables for my apologies, but this is the

1927
02:33:34,920 --> 02:33:37,240
rates that will be put in a pop to 18 notice.

1928
02:33:37,920 --> 02:33:43,800
So it is important for us to show these rates so for everyone sees it, who sees it later

1929
02:33:43,800 --> 02:33:44,400
on today.

1930
02:33:44,940 --> 02:33:49,500
But what we're showing you is this is the fixed charge raising is to serve by meter size.

1931
02:33:50,060 --> 02:33:54,320
Larger the meter, more instantaneous capacity they have of the system, so more they should pay.

1932
02:33:55,060 --> 02:33:57,820
Most of your customers are three, four, one inch meters.

1933
02:33:58,440 --> 02:34:06,460
The large meters that you see, those are the institutions, landscapes, industries that you may have.

1934
02:34:06,880 --> 02:34:07,940
So they pay a lot more.

1935
02:34:08,440 --> 02:34:12,240
So we have the current rate, we have the proposed rates, and then we have the MWD fixed charge.

1936
02:34:12,240 --> 02:34:17,980
We do know what that is in 2026, and then the out years will be passed on of whatever that is.

1937
02:34:18,360 --> 02:34:21,380
So this is just the first component of the bill, this is the fixed charge.

1938
02:34:22,480 --> 02:34:27,740
The second component of the bill, these are excuse me for commercial, these are the private fire lines.

1939
02:34:27,840 --> 02:34:30,040
These are the new charges that we just mentioned.

1940
02:34:31,200 --> 02:34:37,980
As you can see, they're not necessarily a lot, but because there is, it's just that instantaneous capacity of fire lines.

1941
02:34:37,980 --> 02:34:42,440
So they're not using water, there isn't a maintenance, there is just a line for

1942
02:34:42,440 --> 02:34:47,820
instantaneous capacity for reservoirs, excuse me, or distribution systems.

1943
02:34:49,080 --> 02:34:52,860
Now this is the political rate, this one I want to take a little time to talk about.

1944
02:34:53,280 --> 02:34:56,060
First thing, as we mentioned, we are proposing three tiers.

1945
02:34:56,820 --> 02:35:00,040
These three tiered rates are the same for all customer class, so

1946
02:35:00,040 --> 02:35:02,960
that includes residential, commercial, and irrigation.

1947
02:35:03,360 --> 02:35:07,180
So you'll note that in 2026 and onward, we have the same rate for

1948
02:35:08,240 --> 02:35:16,920
We also have the zone charges and then if you notice I mentioned earlier about the pure water, we have those coming into effect in 2029.

1949
02:35:17,180 --> 02:35:19,400
That's when we're expecting that project to come online.

1950
02:35:19,900 --> 02:35:27,480
There is a negative number if you notice in tier one and that's that MWD credit that we get for developing the project.

1951
02:35:27,980 --> 02:35:32,720
That's reflected there and then we have tier two and three reflecting the cost of pure water.

1952
02:35:32,720 --> 02:35:46,860
As Don mentioned, Tier 2 is a blend of metropolitan water and peer water, so that's why it's a lower rate, and Tier 3 is the cost of pure water itself, which is reflected there, and only Tier 3 customers would pay for the pure cost.

1953
02:35:47,060 --> 02:35:47,100
Yes.

1954
02:35:47,440 --> 02:35:54,720
Is it a typo of the irrigation Tier 1 efficient is different than residential Tier 1 efficient in the current rates?

1955
02:35:54,720 --> 02:35:56,100
So that's how it is currently.

1956
02:35:57,840 --> 02:36:03,140
In the current rate structure, your current rate structure, you have different rates for commercial, irrigation, and residential.

1957
02:36:03,520 --> 02:36:04,600
And everything else is the same.

1958
02:36:06,380 --> 02:36:07,520
You have a big 69 number.

1959
02:36:08,060 --> 02:36:08,300
The.

1960
02:36:11,040 --> 02:36:13,320
Yeah, five, six, nine is.

1961
02:36:14,840 --> 02:36:17,820
No, so commercial has five, forty for its current.

1962
02:36:18,640 --> 02:36:26,180
No, under every number is the same for tier one, two, and two, and three, and there's no chart except for the irrigation, tier one,

1963
02:36:28,340 --> 02:36:49,520
That's correct. So currently we have different rates. We're actually correcting that because it's as as Brian pointed out earlier. It's a vulnerability that it's one of the elements of the rate. The case law that has come forward is actually so tier so currently we have four tiers.

1964
02:36:49,520 --> 02:36:55,180
Tier 2 is outdoor efficient, currently outdoor efficient is 569.

1965
02:36:55,980 --> 02:37:01,060
So irrigation does not have indoor, so it just skips to our current tier 2.

1966
02:37:03,480 --> 02:37:10,700
So the irrigation 569 rate is currently the efficient outdoor rate for residential.

1967
02:37:11,860 --> 02:37:19,520
But as Sanjay mentioned, under all the activity that's happened in prop to a team, we're simplifying

1968
02:37:19,520 --> 02:37:23,640
the rate structure, so there's three tiers for everything and all three tiers are going to be the same

1969
02:37:23,640 --> 02:37:27,480
for every classic customer. So that's why it's different now.

1970
02:37:31,600 --> 02:37:32,780
Yeah, so the key point there is

1971
02:37:32,780 --> 02:37:39,640
the rates are the same for the different classes of customer and the current rates are not structured

1972
02:37:39,640 --> 02:37:40,160
that way.

1973
02:37:43,360 --> 02:37:48,680
We're modifying the rate structure because of these case laws. It also from just even without

1974
02:37:48,680 --> 02:37:53,860
the case law, you know, if we just think about this, this is, it makes sense, right? It's easier to explain

1975
02:37:53,860 --> 02:37:57,780
to customers, we're just saying everyone tier one is the same rate, everyone tier two is the same.

1976
02:37:57,900 --> 02:37:59,420
If you're efficient, you're efficient, right?

1977
02:37:59,540 --> 02:38:04,420
Regardless of your commercial or residential irrigation, so they should all pay the same rate.

1978
02:38:04,760 --> 02:38:07,300
And I also highlight the best thing on the slide.

1979
02:38:07,640 --> 02:38:13,800
If you look at residential tier one efficient, the current rate 528th that proposed rate 456.

1980
02:38:16,380 --> 02:38:21,620
So that's able to be accomplished through all the other changes that Sanjay's discussed.

1981
02:38:29,580 --> 02:38:33,620
So there's a lot of changes here, so I'm going to have a slide that shows the actual customer

1982
02:38:33,620 --> 02:38:34,640
impacts in a second.

1983
02:38:35,640 --> 02:38:38,760
So I'll go that about one of the first, this is the recycled customers.

1984
02:38:39,080 --> 02:38:42,660
As mentioned, we're not really making any changes here with the rate structure.

1985
02:38:43,120 --> 02:38:45,960
This is the fixed charge and the variable charge over here.

1986
02:38:46,720 --> 02:38:49,040
We also have the sanitation rate structure.

1987
02:38:49,400 --> 02:38:53,640
Again, no structural changes with the rate structure, these are just the percentage increase

1988
02:38:53,640 --> 02:39:00,940
across the board, and then we have also as requested, we're showing you the usage patterns

1989
02:39:00,940 --> 02:39:06,960
of different customer classes, how much of customers are within their bills, how much

1990
02:39:06,960 --> 02:39:09,600
are outside in the inefficient, how much are excessive.

1991
02:39:10,280 --> 02:39:17,160
As you can see, most customers, roughly 70% of the bills except for commercial are within

1992
02:39:17,160 --> 02:39:20,260
in their budget, and then the inefficient customers

1993
02:39:20,260 --> 02:39:25,240
you can see is more so, and the inefficient is commercial,

1994
02:39:25,540 --> 02:39:27,340
and then the access of is irrigation,

1995
02:39:27,540 --> 02:39:29,540
which is what you typically see in usage.

1996
02:39:30,460 --> 02:39:36,040
How do we have 171,000 residential bills?

1997
02:39:37,080 --> 02:39:39,140
So you're multiplying it out by, you know,

1998
02:39:39,200 --> 02:39:44,020
the number of customers times 12 bills per month.

1999
02:39:44,720 --> 02:39:49,020
in a year. Monthly bills in a year.

2000
02:39:50,240 --> 02:39:52,840
We get to the number of customers you just divided by 12.

2001
02:39:54,180 --> 02:39:58,280
The problem is that some people's bills varies, right?

2002
02:39:58,740 --> 02:40:02,120
I could be efficient in one month. I can be excessive in another month.

2003
02:40:02,300 --> 02:40:03,640
I could be inefficient in another month.

2004
02:40:03,860 --> 02:40:07,520
Of course. Yeah, so that's why we wanted to look at it.

2005
02:40:07,640 --> 02:40:10,560
So now I just want to make one comment.

2006
02:40:10,560 --> 02:40:17,700
But based on what you said, it sounds like our new external outreach executive should

2007
02:40:17,700 --> 02:40:21,120
be very much promoting everything about.

2008
02:40:21,520 --> 02:40:26,360
That's much of what the material you've provided and we should be doing a great amount

2009
02:40:26,360 --> 02:40:33,280
of outreach to explain what's going on and comparison to other Beverly Hills and Gross Point

2010
02:40:33,280 --> 02:40:38,700
Michigan and other places that have the same kind of neighbors and repairs that we have

2011
02:40:38,700 --> 02:40:38,900
here.

2012
02:40:42,760 --> 02:40:50,240
So this is, in some sense, the most important slide that I'm going to be talking about today.

2013
02:40:50,680 --> 02:40:55,820
And this is the customer impact with a water and sanitation bill together.

2014
02:40:56,320 --> 02:40:58,440
This is for a three-fourth inch, one-inch meter.

2015
02:40:59,000 --> 02:41:04,380
This is an individual that uses that 29 as Brian talked about, that water budget, they're

2016
02:41:04,380 --> 02:41:04,960
on their budget.

2017
02:41:05,380 --> 02:41:06,540
They have three people in their household.

2018
02:41:06,540 --> 02:41:14,360
So currently the total bill is $267.20, if they're efficient, now the bill will actually

2019
02:41:14,360 --> 02:41:17,760
drop by $3.71 or 1% reduction.

2020
02:41:18,220 --> 02:41:20,100
And that's with everything that we've talked about.

2021
02:41:20,940 --> 02:41:24,300
Of course, there are some customers who will see more of an increase.

2022
02:41:24,920 --> 02:41:30,180
So if you look at the inefficient customer, this is the person that uses 36 units, their

2023
02:41:30,180 --> 02:41:40,260
bill is currently $312.77, they will go up by $317.25. So they do see almost a $4.50 increase.

2024
02:41:40,920 --> 02:41:49,580
And if you're very inefficient using 51, $420.29 currently now it's $442.04. So that's

2025
02:41:49,580 --> 02:41:57,220
a $21.75 increase in that person's bill. That's a 5% increase. So there are going to be winners

2026
02:41:57,220 --> 02:42:02,040
There's in losers as we change the water rate structure, as we talked about, there's a lot of changes there.

2027
02:42:03,740 --> 02:42:09,400
But those customers that are efficient, and we'll see a benefit of this proposed rate structure.

2028
02:42:16,240 --> 02:42:22,160
So, I'm definitely interested in, if there's any other questions or comments I can go over to the schedule next, and then we can have a discussion.

2029
02:42:23,660 --> 02:42:24,920
Let's do the next steps.

2030
02:42:25,740 --> 02:42:26,380
Okay, next steps?

2031
02:42:26,380 --> 02:42:33,680
This really quick, the two issues I always struggle with is the weather because if it's

2032
02:42:33,680 --> 02:42:38,680
really hot it's going to be different than if it's, I know that the budget-based reds

2033
02:42:38,680 --> 02:42:44,320
takes into account weather but that's always the variable if it's the heat and the heat

2034
02:42:44,320 --> 02:42:44,500
and the heat.

2035
02:42:44,940 --> 02:42:50,260
People don't change their sprinklers when it's hot and keep it low if it's cool they keep

2036
02:42:50,260 --> 02:42:55,640
it low water because it's, you know, people do it manually and they're not really on top

2037
02:42:55,640 --> 02:42:59,920
of it. So that's just one thing that I guess everyone has to

2038
02:42:59,920 --> 02:43:03,020
struggle. Correct. But I guess with all of the

2039
02:43:03,020 --> 02:43:07,460
rachios and all of the work that Craig has done, we should

2040
02:43:07,460 --> 02:43:10,740
be able to influence that because the rachios changes things

2041
02:43:10,740 --> 02:43:12,860
automatically as it's hotter and cooler.

2042
02:43:13,320 --> 02:43:16,600
It's not necessarily that accurate but it does make a

2043
02:43:16,600 --> 02:43:19,320
difference and we should be promoting that as well considering

2044
02:43:19,320 --> 02:43:22,960
we give it practically for free. Right, I think there's so

2045
02:43:22,960 --> 02:43:24,620
So there's a couple of thoughts that I have.

2046
02:43:24,920 --> 02:43:33,240
So over the last 10 years, the board, your board, has made several decisions that have

2047
02:43:33,240 --> 02:43:37,560
made us more financially resilient and less dependent on how much water we sell.

2048
02:43:37,860 --> 02:43:44,240
So Sanjay addressed part of that from increasing our fixed cost when Dave and I started here.

2049
02:43:44,480 --> 02:43:49,000
Yeah, the fixed cost was recovering very microscopic portion of our fixed fees.

2050
02:43:49,000 --> 02:43:55,060
So that gets to the waters of service, and you have to pay for the reliability of that service.

2051
02:43:55,700 --> 02:44:04,180
The budget-based rates in our, also takes an account, weather, and factors like Director Lewett mentioned.

2052
02:44:04,660 --> 02:44:12,460
The fact that our costs go down as water sales go down, because a large portion of our budget is based on purchase water.

2053
02:44:13,040 --> 02:44:15,480
So that also makes us financially resilient.

2054
02:44:15,480 --> 02:44:22,600
And so unlike numerous other water districts during drought or heavy rain because they both have the same effect on the on the budget

2055
02:44:23,400 --> 02:44:28,240
We've never had to and institute cuts. We've never had to institute

2056
02:44:29,960 --> 02:44:37,340
Drought rates or anything like that and that's because of the direction and the steps that the district under the board's guidance has taken to make our

2057
02:44:37,340 --> 02:44:39,580
financial rates more

2058
02:44:41,000 --> 02:44:41,520
Resilient

2059
02:44:41,520 --> 02:44:42,520
So,

2060
02:44:47,770 --> 02:44:54,290
I'll hold on a second, we skipped over something quite early, which was, I was learning

2061
02:44:54,290 --> 02:44:56,530
about the anticipated tier 3 rates.

2062
02:45:01,040 --> 02:45:15,620
It puzzled me. I don't recall the slides long gone, but there was a tier three rates are going to be burdened with excessive warning use, I guess.

2063
02:45:18,100 --> 02:45:32,620
I made a note about it. And so in 2029, 2030, they're going to go up way up. Yeah, they're going up. I mean, we're. So the idea is it's going to really help offset the efficiency.

2064
02:45:32,620 --> 02:45:38,240
uses? No, I wouldn't say that because that would be a cross subsidy and that would violate

2065
02:45:38,240 --> 02:45:44,720
Prop. 18. I would say that we're just allocating the cost of providing that service to our

2066
02:45:44,720 --> 02:45:52,960
tier 3 to how much it costs. So tier 3, there's a first tier 1 benefit. You do have some other

2067
02:45:52,960 --> 02:45:58,920
sources of revenue. You have what we call in our terminology, we call revenue offsets, but

2068
02:45:58,920 --> 02:46:01,740
but that's like property tax, non-rate revenue.

2069
02:46:02,200 --> 02:46:06,880
So all that money that you do generate or receive,

2070
02:46:07,020 --> 02:46:08,720
I should say, goes to tier one.

2071
02:46:08,880 --> 02:46:10,180
So everyone benefits from it.

2072
02:46:10,600 --> 02:46:12,960
So everyone who goes, even if you're in tier three,

2073
02:46:13,120 --> 02:46:14,460
you go through tier one first, right?

2074
02:46:14,900 --> 02:46:16,640
So that's the property tax that you receive,

2075
02:46:17,140 --> 02:46:18,340
that's the non-rate revenue.

2076
02:46:18,800 --> 02:46:21,180
Then tier two and three reflects the cost

2077
02:46:21,180 --> 02:46:22,500
of conservation programs.

2078
02:46:23,660 --> 02:46:27,520
So those individuals that want to be in tier three,

2079
02:46:27,520 --> 02:46:33,200
That's a choice right it's a financial choice. I choose to be there with my bill. I can do that

2080
02:46:33,840 --> 02:46:40,300
Then I'm paying also for services associated with conservation programs and the district provides conservation programs

2081
02:46:40,300 --> 02:46:46,380
Those individuals they tried to help them get out of tier three. Um, maybe they don't want to get out tier three

2082
02:46:46,380 --> 02:46:51,950
That's a choice or in case somebody has a large piece of property. Well the water, but

2083
02:46:51,950 --> 02:46:57,410
the GTF, you have the factors and all that, but still the award demand.

2084
02:46:57,890 --> 02:47:02,510
Yeah, I mean, the water budget should take into account the landscape area, where someone

2085
02:47:02,510 --> 02:47:07,390
may be interested is like, for whatever reason, they just love to change their pool water

2086
02:47:07,850 --> 02:47:08,590
every month.

2087
02:47:09,090 --> 02:47:10,370
Let's just, you know, it's a little bit extreme.

2088
02:47:10,410 --> 02:47:11,670
That's agreed you so far.

2089
02:47:11,690 --> 02:47:15,710
Yeah, but everyone, you know, that's the great thing about being in America, right?

2090
02:47:16,090 --> 02:47:16,490
It's all right.

2091
02:47:16,790 --> 02:47:18,270
And so you can do that if you want to.

2092
02:47:18,310 --> 02:47:19,930
You can get mostly, get your water.

2093
02:47:19,930 --> 02:47:22,370
You can get your, we'll get you the water, but you'll have to pay for it.

2094
02:47:22,550 --> 02:47:22,570
So,

2095
02:47:27,540 --> 02:47:30,980
I just have a question, did you, are you done?

2096
02:47:31,720 --> 02:47:32,000
Yes.

2097
02:47:32,220 --> 02:47:32,780
So, thank you.

2098
02:47:33,180 --> 02:47:36,300
We don't really touch much on commercial, but I see the rates are the same,

2099
02:47:36,620 --> 02:47:45,240
and I would assume that most commercial businesses do not really focus very much on economy,

2100
02:47:45,820 --> 02:47:47,660
and they just use whatever water they need.

2101
02:47:48,060 --> 02:47:52,700
Is there a reason for not charging commercial units more, or the fact that their rates are going

2102
02:47:52,700 --> 02:47:57,900
to go up to which is not necessarily great for business and so let me address our quick

2103
02:47:57,900 --> 02:48:04,300
and then if we get to the next step slightly. So you may recall in our previous discussions

2104
02:48:04,300 --> 02:48:10,520
and one of the concepts of prop to ATN is everything has to be proportional. So under reflecting

2105
02:48:10,520 --> 02:48:17,080
prop to ATN and all the recent decisions we have to have the same rates for each class

2106
02:48:17,080 --> 02:48:17,600
a customer.

2107
02:48:23,130 --> 02:48:27,870
So on the proposed rates, we'll see commercial irrigation and residential

2108
02:48:27,870 --> 02:48:32,990
all the rates are the same under our proposed rates.

2109
02:48:35,580 --> 02:48:37,020
So currently there's different factors

2110
02:48:37,020 --> 02:48:43,060
that went into different issues. So if we could get, so let's halt the next step slide.

2111
02:48:45,260 --> 02:48:45,800
So

2112
02:48:47,910 --> 02:48:56,530
the next step is you know we're this is a workshop to get your input if we're good with what we presented then we

2113
02:48:56,530 --> 02:49:02,230
start developing an administrative record and that's a lengthy document that basically we have this

2114
02:49:02,230 --> 02:49:09,030
Excel model on steroids you can some sense think of and we're gonna put in a document so that someone can

2115
02:49:09,030 --> 02:49:14,570
actually follow the map we don't want to have any black boxes or steps so we can actually see

2116
02:49:14,570 --> 02:49:20,070
how the rates were derived and that's sort of the requirement of Prop. 18. It also helps with transparency.

2117
02:49:20,710 --> 02:49:26,190
It also gives opportunity for your customers to read the document and provide comments.

2118
02:49:26,850 --> 02:49:34,350
As I mentioned, we do have this 60-day window, so we want people to read it. We want people to comment so that we can respond to it.

2119
02:49:34,830 --> 02:49:42,730
If no one responds, that means that everyone's good with it and you sort of lose your right to sue the district over the rates.

2120
02:49:43,610 --> 02:49:51,110
We would send out the nail notice on April 5th, public outreach, August 5th, thank you.

2121
02:49:51,670 --> 02:49:57,110
And then the public hearing is scheduled for October 9th.

2122
02:49:57,170 --> 02:50:01,510
And is that, I don't know if it's a morning or evening meeting.

2123
02:50:02,610 --> 02:50:03,710
Josie, it's morning, right?

2124
02:50:04,150 --> 02:50:04,390
Morning.

2125
02:50:04,650 --> 02:50:05,230
Morning meeting.

2126
02:50:05,390 --> 02:50:06,230
Same time, 9AM.

2127
02:50:06,590 --> 02:50:06,770
Got it.

2128
02:50:06,830 --> 02:50:06,990
Okay.

2129
02:50:07,710 --> 02:50:08,950
So I can put on my counter.

2130
02:50:10,130 --> 02:50:10,190
Sorry.

2131
02:50:10,190 --> 02:50:14,730
And then after that, we have the capacity fee and miscellaneous fee studies.

2132
02:50:14,950 --> 02:50:20,650
Just want to question one comment, you said, just because they don't respond doesn't mean they're good with the rates.

2133
02:50:21,050 --> 02:50:22,010
They just not responding.

2134
02:50:22,450 --> 02:50:24,830
Yeah, so a couple of takeaways here.

2135
02:50:25,110 --> 02:50:28,610
So during the summer, we're going to have extensive public outreach.

2136
02:50:28,990 --> 02:50:31,150
We already have several things on schedule.

2137
02:50:31,530 --> 02:50:37,650
So myself, Brian, have been working closely with Rickian Steven on the outreach effort.

2138
02:50:38,490 --> 02:50:43,470
As early as later this week, there's going to be a dedicated web page for the proposed

2139
02:50:43,470 --> 02:50:48,270
rate changes, including the calculator that was met mentioned, sorry.

2140
02:50:49,090 --> 02:50:56,890
And just, I mean, overall, as Sanjay mentioned, I think what we're proposing to you accomplishes

2141
02:50:56,890 --> 02:51:02,710
all the policy objectives that the board adopted in November, and we've been able to have

2142
02:51:02,710 --> 02:51:08,410
We have very, we're this carefully, very reasonable increases as

2143
02:51:08,410 --> 02:51:13,090
comparatorica are other agencies with small incremental increases.

2144
02:51:13,310 --> 02:51:18,470
And what we're looking for today is the go ahead to move forward with the public outreach,

2145
02:51:18,650 --> 02:51:25,510
which would include sharing these rates with everyone and basically moving forward with the rates as proposed.

2146
02:51:26,110 --> 02:51:28,070
But you don't have to prove them, but we want to blessing.

2147
02:51:28,070 --> 02:51:35,790
So before you go out in public, I think the message is always a better if you keep it

2148
02:51:35,790 --> 02:51:39,270
really simple and keep us on the same page as you.

2149
02:51:39,910 --> 02:51:44,730
So if someone comes up to us and says I see that your rates are public, what are the

2150
02:51:44,730 --> 02:51:46,690
three reasons why rates went up?

2151
02:51:46,750 --> 02:51:47,530
You want to say inflation?

2152
02:51:48,090 --> 02:51:49,410
I mean, what do you want to say?

2153
02:51:49,550 --> 02:51:52,750
And always coupled with that, we're the low, like we want to see where we are.

2154
02:51:52,870 --> 02:51:56,690
I didn't see on the chart where we are with other water districts even though we're different.

2155
02:51:56,690 --> 02:52:02,850
But mainly like what are the messages that we would say like in the elevator to someone why the rates are going up?

2156
02:52:03,070 --> 02:52:08,010
I think that well I thought we would talk about top two so I give you the top two.

2157
02:52:08,370 --> 02:52:12,790
The top two is reliability and diversification of the water supply.

2158
02:52:13,730 --> 02:52:17,830
And then how do we compare, then what do we talk about comparing to other water districts?

2159
02:52:18,850 --> 02:52:22,850
We have an update chart we're on the, we're not the lowest but

2160
02:52:22,850 --> 02:52:28,930
We're further on the lowest side than the middle or the right side, which is higher.

2161
02:52:29,070 --> 02:52:33,890
resiliency and diversification. Resiliency of water supply and diversification of water supply.

2162
02:52:34,590 --> 02:52:40,450
I agree with Director Lewett, except that I'd like to see the communication page.

2163
02:52:40,730 --> 02:52:46,170
Obviously, we've seen all the rates before it goes out, so that if there's a comment or two that any of us would like to make.

2164
02:52:46,310 --> 02:52:49,810
And we should put that on email to all of us so we know exactly what to say.

2165
02:52:49,810 --> 02:52:56,150
They should maybe even a little card that we can hand out something that as we're approached and we approach everyone

2166
02:52:56,150 --> 02:53:01,230
This is going to when they see those other top-end rates. There's going to be a lot of complaints

2167
02:53:01,230 --> 02:53:03,110
This is not going to go on

2168
02:53:05,110 --> 02:53:10,850
Reviewed I can assure you I would suggest that we we could share the outreach material with you

2169
02:53:10,850 --> 02:53:19,430
But I don't know if we have we don't have time in the outreach process to come back to the board for at least we should see it before it goes live

2170
02:53:20,770 --> 02:53:23,450
So that we see it before it's just out there?

2171
02:53:25,210 --> 02:53:26,850
Otherwise we're being surprised by it.

2172
02:53:27,850 --> 02:53:30,970
Yeah, we'll talk internally and figure out the best way to accomplish that.

2173
02:53:31,370 --> 02:53:35,410
Yeah, I think we can do that. I think what I would prefer not to do those is

2174
02:53:36,090 --> 02:53:39,430
to have it approved by the board. It's something normally staff does.

2175
02:53:39,670 --> 02:53:43,830
We can certainly share it. And if there is feedback, we'll do our best to incorporate that.

2176
02:53:44,010 --> 02:53:45,550
So I think that's a reasonable request.

2177
02:53:46,290 --> 02:53:51,090
I agree with the director Burns, we should be able to see it before the surprise, yeah, I don't know.

2178
02:53:51,530 --> 02:53:53,790
Yeah, and I'm confirming that we'll do that.

2179
02:53:54,710 --> 02:54:02,410
Just if I could just volunteer something, Sanjay referred to this kind of new procedure with the 60 days, just to highlight that a little bit.

2180
02:54:02,890 --> 02:54:05,810
That was effective, it became effective January of this year.

2181
02:54:06,530 --> 02:54:13,310
And so there are some substantive requirements that the notice has to include the basis for the rates, how they're calculated, et cetera.

2182
02:54:13,310 --> 02:54:19,110
And what that provides is a kind of, you may be familiar with this term exhaustion of administrative remedies

2183
02:54:19,110 --> 02:54:22,830
where you have to work your way through one process before you can go to court.

2184
02:54:23,310 --> 02:54:27,690
And that's what this is designed to do, so that you're going to send out the notices.

2185
02:54:28,110 --> 02:54:32,730
You may get some what are called written objections and you have to respond to those objections.

2186
02:54:33,330 --> 02:54:39,330
And if we do all the, we dot all our eyes and cross the teased with regards to this process,

2187
02:54:39,330 --> 02:54:43,550
Yes, it really limits the amount of people who can challenge the rates post adoption.

2188
02:54:44,490 --> 02:54:49,230
So there will be some, I know you're talking about messaging, but there's also some statutory

2189
02:54:49,870 --> 02:54:53,570
requirements that have to be met in the notice that will be included as well.

2190
02:54:53,850 --> 02:54:55,050
And Steven, I respect that.

2191
02:54:55,150 --> 02:54:56,170
That's obviously important.

2192
02:54:57,770 --> 02:54:58,210
Fantastic.

2193
02:54:58,950 --> 02:55:02,330
So is there any more discussion or can we roll on?

2194
02:55:03,570 --> 02:55:04,650
It's like we can roll on.

2195
02:55:04,870 --> 02:55:05,250
Thank you so much.

2196
02:55:05,250 --> 02:55:06,010
Thank you for your time.

2197
02:55:06,150 --> 02:55:07,030
Appreciate it.

2198
02:55:12,150 --> 02:55:14,770
All right, moving on to item 10, non-action items.

2199
02:55:15,250 --> 02:55:16,790
General manager's reports.

2200
02:55:18,290 --> 02:55:19,510
Thank you, Peter.

2201
02:55:20,370 --> 02:55:21,710
So I've got a couple items.

2202
02:55:21,710 --> 02:55:25,730
If you saw me looking at my phone, it was because some information

2203
02:55:25,730 --> 02:55:27,670
is coming in while we're in this meeting.

2204
02:55:27,670 --> 02:55:28,810
And I wanted to share it.

2205
02:55:30,750 --> 02:55:33,990
And I'll start with this afternoon at 1 o'clock.

2206
02:55:33,990 --> 02:55:37,110
We have the City of Burbank coming to visit us.

2207
02:55:37,270 --> 02:55:39,550
That will include the Mayor and Nikki Perez.

2208
02:55:39,550 --> 02:55:43,550
as the City of Burbank is working on a pure water project

2209
02:55:43,550 --> 02:55:45,770
of their own, and actually we're increasingly

2210
02:55:45,770 --> 02:55:48,710
hearing from other cities and water agencies that want

2211
02:55:48,710 --> 02:55:51,410
to come see our pure water demo facility

2212
02:55:51,410 --> 02:55:53,750
and just understand the process that we've gone through.

2213
02:55:54,450 --> 02:55:55,330
So that is happening.

2214
02:55:55,790 --> 02:55:57,850
President Cordesky will be joining us

2215
02:55:57,850 --> 02:55:58,970
along with Director Levine.

2216
02:55:59,670 --> 02:56:01,990
And generally, whenever we have elected officials coming

2217
02:56:01,990 --> 02:56:04,610
to the district, we'll always let the president know

2218
02:56:05,310 --> 02:56:07,070
and include the board.

2219
02:56:07,210 --> 02:56:09,010
And I feel like that's proper protocol.

2220
02:56:09,010 --> 02:56:12,030
also will be doing that this afternoon at 1 o'clock.

2221
02:56:12,790 --> 02:56:15,870
The city of Glendale has actually also expressed a similar

2222
02:56:15,870 --> 02:56:19,130
interest so we'll have that potentially coming in the future.

2223
02:56:20,810 --> 02:56:24,990
We heard I just learned during earlier today the president

2224
02:56:24,990 --> 02:56:30,250
did nominate the commissioner of the Bureau of Reclamation.

2225
02:56:30,250 --> 02:56:32,950
We've been waiting and without a commissioner for quite

2226
02:56:32,950 --> 02:56:37,070
some time since the president took office in January.

2227
02:56:37,070 --> 02:56:42,530
The commissioner is critically important because of all of the activity on the Colorado

2228
02:56:42,530 --> 02:56:48,630
River that needs to be resolved and the individual nominated is Ted Cook.

2229
02:56:49,210 --> 02:56:54,410
Ted is the former head of the Central Arizona project.

2230
02:56:54,870 --> 02:57:02,070
He retired in 2023 and so he's very knowledgeable on water issues and knows the Colorado River,

2231
02:57:02,070 --> 02:57:03,650
River very, very well.

2232
02:57:04,830 --> 02:57:11,350
So he will then be subject to confirmation by the Senate.

2233
02:57:12,130 --> 02:57:16,870
And my, without knowing anything more, I would expect that he would be confirmed.

2234
02:57:17,070 --> 02:57:19,830
But I have not heard that as of yet.

2235
02:57:21,850 --> 02:57:30,230
The other major announcement is that we learned just today also from Anashwab that

2236
02:57:30,230 --> 02:57:40,070
a application that we submitted for Oceanwell to Senator Alex Padilla was included in his

2237
02:57:40,070 --> 02:57:46,010
package for what is called Congressional Directed Spending, which is an earmark.

2238
02:57:46,690 --> 02:57:53,270
So all of our representatives, senators, and representatives in the house, they are allowed

2239
02:57:53,270 --> 02:58:00,750
a certain number of earmark requests for special projects and priorities of their office.

2240
02:58:01,370 --> 02:58:05,890
And the senator picked our project out of many that were submitted to him.

2241
02:58:06,030 --> 02:58:10,110
He is able to submit a total of 40 projects and that would be statewide.

2242
02:58:10,730 --> 02:58:17,270
And so he selected our work with Oceanwell for a $1.1 million essentially grant.

2243
02:58:17,270 --> 02:58:27,110
These earmarks generally, there are essentially no strings attached on them, except that they need to be used for the intended purpose that was described.

2244
02:58:27,830 --> 02:58:39,270
The purpose was a feasibility study for our work with Oceanwell, and that's really critically important to illustrate the business purpose and business elements of the proposal.

2245
02:58:39,830 --> 02:58:46,410
It also would be an important element to allow the project to be eligible for other federal funding

2246
02:58:46,410 --> 02:58:52,850
like from the U.S. Bureau of Reclamation, because that funding requires an approved feasibility

2247
02:58:52,850 --> 02:58:53,370
study.

2248
02:58:54,030 --> 02:58:55,830
So really exciting that that happened.

2249
02:58:56,510 --> 02:59:02,790
We're not at the final approval yet, though, it does still need to be included in an appropriations

2250
02:59:02,790 --> 02:59:06,610
bill that is approved by Congress, so that's no small matter.

2251
02:59:07,070 --> 02:59:12,410
But it will be included in the bill, this would be the interior appropriations bill.

2252
02:59:12,410 --> 02:59:15,130
And so assuming that that's not nixed,

2253
02:59:15,270 --> 02:59:19,070
that really exciting step forward for our partnership

2254
02:59:19,070 --> 02:59:19,890
with Oceanwell.

2255
02:59:21,210 --> 02:59:25,090
Number four, yesterday we had our strategic planning meeting.

2256
02:59:25,250 --> 02:59:27,790
Thank you for the engagement on that.

2257
02:59:27,930 --> 02:59:30,610
Sorry, it was, the audio was a little bit difficult

2258
02:59:30,610 --> 02:59:32,830
to hear in there, but we always try to pick

2259
02:59:32,830 --> 02:59:35,650
a different venue and I like that we do that.

2260
02:59:36,090 --> 02:59:39,110
But I think we'll look at other locations

2261
02:59:39,110 --> 02:59:41,430
where we can hear each other a little bit better.

2262
02:59:42,410 --> 02:59:49,790
I think that is important, but what I wanted to speak to is we talked about the Irvine

2263
02:59:49,790 --> 02:59:53,450
Ranch water district proposal for water banking.

2264
02:59:53,770 --> 02:59:55,030
I shared quite a bit with you.

2265
02:59:55,190 --> 02:59:56,170
I know it was a lot.

2266
02:59:56,810 --> 02:59:59,750
Irvine Ranch was actually on standby in the...

2267
03:00:00,000 --> 03:00:28,240
We've had the event that you wanted to hear from them, so they listened to the discussion and while we were in the meeting here they called and asked it, we offered and invite you to come and see the water bank. And I always felt like this would be a really helpful step forward before you really think about making a decision on this. And you know, it helps to see the bank itself, you know, sort of kick the dirt, so to speak, but also meet some of the partners.

2268
03:00:28,240 --> 03:00:33,000
So, me, some of the directors from Irvine Ranch Water District, and you'll have an opportunity

2269
03:00:33,000 --> 03:00:38,040
to talk with them, and also go up there and meet their partners in Rosedale Real Bravo

2270
03:00:38,040 --> 03:00:39,920
who actually operate the water bank.

2271
03:00:40,660 --> 03:00:44,420
I did this years ago when I was working for Irvine Ranch.

2272
03:00:44,480 --> 03:00:50,080
I think you know I worked there before, and I made that trip, and it was really, really

2273
03:00:50,080 --> 03:00:55,380
helpful for me so that you can kind of visualize what's actually happening, and it's not just

2274
03:00:55,380 --> 03:01:00,780
There's sort of a complicated series of boxes and arrows on a paper.

2275
03:01:01,940 --> 03:01:06,480
They did suggest that the week of June 30th would be good for them.

2276
03:01:06,700 --> 03:01:08,860
They have to kind of arrange a fair amount on their side.

2277
03:01:09,560 --> 03:01:16,480
I looked at the calendar and we have a regular LV board meeting on July 1st, that's at Tuesday.

2278
03:01:17,220 --> 03:01:24,020
So one idea just throwing out there and subject to your availability, we could make it a special

2279
03:01:24,020 --> 03:01:29,360
board meeting of sorts and include a trip up there to go look at the water

2280
03:01:29,360 --> 03:01:35,720
bank. So I'll just throw that out there and if you are able to look at your

2281
03:01:35,720 --> 03:01:39,940
calendars and perhaps let me or Josie know if that might work if it doesn't

2282
03:01:39,940 --> 03:01:44,300
will look for another date. This is a one-day trip? This would be a one-day trip, yeah.

2283
03:01:44,760 --> 03:01:49,220
Why do you think July 2nd? July 1st. It's a Tuesday. Works for me.

2284
03:01:50,880 --> 03:01:52,260
How far is it from here?

2285
03:01:52,820 --> 03:01:55,640
It's probably, so it's in Kern, County.

2286
03:01:56,220 --> 03:02:00,160
It's probably, let's see, it's a couple hour drive.

2287
03:02:00,160 --> 03:02:01,840
It's probably about a two hour drive.

2288
03:02:02,460 --> 03:02:03,980
So me here, me here in the morning,

2289
03:02:03,980 --> 03:02:05,360
and then like a whole day thing.

2290
03:02:05,600 --> 03:02:07,340
Yeah, I'm not starting a bigger field, right, itself.

2291
03:02:07,740 --> 03:02:09,740
Yeah, it's South of Bakersfield.

2292
03:02:10,260 --> 03:02:12,480
And this time of the year, it'd be wonderfully cool.

2293
03:02:12,820 --> 03:02:13,780
Yeah, it'd be nice and cool.

2294
03:02:14,220 --> 03:02:17,840
We might want to get an early start to do it

2295
03:02:17,840 --> 03:02:25,000
And what we would do is arrange a van and transportation and the concept would be it'd be

2296
03:02:25,000 --> 03:02:25,440
two part.

2297
03:02:25,660 --> 03:02:32,220
You'd actually go to see the actual recharge facilities, the canals, the pumps and everything.

2298
03:02:32,700 --> 03:02:37,680
And then we'd probably go into the office of Rosedale Rio Bravo where we'd have a bit

2299
03:02:37,680 --> 03:02:41,800
of an orientation, meet and greet and talk through it.

2300
03:02:42,260 --> 03:02:47,080
And they could also explain, you know, sort of how it all works and kind of put all the

2301
03:02:47,080 --> 03:02:53,360
pieces together. So two parts, kind of an outside part, and then a briefing inside. And

2302
03:02:53,360 --> 03:02:58,920
I'm not sure which order makes more sense. Maybe the briefing first, and then the outdoor

2303
03:02:58,920 --> 03:03:01,580
part. But we'll kind of think through that and plan it.

2304
03:03:02,080 --> 03:03:04,800
So have no meeting July 1st. We don't need a meeting July 1st.

2305
03:03:05,080 --> 03:03:11,680
So I would like to circle back with Josie and the team just to see what we have on the agenda

2306
03:03:12,780 --> 03:03:17,060
forecast to make sure that we don't... There's probably items on there that we need

2307
03:03:17,060 --> 03:03:22,760
need to work on and we can look at that, but we'll figure out a plan and if it doesn't

2308
03:03:22,760 --> 03:03:26,620
sound like I'm hearing anyone has a conflict that's jumping out at you.

2309
03:03:26,880 --> 03:03:28,700
It's just a short read, which is a life work.

2310
03:03:29,420 --> 03:03:29,540
Yeah.

2311
03:03:29,740 --> 03:03:30,300
It's just a business.

2312
03:03:30,640 --> 03:03:34,000
All I mean, Tuesday, we've got better on the 8th, but I don't know what it is.

2313
03:03:34,080 --> 03:03:34,480
Yeah, I know.

2314
03:03:34,760 --> 03:03:35,620
It's on the 8th.

2315
03:03:35,980 --> 03:03:37,140
Do you have meetings on the 8th?

2316
03:03:37,300 --> 03:03:38,020
I'm out of time, too.

2317
03:03:38,280 --> 03:03:38,740
I'm out of time.

2318
03:03:39,420 --> 03:03:40,180
We'll met you probably.

2319
03:03:41,580 --> 03:03:44,420
The second short week is good, no one works the week.

2320
03:03:44,780 --> 03:03:44,860
No.

2321
03:03:47,360 --> 03:03:50,300
Dave, I'll just mention the agenda is very light.

2322
03:03:50,680 --> 03:03:54,940
There's handful of consent items and one formal item as of right now.

2323
03:03:56,300 --> 03:03:58,380
Yeah, that would be great if we can do that.

2324
03:03:58,380 --> 03:03:59,460
Yeah, that would be great.

2325
03:03:59,820 --> 03:04:00,020
Adjust.

2326
03:04:01,000 --> 03:04:03,780
Yeah, because I have an appointment in the afternoon on the first.

2327
03:04:04,000 --> 03:04:04,900
I can reschedule.

2328
03:04:05,060 --> 03:04:05,680
I just need to know.

2329
03:04:06,080 --> 03:04:06,720
Yeah, let's do it.

2330
03:04:06,840 --> 03:04:07,100
Looks good.

2331
03:04:07,700 --> 03:04:07,760
Yeah.

2332
03:04:08,200 --> 03:04:08,300
Yeah.

2333
03:04:08,820 --> 03:04:11,380
I think this will be really beneficial.

2334
03:04:11,380 --> 03:04:18,500
Even if we decide not, we decide not to pursue this, it will be very educational for all

2335
03:04:18,500 --> 03:04:21,720
of us and help develop some partnerships that we don't really have.

2336
03:04:22,060 --> 03:04:23,620
And Irvine Ranch can go with this or no?

2337
03:04:24,220 --> 03:04:25,300
Yeah, they're going to host us.

2338
03:04:25,640 --> 03:04:26,700
They'll host us.

2339
03:04:26,920 --> 03:04:33,620
So they will go, several of their directors will attend and they will include some of the

2340
03:04:33,620 --> 03:04:38,780
directors from Rosedale Real Bravo, who are really the banking partners and they're, I

2341
03:04:38,780 --> 03:04:40,160
would say, very sophisticated in.

2342
03:04:40,740 --> 03:04:46,000
And in my lighthearted way, if we're going to go up there, I request that we have some

2343
03:04:46,000 --> 03:04:47,700
security since we're going to a bank.

2344
03:04:55,110 --> 03:05:00,750
So then just one final item, an announcement that we have completed the recruitment and

2345
03:05:00,750 --> 03:05:09,350
selection process for our director of finance and technology, and we've selected Brian Rich.

2346
03:05:13,970 --> 03:05:14,490
That

2347
03:05:17,280 --> 03:05:18,280
concludes my report.

2348
03:05:18,920 --> 03:05:20,900
Any questions or comments for the general manager?

2349
03:05:22,600 --> 03:05:27,540
Seeing none, let's move on to item 10B, which is Director's comments and reports on

2350
03:05:27,540 --> 03:05:28,220
outside meetings.

2351
03:05:28,960 --> 03:05:32,780
Why don't we start with Mr. Burns when

2352
03:05:36,620 --> 03:05:37,260
we start with Randy?

2353
03:05:37,720 --> 03:05:43,200
I have no comments, Mr. Paul.

2354
03:05:43,200 --> 03:05:49,140
Well, I wanted to comment on yesterday's meeting that we had the Strategic Planning Committee

2355
03:05:49,140 --> 03:05:59,540
meet the strategic meeting and the observation that the complications of our position have

2356
03:05:59,540 --> 03:06:04,940
increased enormously due to the pure water and just life in general, ocean well, and all

2357
03:06:04,940 --> 03:06:05,120
these.

2358
03:06:05,120 --> 03:06:14,540
I just thought the idea of another whole JPA and we had just modified our existing JPA

2359
03:06:14,540 --> 03:06:19,080
and we found out a complicated process in order to put the pure water project in place.

2360
03:06:19,240 --> 03:06:24,620
And I remember all the discussions and long thought process that went into it.

2361
03:06:25,280 --> 03:06:30,260
So this is going to be a challenging year for sure.

2362
03:06:30,260 --> 03:06:38,900
I just wanted to pass that comment, won't everybody let them know that we're aware of the complexity that's facing us.

2363
03:06:40,620 --> 03:06:48,280
So, yeah, so thank you, and so, yes, as Jay mentioned, Don and Jay and I went up to Sacramento last week.

2364
03:06:48,540 --> 03:06:52,820
And we lobbied for the Governor's trailer bill, which once again,

2365
03:06:52,820 --> 03:07:00,340
And the trailer build doesn't green light the DCP, the Delta Kavans project.

2366
03:07:00,580 --> 03:07:08,400
It merely enables more efficiently to study whether the project is going to be worthwhile

2367
03:07:08,400 --> 03:07:09,360
for the stakeholders.

2368
03:07:10,260 --> 03:07:15,340
And so once that study is done, then the stakeholders can decide whether or not they want to proceed

2369
03:07:15,340 --> 03:07:19,480
with the DCP, with the Delta Kavans project.

2370
03:07:20,220 --> 03:07:25,780
In addition to, so the three of us were in a group.

2371
03:07:25,960 --> 03:07:29,880
We also had Caiagus with us.

2372
03:07:30,060 --> 03:07:32,320
So Raoul was with us and Charlotte was with us.

2373
03:07:32,800 --> 03:07:38,320
As Jay mentioned, we had a gentleman from groundswell with us for one or two of the meetings.

2374
03:07:38,700 --> 03:07:45,420
And we had a union representative as well, an engineering union representative with us

2375
03:07:45,420 --> 03:07:45,760
as well.

2376
03:07:45,760 --> 03:08:05,300
And honestly, having like a group of people that big walk into the office and advocate for this bill, I think it was really effective, I think people, if the elected see one or two people dropping by and making a pitch, they don't know that it's that important.

2377
03:08:06,140 --> 03:08:11,400
We all discussed how many people we represented and how important was to everybody that we represented.

2378
03:08:11,400 --> 03:08:17,500
And I think we really did help, I think it really did help and I think the fact that

2379
03:08:17,500 --> 03:08:19,960
we had that many people was really beneficial.

2380
03:08:21,360 --> 03:08:30,140
One of the issues that we have to deal with is that there are a lot of people that are

2381
03:08:30,140 --> 03:08:36,280
complaining about it and it really is the people, the really is the people for whom the Delta

2382
03:08:36,280 --> 03:08:44,880
is in their backyard. They think it's going to destroy the entire environment of the Delta.

2383
03:08:46,120 --> 03:08:52,800
Unfortunately, because that's so physically, so far away from us, and probably, you know,

2384
03:08:52,880 --> 03:09:00,660
mentally as well, our electives down here don't often hear their constituents advocate for this

2385
03:09:00,660 --> 03:09:08,080
project and so it puts us in a bit of a bad position to be honest, you know, we don't

2386
03:09:08,080 --> 03:09:14,280
have a position of strength and I'm not sure how to activate our local constituents

2387
03:09:14,280 --> 03:09:22,460
to contact their electives but I think it's important, I don't know how we can, if we can

2388
03:09:22,460 --> 03:09:28,260
do it even with just really need three or four people from our last versionist to call and

2389
03:09:28,260 --> 03:09:37,800
to call any of our electeds and it would be helpful to them and to us but I'm not sure

2390
03:09:37,800 --> 03:09:38,980
how to actually make that work.

2391
03:09:40,960 --> 03:09:46,700
Yeah, just to piggyback on that, the Delta folks, it's probably their number one issue

2392
03:09:46,700 --> 03:09:51,740
of all their issues and down here I don't know if it cracks the top 20 in Southern California.

2393
03:09:52,000 --> 03:09:54,700
People think their water comes from their faucet.

2394
03:09:54,700 --> 03:10:00,680
As my role as the Met Legislative Chair, and I've only been this role for a couple of months,

2395
03:10:00,760 --> 03:10:04,900
but what I think is there's 26 met member agencies in Southern California.

2396
03:10:05,700 --> 03:10:09,300
And every met director I've met is really close to their elected in Sacramento.

2397
03:10:09,880 --> 03:10:15,380
And on the flight, actually, I was on the plane next to the Summary Men's Shults who came to our pure water event.

2398
03:10:16,220 --> 03:10:20,500
And he was, I sat next to him, and he's good friends with Marsha Ramos, because he was a met director.

2399
03:10:20,640 --> 03:10:22,660
And they served on the Burbank City Council.

2400
03:10:23,820 --> 03:10:27,220
So they're very good friends and he said to me if Marsha didn't want to be a met director

2401
03:10:27,220 --> 03:10:28,960
he didn't know what he would do to replace her.

2402
03:10:30,240 --> 03:10:34,560
But it's everyone I met that I know has really close relationships with their electives,

2403
03:10:34,700 --> 03:10:35,440
multiple electives.

2404
03:10:35,520 --> 03:10:38,280
And so we're not really using those relationships.

2405
03:10:38,520 --> 03:10:44,960
So what I want to do is get the met board members and the met member agencies like they would

2406
03:10:44,960 --> 03:10:48,580
come to us and they would say you're responsible for these five electives and just maybe it's

2407
03:10:48,580 --> 03:10:53,340
every couple of months meeting with them either down here in the district or up in Sacramento

2408
03:10:53,340 --> 03:10:56,580
on these issues and letting them know about the water issues.

2409
03:10:56,740 --> 03:10:59,760
We don't do a good enough job in the water community advocating on our issues.

2410
03:10:59,940 --> 03:11:04,940
And then when we need to have something to help us, we're not, we don't have the, there's

2411
03:11:04,940 --> 03:11:11,620
a Senator Jerry McNerney up there who's very vocal and he, he, they hear about him and his

2412
03:11:12,520 --> 03:11:15,920
Delta conveying how he's against the Delta conveying project all the time but they don't hear

2413
03:11:15,920 --> 03:11:21,480
everything from us, so it doesn't cost anything to trade their vote on this project.

2414
03:11:21,660 --> 03:11:27,460
So I think we need to do a better job, and that's one of my main goals to engage our,

2415
03:11:27,900 --> 03:11:33,220
we have the relationship, just leverage them and use them, so hopefully we can make a change there.

2416
03:11:33,340 --> 03:11:39,040
And then yesterday, you got to go to the Resiliency Summit for LA County, the LA County water plan.

2417
03:11:39,160 --> 03:11:44,860
And first of all, it was only the second time they've had this summit and was done at the public works in Alhambra,

2418
03:11:45,360 --> 03:11:52,080
California, I think to Craig Jones for driving us and actually drove the first mayor of

2419
03:11:52,080 --> 03:11:55,620
Agura and the former state center friend Pavley in the car along with Gary Burns and

2420
03:11:55,620 --> 03:11:56,980
Director Cordesky and myself.

2421
03:11:57,640 --> 03:12:02,280
And while we're there, I mean it was a who's who of LA County, the two city council members

2422
03:12:02,280 --> 03:12:06,540
of Malibu and Lindsey Horbath was the one who was hosting it and she was there of course.

2423
03:12:07,460 --> 03:12:14,420
The chair of Metropolitan was there, other members of Metropolitan board members and staff

2424
03:12:14,420 --> 03:12:18,180
And so it was really like a great, and of course, our

2425
03:12:18,180 --> 03:12:20,900
General Manager, Dave Peterson, on the center stage,

2426
03:12:20,900 --> 03:12:24,200
talking about how lost Virginess has been through some major,

2427
03:12:24,200 --> 03:12:28,940
major crisis in water and fires and droughts and came

2428
03:12:28,940 --> 03:12:32,060
through unscathed pretty much.

2429
03:12:32,260 --> 03:12:37,320
I mean, charred and burnt, but unscathed and telling our story,

2430
03:12:37,360 --> 03:12:38,240
which is a great story.

2431
03:12:38,700 --> 03:12:43,300
And we were the continue to be leaders in the water

2432
03:12:43,300 --> 03:12:50,160
our community. So it was just nice to see and sorry we were a little tardy for the strategic

2433
03:12:50,160 --> 03:12:54,000
planning. And also, yeah, I think next time we pick a room, we had a room once in West

2434
03:12:54,000 --> 03:12:58,940
Lake. It was perfect. So we can just pick rooms ahead at times. I'm going to do the due diligence

2435
03:12:58,940 --> 03:13:05,320
and check out the range of acoustics. I think acoustics, I think the air conditioning was behind

2436
03:13:05,320 --> 03:13:10,000
us in very loud. And if we can't find one, I'm okay doing it here. I mean, because we can

2437
03:13:10,000 --> 03:13:11,880
We need to set up tables here if you want more of a dialogue.

2438
03:13:13,020 --> 03:13:19,340
Just other than that, the content of the meeting was great and I just, we're all excited about all of our projects that we have going on here.

2439
03:13:20,340 --> 03:13:20,700
Yeah, fantastic.

2440
03:13:21,340 --> 03:13:23,620
All right, moving on, item number seven feature.

2441
03:13:24,180 --> 03:13:27,940
I have one more question which came up this point in time.

2442
03:13:28,380 --> 03:13:38,200
How long we talked about the governor as authorizing it in the trailer bill, a study of the DCP.

2443
03:13:38,200 --> 03:13:40,540
Is there any time frame given for that?

2444
03:13:41,740 --> 03:13:42,700
No, there's not.

2445
03:13:44,040 --> 03:13:44,900
No, there's not.

2446
03:13:45,200 --> 03:13:49,060
I think it was discussed a little bit.

2447
03:13:49,260 --> 03:13:51,740
I mean, it could be years if it's not streamlined.

2448
03:13:53,200 --> 03:13:54,040
Maybe years.

2449
03:13:54,220 --> 03:13:57,220
Anyway, even if it is streamlined, but I mean,

2450
03:13:57,460 --> 03:13:59,920
it's better to have a streamlined than not.

2451
03:14:01,240 --> 03:14:01,760
I mean, what?

2452
03:14:02,660 --> 03:14:03,900
Just coming from Metropolitan.

2453
03:14:04,400 --> 03:14:06,540
There's 27 state contractors.

2454
03:14:06,540 --> 03:14:10,460
There's metropolitan's the largest, and I think it could be safely said that the Delta

2455
03:14:10,460 --> 03:14:14,820
conveyance project, if metropolitan's not involved, it probably doesn't happen.

2456
03:14:14,820 --> 03:14:20,080
It doesn't happen, and if we can't get this trailer bill streamlined, I don't know if

2457
03:14:20,080 --> 03:14:24,480
metropolitan can make a decision to go forward, I don't think, by 27.

2458
03:14:24,780 --> 03:14:30,480
I think, I mean, it always comes up since the peripheral canals and Governor Brown,

2459
03:14:30,500 --> 03:14:30,940
the father.

2460
03:14:31,620 --> 03:14:34,640
So might come back in another iteration, but it might not be in our lifetimes.

2461
03:14:34,640 --> 03:14:35,460
All

2462
03:14:37,630 --> 03:14:39,470
right, so Gary, I think you've gathered your thoughts?

2463
03:14:39,590 --> 03:14:41,930
Yes, now I needed to update what I had done.

2464
03:14:42,510 --> 03:14:46,630
So I've attended two more AWA webinars.

2465
03:14:47,050 --> 03:14:49,350
One on PFAS, that was really interesting.

2466
03:14:49,570 --> 03:14:51,330
Someone's come up with a technique

2467
03:14:51,330 --> 03:14:55,930
to put a chemical in the water and actually dissolve the PFAS.

2468
03:14:56,530 --> 03:14:58,890
This was very interesting, and what's really interesting

2469
03:14:58,890 --> 03:14:59,830
is, really,

2470
03:15:00,000 --> 03:15:28,980
But nationwide, very interesting to hear that people are all over the country and their different attitudes and thoughts about things. The other one, the following day was on cyber security. And they had people from four tonight in and explaining. It was pretty basic, but explaining again, how important cyber security is. And I've been talking about it for three years now from the first day I was here. So I hope and pray that we're all on top of that as I know.

2471
03:15:28,980 --> 03:15:29,980
No, I vote.

2472
03:15:32,450 --> 03:15:32,890
I vote.

2473
03:15:32,890 --> 03:15:33,010
Excellent.

2474
03:15:33,190 --> 03:15:33,570
Thank you, Gary.

2475
03:15:33,750 --> 03:15:38,970
Oh, and what I got out of yesterday, which I didn't hear either of you say, was the fact

2476
03:15:38,970 --> 03:15:43,170
that we're going to all coordinate more between the agencies and the districts.

2477
03:15:43,450 --> 03:15:49,450
I thought that was where Dave, your presentation was and Lindsay's and all of that was really

2478
03:15:49,450 --> 03:15:54,270
that everybody wanted to communicate because we're all in the same situation together and

2479
03:15:54,270 --> 03:16:01,950
And the fact that streets and water stop at certain county boundaries is foolish.

2480
03:16:01,950 --> 03:16:07,190
It's the way it's developed, but other than that, it sounds like we're going to coordinate much better.

2481
03:16:07,890 --> 03:16:10,990
I don't know if that's going to help with rates, but we're going to coordinate.

2482
03:16:12,510 --> 03:16:15,590
All right, I think we're good.

2483
03:16:15,890 --> 03:16:19,510
We're all right, we're moving on, we're moving on to item 11, future agenda items.

2484
03:16:19,870 --> 03:16:23,290
Does anybody on the board wish to request a future agenda item?

2485
03:16:25,050 --> 03:16:33,230
seeing and hearing none. Why don't we go into Josie five minutes? Fantastic. We're going to close session five minutes.

2486
03:16:34,250 --> 03:16:42,830
All right fantastic. Now let's see the close session is over. It has adjourned and we have a report out from our council.

2487
03:17:01,680 --> 03:17:05,500
Thank you so much and it's 12.38 for whoever's counting.