[This transcript was generated automatically from audio using AI and hasn't been reviewed by a person -- it can contain mistakes, including plausible-sounding sentences that were never actually said. Treat it as a starting point, not a verbatim record.]

[0:00] Good morning, everybody. It's 9 o'clock. We'll get started unless you could Sophia lead us in the Pledge of Allegiance.
[0:24] Thank you, Sophia.
[0:28] Item number two, I didn't remember one roll call.
[0:31] Director Levine, Director Burns, Director Poland, Director Lewit, Director Kordewski,
[0:38] all present.
[0:39] Thank you, Fuzi.
[0:41] I don't know, number two, Dave, are there any changes to the agenda?
[0:47] No proposed changes, thank you.
[0:49] All right.
[0:51] Can I get a motion and a second, please?
[0:55] Motion to approve.
[0:58] Motion to approve.
[0:59] Second.
[1:01] I can't wait to hear.
[1:02] Fantastic.
[1:03] All those in favor say aye.
[1:05] All right, I'll lose again, say nay, are there any abstentions seeing none?
[1:12] 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.
[1:21] No actions shall be taken on any matter not appearing on the agenda.
[1:24] Josie, are there any public comment cards?
[1:26] And then at this time, but we have introduction of new employees.
[1:30] Let's go.
[1:32] Good morning, board.
[1:34] Today, I'd like to introduce Daniel Mendez.
[1:36] Daniel began working at TAPIA as a water reclamation plan operator and training.
[1:40] 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.
[1:50] Daniel holds an operator and training certificate and a grade one water treatment operator certification.
[1:55] Daniel is an avid reader and enjoys music, above all Daniel values his time with his
[2:01] two-year-old daughter enjoys trips to Disneyland, playing at the park, and spending time at the
[2:05] beach together. Welcome, Daniel. Secondly,
[2:13] I like to introduce Donde Garza. Donde is our
[2:16] new water treatment operator at West Lake. Donde has previously worked at Monocito Water District
[2:21] while completing his associate's degree in water science. He is a Navy veteran served five years
[2:26] board to USS Oak Hill stationed out of Virginia Beach, Virginia.
[2:29] Donde is very passionate about water treatment and water quality and is looking forward to
[2:33] learning more about the district's treatment systems and pure water project.
[2:37] In his free time, Donde enjoys weightlifting and watching sports.
[2:40] Welcome, Donde.
[2:42] Welcome
[2:46] to both of you.
[2:49] So, I will introduce a new employee also, Jamie Heaton.
[2:54] 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.
[3:08] He's been a dedicated to public service technical excellence and building strong relationships and looks forward to continue that commitment here at LVMWD.
[3:17] On a personal note, he's been married to his wonderful wife Pamela for 17 years and
[3:23] he caught her wonderful, so good job there.
[3:27] And they have two amazing children, Jacob and Celeste, so welcome Jamie.
[3:37] And then last but definitely not least, I'd like to introduce Sarah Matthews, who's joining
[3:43] us as our senior engineer within the engineering and facilities department.
[3:47] Sarah is a licensed civil engineer with 13 years of experience in design and project management of water and wastewater facilities.
[3:55] Sarah is attended the University of Pittsburgh where she's received her degree in civil engineering with an emphasis in water resources.
[4:02] After college, Sarah moved back home to enter a county where she's worked her entire career in the local water wastewater industry.
[4:09] Her project experience includes pump stations, pipelines, storage treatment, lift stations,
[4:16] and
[4:16] I really related and really benefits the district
[4:20] with her on our team.
[4:22] Sarah's also an active member
[4:24] in the Benzura County American Public Works Association
[4:27] and serves as a member of their executive board
[4:29] and is currently their treasurer.
[4:32] In 2019, Sarah was awarded the Benzura County APWA's
[4:35] Young Professional of the Year Award
[4:38] and was also awarded the 40 under 40
[4:41] champions of construction in 2021.
[4:44] on. In her previous role, she worked for the private sector, working for MKN and Associates
[4:50] Engineering and Phoenix Civil Engineering, both of which are consults that have worked
[4:56] on multiple projects for the district. So, Sarah has a lot of experience, projects related
[5:03] to the Kayegas-Loss version as interconnection, as well as some of the pipeline projects in
[5:08] Allabassus.
[5:10] Outside of work, Sarah enjoys traveling, cooking, camping,
[5:13] backpacking and has particular fullness
[5:15] for a good cup of coffee.
[5:18] So please let's give a warm welcome to Sarah.
[5:25] Welcome to you all.
[5:28] Moving on, item number four, consent calendar.
[5:32] Does anyone on the board wish to pull an item
[5:34] from the consent calendar?
[5:36] I do.
[5:38] I want to pull item four G, so I move to approve items
[5:40] for A through F and H and I.
[5:45] All right, and do you want to discuss?
[5:48] Second, first, and okay, so I'll do that.
[5:51] Second.
[5:51] Thank you, so we vote on that.
[5:55] All those in favor say aye.
[5:57] All those against say nay.
[5:59] Are there any abstentions?
[6:02] Fantastic.
[6:03] So on 4G, it talks about buying the astro-annual backflow supply
[6:08] of delivery of one-inch pressure regulators
[6:10] to authorize the general manager of one year purchase order of 120,670.
[6:17] So the question occurred to me, how often do we buy them?
[6:23] Do we use a lot of these 1-inch pressure regulators?
[6:29] I assume we have what, 20,000 connections, and we have 17 or 18,000,
[6:37] and the three-quartered connections,
[6:39] how many one's connections do we have?
[6:42] It raises a question in my mind.
[6:45] We know how many do we use a year?
[6:49] That's 120,000.
[6:52] We'll have Spencer answer that question.
[6:55] So we have 2,800 regulated services in the district.
[6:59] Start that from the beginning.
[7:01] We have 2,800 regulated services in the district
[7:05] And about 2,000 of those will use the one inch regulator.
[7:12] And that's areas where we have, we supply above 150 PSI.
[7:16] We have to regulate to protect our water meters.
[7:20] Okay.
[7:21] Great.
[7:21] How many, roughly, how many here do you replace?
[7:26] It does vary from year to year, but the key or the point is we need to catch up on replacing
[7:35] 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.
[7:52] 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.
[7:59] Make sense.
[8:00] Sure.
[8:01] Thank you.
[8:02] Thank you.
[8:02] You're very much.
[8:03] All right.
[8:03] I had a brief question about the same thing.
[8:05] How much do they cost each?
[8:07] Because I don't see that any.
[8:09] And nor do I see the quantity, so I couldn't even divide.
[8:15] He's phoning a friend.
[8:16] And the other question is still there for us.
[8:19] So actually, the attachment to the board packet has the price table.
[8:26] So like for example, the one-inch pressure regulator was $219.90
[8:32] sense each and there's a total of 500 yeah okay and then my other question was are
[8:40] these the ones that go before the homes that we've had some issues where okay they go
[8:46] before our meter thank you all
[8:53] your questions answered Lynn yes fantastic can we have a
[8:56] motion and a second made a motion to move item 4g as published I'll second it all those
[9:02] in favor say aye.
[9:03] All right.
[9:04] All those against say nay.
[9:06] Are there any abstentions?
[9:08] Seeing none.
[9:09] Moving on.
[9:10] Item number five.
[9:12] Illustrative or verbal presentation agenda items
[9:15] the MWD representative report
[9:17] would vice president director Lueit provide the report.
[9:21] Yeah, so metropolitan, a couple of things I want to report on.
[9:25] Number one is, I don't know if you saw the news last Sunday,
[9:28] but the one on one freeway downtown was blocked off
[9:30] And that was exactly where Metropolitan was.
[9:34] 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.
[9:44] 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.
[9:58] So that was a non-starter.
[10:00] So bottom line is we had to cancel Monday and Tuesday's meetings and we were going to
[10:05] discuss the recruitment of the new general manager.
[10:09] So that got moved to Friday at Le Verne, which I drove down to, and then we started the
[10:15] meeting.
[10:15] It was going well, but then there was some information, redactions, that, not all the board
[10:20] saw and some letters, so we had to kind of postpone that.
[10:23] So we're reschedging all the meetings until Monday the 23rd and Tuesday the 24th, which is next week.
[10:31] So as far as the committees and all the work of the metropolitan, it's on delay.
[10:38] And then the other thing, the other part that I want to report back was last Wednesday,
[10:42] President Kordesky joined me along with 32 of our partners in advocating for
[10:51] the Delta conveyance project, and it wasn't just, it wasn't, we, Andy and I were representing
[10:59] Las Vegas, there were people there representing metropolitan, Modoc, Cyrus actually had both
[11:08] clients, us and Modoc, which is the municipal Orange County water district, so he was able
[11:14] to help us, and then a lot of the lobbyists came up also, and there was representatives
[11:17] from Eastern as well, the General Manager's Syvaji was there.
[11:24] And then also Ground Swal, which is an organization, I'm not sure if you've heard of,
[11:28] but it's a really powerful organization in California that there are people that live in Southern California,
[11:33] who have family and relatives outside the Southern California service area,
[11:38] think like Marino Valley or Palmdale, who don't have adequate water systems.
[11:42] And so a lot of these people that live in LA fight for their family and
[11:46] friends who live in the outskirts of Ella,
[11:48] he don't really have access to good, clean water,
[11:50] believe it or not.
[11:50] And so they came in some of our meetings
[11:52] and really made a difference with the electives up in Sacramento
[11:55] because they knew a lot of them.
[11:57] And so we had a really like an all-star team.
[12:00] There's four teams and we had an all-star team
[12:03] in each of our meetings and trying to get our electives
[12:08] to sign on to the Delta conveyance project.
[12:11] We had a meeting with Ben Allen,
[12:13] which I want to thank Jeremy for getting.
[12:16] 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.
[12:25] How long has Jesse been in power in Sacramento?
[12:28] Six years, I think it was our first meeting with Jesse's office, Jesse Gabriel, who's the budget chair.
[12:34] 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,
[12:39] along with the new Senate Pro Tem,
[12:42] Chantal Monique-Limon, who covers the Camarillo
[12:47] to Senate Barbaria, who's the new Senate Pro Tem,
[12:50] who's taken over from Aguayo, from Healdsburg.
[12:52] Pretty big deal.
[12:53] We met with the Camarillo, both the Cayegas folks too,
[12:56] which was great pairing with them.
[13:00] And we had a couple other meetings during the day,
[13:03] which were all really positive.
[13:05] It's still coming down to getting as many people,
[13:08] So many elected to son on to a letter which we have over 30 right now.
[13:12] 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.
[13:25] 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.
[13:33] But my, my just, the just of it is the governor probably has six priorities.
[13:38] One of them is the DCP, one of my nose has to do with pharmacy and healthcare issue
[13:43] rates.
[13:44] And I know two of them are SQL with the LA Olympics, believe it or not, they can wave
[13:47] SQL.
[13:47] They wave SQL for stadiums.
[13:49] And now they're saying they can wave SQL requirements for the LA Olympics.
[13:52] So the end of the day it's going to come down to how much the governor wants the DCP.
[13:58] 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.
[14:06] 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.
[14:16] 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.
[14:22] 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.
[14:28] 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.
[14:51] thereafter, then it will just give us the data and will allow us to make a decision whether
[14:57] we want to move forward on this $20 billion project for this.
[15:00] State. So, it was just great advocate, it was like a campaign, in fact, talking to the
[15:07] Met Chair last night and making phone calls and even send a text this morning before the meeting, of course.
[15:13] But it's a campaign that we're trying to go one-by-one to get each of our electives up there on board.
[15:19] So I'll keep you posted, see how it goes, but I feel confident.
[15:23] I want to reach out, seriously, thank Cyrus for being such a great host and also for
[15:27] for all the work behind the scenes that he doesn't get any credit for, but I want to just open up
[15:33] if there's any questions or comments about what I'm doing up in Sacramento every week.
[15:40] I like your report, thank you.
[15:43] The thoroughness and depth and the accuracy, thanks.
[15:46] Thank you, Director.
[15:49] All right, seeing no more comments?
[15:51] Let's move on.
[15:52] Item B, Water Supply Conditions Update, I believe that's done Patterson.
[15:57] Sorry,
[16:01] my thing didn't move over to the agenda item as quickly as it hoped.
[16:06] The water supply condition update is located in your agenda packet.
[16:11] And since it's June, there's not much to report on as far as updates go.
[16:23] Water condition is pretty unchanged from last month, obviously, there's been some more
[16:29] snow melt.
[16:29] And conditions are still pretty good state wide as far as the reservoir levels go.
[16:37] The allocation has remained unchanged since my last report.
[16:41] Thank you.
[16:42] Thank you, Nott.
[16:44] Hold it.
[16:44] I got a question.
[16:46] A new chart has shown up on this report, bottom right hand corner, intentionally created surplus.
[16:54] And I'd like to discuss that a little.
[16:56] So I don't, could you give me a little background on that?
[17:00] You know, I think, can the general manager just shaking his head like,
[17:02] yeah, he can talk about it.
[17:04] So intentionally created surplus is water stored in like me that was part of
[17:10] the negotiations on the river.
[17:12] It came out of the quantification settlement agreement in 2003.
[17:18] Essentially what it allows and encourages is parties, water purveyors
[17:25] that have water rights on the river that they can leave water in Lake Mead, and there's
[17:31] a storage account called ICS, or intentionally created surplus, where that water sort
[17:37] of has their name on it. And so it has a benefit to keep water in Lake Mead to keep the water
[17:44] level higher than it otherwise would be, but then yet give the water right holder that certainty
[17:50] that that water is indeed held for their purpose.
[17:54] So how does that impact the city of Las Vegas,
[17:58] which had to drill a deeper hole to get their water?
[18:02] So can that water, is it being water being fungible?
[18:06] Does that mean that that water can be, if needed,
[18:12] given to, or to city of Las Vegas?
[18:17] I'm not.
[18:17] The sun in the bottle,
[18:19] the sun in the bottle of water was already.
[18:21] right? I'm not sure if that has any potentially created surplus in like me. So they may not have it,
[18:33] but because water is fundable, I guess that comes down to what happens at the time.
[18:42] Okay. Yeah. The purpose of this chart right here is to show that metropolitan is approaching the maximum
[18:50] amount potentially created surplus. So what they're showing is that they only have about
[18:58] 77,000 acre feet remaining. The problem with that is that if they back up more water and lake
[19:05] mead, they no longer have sort of the mechanism to ensure that that water is held for their purposes.
[19:14] And so it kind of is another reason to illustrate the importance of coming to an agreement on
[19:18] 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.
[19:40] Thank you.
[19:42] It has like, and moving on, item C legislative and regulatory update.
[19:48] I believe that is our very own mayor pro-tem, Jeremy Wolfe.
[20:03] Thank you, and good morning.
[20:05] I am sharing screened, so there we go.
[20:08] Shout out to Debby Rosolis for telling me about the PDF, so I won't have the same mistake as last time.
[20:14] So, good morning, everybody.
[20:17] I'm going to start off on the federal level, not a lot going on in the federal level.
[20:21] the government, the President's pretty quiet.
[20:24] Last Thursday, though, Trump signed legislation
[20:27] overturning California's authority to enforce
[20:30] zero emission vehicle and truck regulations,
[20:34] revoking three EPA waivers that have been granted
[20:37] under the Biden administration.
[20:39] This move blocks California's mandates
[20:42] to phase out gas-powered cars and reduce truck emissions.
[20:47] So in response to this,
[20:49] This California Attorney General Rob Bonta filed a lawsuit joined by 10 other states arguing the rollback is illegal.
[20:57] 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.
[21:09] 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.
[21:22] 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.
[21:37] So to ignore federal law, this conflict centers around California's longstanding
[21:43] authority under the 1967 Clean Air Act to set stricter air policy standards.
[21:48] This is now being challenged through unprecedented use of congressional review.
[21:53] What does that mean for us at Las Vegas, that means that we're stuck in the middle
[21:56] of this federal state battle on what's going to happen with our fleet.
[22:00] So while there's nothing new to report, it just shows the complexity of where we are
[22:04] to move our fleet to zero admissions and the battle just went from the state level and is now much more complex.
[22:13] So we'll be following that really closely because this will have big input puts.
[22:18] And as we mentioned before, losing the federal mandate, what that means is that market forces aren't moving to increase technology.
[22:27] So for our water tenders and other critical vehicles, the technology's not there, but
[22:32] But we might still have to comply by it.
[22:34] And so that's going to have tremendous impacts on loss virgins.
[22:37] So we'll be following that really closely.
[22:40] I want to move on to the state level.
[22:42] I want to give a big shout out to Don Patterson.
[22:45] He was very involved in the lobby day last week.
[22:48] I think it was his first time up lobbying for loss virgins.
[22:51] So I'm going to turn it over to mention a few things that director Lueit might not have included, not on purpose.
[23:02] 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.
[23:20] who represent South LA and then assembly member Shiva who represents parts of the San
[23:27] Fernando Valley.
[23:28] And it was a really good trip, I think we did a good job bobbing for the hopefully
[23:36] support of the trailer bill and seemed like in general we got pretty positive results and
[23:41] I enjoyed spending time with Director Cordesci and Lewet and lobbying for the district.
[23:48] Nice, we enjoyed having you.
[23:50] Thank you, Dawn.
[23:52] And just to note, besides Assembly Member Irwin, who is already on board for the DCP,
[23:57] we met with our entire delegation who represents us in the legislature, because Assembly Member
[24:01] Siavo does have a portion of the unincorporated chat's worth.
[24:05] So it's great, we're covering all bases.
[24:08] This has been mentioned a few times now, but I just want to highlight that Senator Monique
[24:13] Lemone is going to be the speaker, Pro Tem, I mean, not the speaker, the Pro Tem of
[24:18] the Senate starting January 1 of 2026.
[24:22] And this is a big deal because it brings the power balance to Central and Southern California.
[24:28] And Senator Lemone is familiar with the region and covers most of Cayegas, and so that's
[24:34] is going to be really important for us to continue to develop a relationship with her.
[24:39] She currently serves as the chair of the Democratic Caucus and the Senate Banking Committee.
[24:45] And interestingly enough Senator McGuire, who was the former pro-tem, is terming out in 2026.
[24:52] And he's going to be running for insurance commissioner, a position I don't know why anyone would want to do.
[24:57] But that's part of the shuffle.
[25:01] So, more on Sacramento, we've talked about this a lot, but the legislature's budget came out last Friday.
[25:10] So, the California Assembly and Senate reached an agreement for the framework for the budget.
[25:15] And as expected, it did not include the Governor's trailer bill to streamline approvals for
[25:21] the Delta conveyance project. The Governor has stated that he will continue to fight for the inclusion of the DCP
[25:29] streamlining language in the final version, so the next two weeks will be critical as the
[25:35] administration and legislative leadership negotiate the budget, and we're confident
[25:41] this will get done. So this is not the final budget, but rather the legislatures opening
[25:46] position for negotiations with Governor Newsom. And how this budget differentiates from
[25:54] the one that was laid out in mid-May called the May Revise, is the legislature's plan addresses
[26:01] the significant, the plan rejects or delays some of the deeper cuts that Governor Newsom
[26:07] had proposed in areas like housing, social services, climate programs, and the legislative
[26:14] version is seen generally as less severe in its cuts to social safety net programs.
[26:18] 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.
[26:40] So these next two weeks are going to be really, really critical.
[26:46] 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.
[26:59] 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.
[27:14] The next topic I want to briefly touch on is that Los Virginis has joined the coalition
[27:20] that's being led by Metropolitan Water District for trailer bill language to address
[27:26] the invasive golden muscle. While the name might sound great, without legislative
[27:33] protection and funding, the presence of the golden muscle could jeopardize water supply reliability,
[27:38] severely restricting the ability of water suppliers to import water.
[27:43] For groundwater recharge, it can lead to the closure of lakes and reservoirs.
[27:47] The first known detection, the Golden Muscle, occurred actually in late last year in October
[27:55] in the Delta, and they're known to spread rapidly, creating problems for infrastructure and
[27:59] water quality, and damaging native ecosystem health.
[28:03] Similar to the Quagga Muscle, Golden Muscles attached to infrastructure and dense clusters,
[28:09] clogging water-convain systems, pipelines, pumps, filters, and hydropower, they also severely
[28:16] damage the food web and out-compete native species and severely impact fisheries.
[28:22] While they have not been detected in metropolitan local supply, metropolitan already implements
[28:30] So this will be effective for the Golden Muscle, but we need additional legislative
[28:36] and funding in order to effectively eradicate them.
[28:40] Director Luton, I want to put you on a spot, but is there anything on the Golden Muscle you want to?
[28:44] Now, you just want to say that the Quagga Muscle, which we know very well is from the Colorado,
[28:50] but the Golden Muscle is found in the State Water System, which is kind of scary, because
[28:54] 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.
[28:59] And it's a big deal to stop, and there's no legislation.
[29:03] 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.
[29:10] Great, yeah, thank you for that.
[29:12] And so, Los Virginis has officially joined the coalition to request funding and legislative support.
[29:18] I'm sorry, Jeremy.
[29:19] And did you just say that there's going to be some language in a trailer bill?
[29:23] Well, they're advocating for language in the trailer bill.
[29:27] It's not as controversial as the DCP, so it's not getting anywhere near as much attention.
[29:31] But Metropolitan, I think they're second priority, is that right?
[29:35] Yeah, I mean, it's one of the three items we lobbied on before whoever knows the answer.
[29:40] How do they eradicate them or reduce them?
[29:43] I mean, one of the, I guess it's before gets in the pipes in the stage where beginning stages where
[29:51] 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.
[29:58] I don't know what it's called, but they put it in.
[30:00] 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
[30:29] You add a chlorine or a bioside when they're still in their larval state before they form the shell.
[30:37] Any idea why this new one has appeared in California, in the state water?
[30:42] So the theory is that, so the quagga muscle is a variant and the quagga you see more in the quagga
[30:49] on the Colorado River system because that water is higher in mineral content.
[30:54] and that is an important element for the clogger to form their shell, but interestingly the golden
[31:01] muscle seems to be a little bit different and so it is able to survive in the state water project
[31:06] which has lower mineral content which is concerning because one of the benefits of the clogger's
[31:13] need for those minerals is that it really wasn't viable or it hasn't been viable in the state water
[31:19] a project, but this muscle seems to have adapted to deal with that.
[31:24] It's really, really difficult, if not impossible, to eradicate them once they take hold.
[31:29] So it's really, it becomes a control measure to control and reduce the spread of them.
[31:36] And so the legislation is really about providing protections in the event that you have a control
[31:42] plan that's been approved by the state, that then you would be afforded certain protections
[31:47] from liability associated with the spread or transfer
[31:52] of those muscles if that were to happen.
[31:54] I assume if they get past the chemical disinfection
[31:58] that they attach to the sides of the inside
[32:00] of the hypes and there has to be some sort of rotor rotor
[32:03] to get rid of.
[32:04] Yeah.
[32:04] And I assume these are invasive in some way.
[32:08] Yes, they're from Southeast Asia
[32:10] and they were first detected in October of 24.
[32:14] So very invasive.
[32:16] Okay, moving on. My last item. Last week, the South Coast Air Quality Management District
[32:25] or SCAQMD Board voted seven to five to reject two proposed rules aimed at phasing out
[32:34] residential gas-powered water heaters and furnaces. The region's 10 million water heaters and furnaces
[32:42] are among the largest source of smog-causing gases in the LA basin.
[32:46] I actually learned that their water heaters are the third largest source of greenhouse
[32:51] gases, transportation being the first refineries being the second and water heaters being
[32:58] the third.
[33:01] And so really quickly about what is SCA-QMD, it's authority extends over a vast 10,000 square
[33:10] an air mile area that includes all of Orange County and urban portions of Los Angeles, Riverside, and San Bernardino counties.
[33:17] And this region known as South Coast Air Basin is geographically prone to trapping pollutants leading to significant air quality challenges.
[33:27] South Coast District is a regulatory agency that's responsible for
[33:31] monitoring and improving air quality for more than 17 million people living in one of the nation's most notoriously smoggy regions.
[33:38] established in 76 this powerful body sets and enforces some of the strictest air pollution standards in the United States.
[33:47] The board has 13 members, 10 are elected officials, of these four are county supervisors representing Los Angeles, Orange, Riverside, and San Bernardino counties.
[33:56] And some names we might know are a supervisor, Holly Mitchell, and Los Angeles City Council member, Nithya Rahman.
[34:02] But back to the decision, the decision represents a setback for regional smog reduction.
[34:09] The proposed rules were designed to curb nitrogen oxide emissions, a primary component of smog from what there's 10 million water heaters.
[34:18] And the water heaters are comparable to refineries, as I mentioned.
[34:23] So the proposal was not a direct ban or consumer mandate.
[34:27] Instead, manufacturers would have had to pay fees for selling natural gas units.
[34:31] It's with the revenues intended to subsidize the cost of zero emission alternatives.
[34:36] So you guys might have heard of something called heat pumps that are the city of LA requires.
[34:40] And those are like electric water heaters.
[34:44] And so this decision is actually really interesting and it shows that the market's not ready for
[34:49] these type of big decisions.
[34:51] 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.
[34:58] So, with that, that concludes my report, are there any questions from the board?
[35:02] Yes.
[35:04] You didn't touch on or maybe I missed the SCA-QMD and what their plan is, or are they
[35:12] thinking of sending the state rule requiring zero emission vehicles?
[35:20] Because I mean, as far as I know, there's no physical reality that there's a big
[35:27] a big truck that can hold dirt or do stuff like we need to do in the district.
[35:32] How are we going to solve this problem?
[35:34] So there's a piece of legislation, SB 594, I think that is going for municipalities would give them an exemption.
[35:45] However, this legislation is being stalled and it's now a two year bill.
[35:49] So I don't have a good answer to your question.
[35:52] It's we're in a really, we're in like a purgatory where we don't know what's going on.
[35:57] It's a catch 22, Dave, is there anything you want to add to that?
[36:01] Yeah, I'll just share, it's an ongoing issue that there's a lot of focus on it.
[36:05] It is a statewide issue, so it's not a South Coast AQMD, so
[36:09] their partner at the state level is CARB or the California Air Resources Board.
[36:15] There are two efforts underway among utility agencies.
[36:20] One through the California Municipal Utilities Association, which we're part of.
[36:25] and Aqua, and both groups are working with CARB to try to improve their exemption process.
[36:34] So the belief is this rule is probably going to go forward in some shape or form, and
[36:42] the thought process is to ensure that there's exemptions available for public agencies when
[36:47] a commercially available vehicle is not, when a vehicle for public use is not commercially
[36:53] available or if it is only commercially available from a single vendor where that price would
[36:59] be not competitive. So we haven't gotten there but that's really the goal is to get to
[37:06] a point where that can be shown and when you do that then you would be able to buy a conventionally
[37:11] powered vehicle. Does the governor have a couple of the multi-pronged questions? Does the governor
[37:19] to have authority to waive the requirements and be, he probably wouldn't or would he?
[37:25] So where does this stand?
[37:28] 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.
[37:38] But I think there will be legislation where exemptions are made for where the technology's not available.
[37:44] But I don't, this is an ongoing issue.
[37:48] CMUA is really taking the lead on the regulatory side of this.
[37:53] But does that answer your question?
[37:55] I know.
[37:56] Sort of.
[37:57] I don't have a good answer, is my answer.
[38:00] I know it's a tough question.
[38:02] I don't know what the answer is.
[38:04] Okay.
[38:05] Yeah, we're in limbo.
[38:06] That's the term I meant.
[38:06] It looks like you want to say something.
[38:08] Not to put you on the spot, but what's new with your favorite bill,
[38:12] So the met proxy or one bill, have you anything made?
[38:17] It's, they took the amendments and I believe it's now moved on to the Senate side.
[38:21] There was a Republican opposition, but it, on the assembly side, but
[38:25] it was, I think it passed something like, I think it was like 67 yes, six noes and
[38:31] then three absence.
[38:33] But now it's, it's starting its journey on the Senate side.
[38:36] So get ready to go up and provide testimony.
[38:39] Tony.
[38:39] Really?
[38:40] Probably.
[38:40] Yeah.
[38:41] I'll follow up on that today.
[38:43] And if you can keep us posted on that.
[38:44] I will.
[38:45] I'll include that.
[38:46] So it's a bill to allow Metropolitan to use proxies if I can't be at a meeting.
[38:50] I can give my proxy to another member.
[38:52] Right.
[38:53] Yeah.
[38:53] Board member.
[38:54] So Jackie, you're wonderful.
[38:56] It's Eastern.
[38:56] There's a lot of districts carrying the bill.
[38:58] And I actually went up to Sacramento to testify.
[39:00] Because they said it makes sense for someone in her district to be involved.
[39:03] So they asked me to testify.
[39:06] And the amendments were taken regarding the sunset and so, but now it's moving through
[39:13] the Senate process.
[39:14] Okay.
[39:14] Thank you.
[39:15] Thank you.
[39:16] I just want to make one comment.
[39:17] For years and years and years, the gas company promoted gas, the clean alternative and
[39:22] look at that we didn't know.
[39:24] And I suspect that these board is looking towards what Washington is looking at right now, which
[39:32] is to not put forth something like this that makes it very difficult on us as consumers
[39:38] and not get another argument with Washington who at this point is trying to remove all of
[39:44] these impediments. And it looks from what you wrote, and it's just going to increase the cost.
[39:49] We wouldn't, it wouldn't obviate gas. We just increased their cost for, because the last
[39:55] part of it is that it's for low income, it houses to be able to buy expensive electric
[40:01] Electric only, when we can't even provide enough electricity for the electric cars we don't have?
[40:07] 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.
[40:16] Well, it takes many years, at least 20, probably for a water heater to cycle through.
[40:22] Thank you, Director Burns, good point.
[40:25] Thank you, Jeremy.
[40:26] Thank you.
[40:26] All right, moving on, item number six, charges report.
[40:30] Director Levine, would you please provide the report?
[40:34] Yeah, no crazy, unusual items.
[40:36] The big item was about $2.5 million for water to met.
[40:41] But I did have one question Don, if you know there was $10,000 to American business bank on a progress payment.
[40:51] I just kind of stood out, do you guys know what that is?
[40:56] as if now we figure it out offline, but Jessica, I answer that.
[41:09] Hi. That would be for the release of retention for the project.
[41:13] So after every payment, we have to release a payment so it invoices directly for American
[41:18] business bank.
[41:20] So is that, do we bank with American business bank, or is that just the European escrow account?
[41:25] So it's like on construction projects, it's practice, and it's part of the contract that we hold a retention amount.
[41:33] Under the contract, the contractor can request that those monies be held in an escrow account.
[41:40] They don't always do that, in fact, I would say it's less frequent.
[41:43] But some of the contractors do request that that be done.
[41:46] And then what happens is, with every progress payment, we make the payment to the contractor.
[41:52] and then a portion, is it 10%, does that sound right?
[41:55] Or 5%, a portion is made to an escrow account,
[41:59] and then when the project's completed
[42:01] and your board approves it and accepts the project,
[42:04] then we release that escrow account
[42:06] and the payments made to the contractor.
[42:09] Other, there's curious.
[42:10] Yeah, and the reason they do that, as Dave mentioned,
[42:13] it doesn't happen often,
[42:15] but especially for larger projects,
[42:17] that amount is able to accrue interest
[42:19] when it sits in the bank.
[42:21] So that's why the contractors sometimes prefer to do that.
[42:25] And to answer your question, typically the contractor specifies or requests that it be held as particular financial institution.
[42:36] Okay. Thank you.
[42:37] Thank you.
[42:38] Thank you very much.
[42:39] That's all I got.
[42:42] Thank you, Randy.
[42:43] Moving on.
[42:44] Item number seven.
[42:45] Seven A, the Aqua Statewide Position of President and Vice President and nomination in support of candidates.
[42:50] I believe Dave is on this one.
[42:53] Thank you.
[42:54] So this item involves two resolutions.
[42:57] Both of them are for Aqua.
[43:00] We're a member of Aqua.
[43:02] And as a member, we vote in the Aqua election.
[43:07] That occurs every two years.
[43:09] And the officers serve for two-year terms.
[43:12] So we are coming up to that election cycle.
[43:16] That will be the two-year term of 2026
[43:18] to the end of 2027 and as the candidates begin to run for office they request
[43:28] resolutions and they need they're required to have a certain number of
[43:31] resolutions from aqua members to support their candidacy for the office and
[43:37] so generally when those we have a relationship with those individuals they will
[43:42] ask us to consider adopting a resolution when we do that you essentially
[43:47] She expressed support for them early on in the process.
[43:52] The offices here are the offices of President and Vice President.
[43:56] For President, it's customary always for the Vice President to become President.
[44:01] And it's very unusual that there would be a candidate running against the current Vice President.
[44:07] And so that is the case this year.
[44:10] The Vice President is Ernie Avila.
[44:13] And Ernie is with the Contra Costa Water Agency.
[44:16] He's done a really great job as Vice President and actually already showing leadership to step into the president role.
[44:24] And so the first resolution, number 2657 is to nominate and support, actually it's the second resolution.
[44:32] Sorry, 2658 is to nominate and support Ernie Avila for president.
[44:38] The other resolution is for Vice President.
[44:41] This is normally the office that has contenders.
[44:44] This year, I'm not aware of any other candidates running.
[44:48] Carol Lee, Gonzalez Brady, is the candidate that we're recommending.
[44:53] We know Carol Lee really well.
[44:55] She is a director with the Rancho Cal-
[45:00] 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.
[45:28] and also resolution number 265-8 in support of hernia-vila.
[45:33] Fantastic, and before we discuss, can we get a motion in a second, please?
[45:37] I'll make it.
[45:37] I'll second it.
[45:39] Fantastic, any discussion?
[45:40] Yeah, I just like to read into the end of our first paragraph right there.
[45:45] It's a pretty indicative of what Aqua does.
[45:48] Aqua region statewide may be different, but we can agree on one thing.
[45:53] And the need for prudent, sustainable water management in California is critical.
[45:58] And at the very beginning, she says, water issues are complex and we sometimes have different opinions on solutions.
[46:04] Seems like a very competent young lady.
[46:08] Just because it's on the agenda, I just like to chime in on this DCP, which I believe, and
[46:13] I'm sitting here in Southern California, and 27 and a half million people would benefit from this Delta conveyance project.
[46:21] that Aqua didn't take a position.
[46:23] And I think, you know, they say that we have northern interest and southern interest and
[46:26] delta interest, but I think for an organization to be statewide and be an advocate, I think
[46:31] at some point you have to take a position even though it might upset some of your members.
[46:34] So it's kind of makes me have like a, I think we need to figure out those of us.
[46:39] I think there's two of us, Don and Dave are both on the board of Aqua.
[46:43] I think you need to talk to them about where they're going to hold.
[46:47] If there's a major issue facing California and they're going to not take a position because
[46:50] as they have members who might not be in support,
[46:53] what kind of advocacy group is it?
[46:55] I get not taking the position on all the issues
[46:57] affecting the state, but when there's a big issue,
[47:00] that to me is so black and white
[47:01] and one side for the water community,
[47:04] to not take a position doesn't show leadership.
[47:06] So hopefully these two leaders, if they get elected,
[47:09] the board will let them know that as members,
[47:13] we really feel like they need to take a role
[47:14] in what's best for California water.
[47:17] So just to put that out there.
[47:20] not only at it, although you did say this,
[47:22] but that the DCP actually benefits
[47:25] both the central coast and the southern coast.
[47:28] And I think people are missing the fact
[47:29] that the farmers need that, as well as sites,
[47:32] because sites is actually supposed to help the central coast
[47:34] by taking all that extra water
[47:36] and giving it to the agriculture committees or farmers.
[47:41] So I think some of it is, yeah.
[47:43] You want to say something?
[47:44] I just responded to a comment even ago.
[47:47] I know Ernie, I've met Ernie a little over the years and I really like and support the
[47:52] man.
[47:53] I'm hoping this is news that there's no position on the DCP from off course.
[47:58] That's an important issue.
[48:01] I'd really like to see some movement if we can get it to happen.
[48:06] Yep.
[48:07] I agree with Len.
[48:08] I think Ernie's a great choice.
[48:09] I haven't met the Vice President.
[48:11] 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.
[48:21] Can we call a vote here? All those in favor say aye.
[48:24] Aye.
[48:25] All those against say no.
[48:28] Any abstentions?
[48:29] Hearing and seeing none?
[48:31] Moving on, item number eight, external affairs, 2025, Urban Water Management Plan Award.
[48:47] So why Craig is walking in here? Craig makes a dramatic entrance.
[48:54] So this item is for the 2025 Urban Water Management Plan, the award of contract. So the staff
[49:02] completed an RFP and Craig is going to tell you about the RFP and the recommendation.
[49:08] Questions, apologies, good morning, board, I make the mistake of having my fifth cup of coffee this meeting, so that explains.
[49:21] All right, yes, the item before you this morning, board members is the Urban Water Management Plan of 2025.
[49:30] So just some quick background, 1983 State of California established the Urban Water Management Planning Act.
[49:38] following the severe drought of 1976 and 1977.
[49:43] So this act effectively requires that urban water suppliers prepare urban water management
[49:49] plans every five years to evaluate long-term water supply and demand.
[49:54] These plans aid in long-term resource planning evaluate the reliability of our local supplies
[50:01] or lack thereof, outlined demand management strategies and document progress towards reducing
[50:07] being per capita water consumption.
[50:10] So basically these plans are critical to local regional and statewide water planning initiatives
[50:15] and help ensure that Californians, California's urban water suppliers can provide reliable water supplies
[50:23] during normal dry and successive or multiple dry years.
[50:28] And again, it is something that is required out of the California water code.
[50:34] and so a couple of concepts or components, if you will, of an urban water management plan.
[50:42] As we're looking at water use, water supplies. In other words, our projected water supply availability.
[50:49] This does look out over a 20-year timeframe. And so in other words, we'll look back as an example
[50:58] how reliable was the water supply during the drought of 21-22?
[51:02] We'll look at water use targets, how has our per capita water use changed since 2020?
[51:10] And it has changed dramatically.
[51:12] We'll relook at our water shortage contingency plan and see how well and effective it functioned
[51:20] for us and then supply assessment.
[51:22] 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.
[51:45] 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
[52:05] 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.
[52:16] So let me read the formal recommendation before you this morning.
[52:19] Please accept the proposal from Stantec Consulting Services Incorporated and
[52:25] authorize the general manager to execute a professional services agreement in the amount of $101,460 for
[52:32] more preparation of the 2025 urban water management plan.
[52:38] Fantastic.
[52:39] Can we have a motion in a second, please?
[52:42] I'll make the motion.
[52:46] All right.
[52:47] Any questions for Greg?
[52:52] I guess you covered it all.
[52:53] I'm happy.
[52:54] I guess there was one comment having lived through a couple of cycles of the urban water management
[52:59] plan.
[53:00] It's usually written and adopted after long after it's required and we are almost in a default position.
[53:09] We have to adopt the plan that's been in fact basically.
[53:15] Is there any use you've seen in this plan, does it have any effect on us?
[53:22] It is a planning document.
[53:24] So I mean, I think to your point, director Pullen, sometimes, and we see this from 2020 to now, things change, right?
[53:32] Yes.
[53:32] The planning document and all of a sudden, the landscape looks considerably different.
[53:38] 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.
[53:45] The goal to your point is to make sure that all these extra pieces were doing dovetail.
[53:51] So it is a document that can hopefully withstand time.
[53:55] Thank you.
[53:56] You're welcome.
[53:58] I'll be sure to be late every time then.
[54:02] Thanks for your patience.
[54:03] Thank you guys.
[54:04] All right, fantastic.
[54:05] Let's go ahead and vote.
[54:06] All those in favor say aye.
[54:08] All right.
[54:09] All those against say nay.
[54:11] Any abstentions?
[54:12] Seeing none.
[54:13] Moving on.
[54:14] Thank you, Craig.
[54:16] Number 9a, Finance and Administration.
[54:18] And you'll review the district's investment, financial and debt management policies, and I believe Brian Ritchie is our.
[54:25] Yes, good morning.
[54:27] President Kordesky, and members of the board.
[54:31] Let me share my screen.
[54:50] Okay, here we go.
[54:52] So today, I'm here to give a brief presentation to request the approval of an updated debt management policy.
[55:02] and also just to give a brief update on the investment
[55:06] and financial policies of the district.
[55:11] So starting out with the investment policy.
[55:14] On June 13th, 2017, the board adopted its investment policy
[55:19] and section 18 of the policy requires an annual review
[55:23] with any recommended changes to be presented to the board.
[55:26] The policy is focused on the principles
[55:29] of safety, liquidity, and yield,
[55:31] and meets the standards established by the State Treasurer's Office and the California Government Code.
[55:38] The district has historically favored a more restrictive policy than provided for by state law, and
[55:46] its buy and hold strategy has provided greater stability through fluctuating market conditions.
[55:53] So typically we review these policies as part of our two year budget process,
[55:58] which will be coming up in December and January.
[56:02] And so at this time, staff proposes no revision
[56:05] to the investment policy and to leave it as is.
[56:11] Next, financial policy.
[56:13] So the board has approved 11 financial policies
[56:16] that established guidance related
[56:18] to the financial management of the district.
[56:21] The policy is to find how the district manages
[56:23] its restricted cash and budget, establishes reserves
[56:27] and prefers to pay for capital projects and use funds and access of reserve balances.
[56:33] The financial policies are designed to be long-lasting and provide clarity to staff,
[56:38] the public, and municipal market investors.
[56:41] So as also with the investment policy, we plan to incorporate the update of this,
[56:47] if any, into the upcoming two-year budget process.
[56:51] And at this time, staff proposes no revision to the financial policies.
[56:58] Now, finally, the debt management policy.
[57:02] So on April 7th, 2020, the board adopted a debt management policy that outlines when
[57:09] debt financing would be considered the types of debt to be evaluated and related debt management
[57:15] responsibilities.
[57:16] The district has a long-standing preference for pay-as-you-go funding of capital improvement projects.
[57:25] However, it is necessary at times to debt finance large capital improvement projects that have an extended, useful life
[57:33] to ensure that adequate revenues are maintained for operations, maintenance and emergencies, for example with the Pure Water Project.
[57:41] 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.
[57:53] A comprehensive review and update of the debt management policy was recently completed by staff in collaboration with the district's municipal advisers, PFM.
[58:05] So now I'd like to go over briefly some of those changes.
[58:09] So here's summary of changes.
[58:14] The new management policy that we have in 2025,
[58:19] explicitly integrates the multi-year CIP
[58:22] with the debt policy, ensuring projects are prioritized
[58:26] and financed in alignment with loan term planning.
[58:30] The previous policy did not specifically reference the CIP.
[58:35] Second, the new policy has expanded debt instruments
[58:39] and financing alternatives.
[58:41] So the 2025 policy details a broader range of debt instruments,
[58:46] including capital leases, variable rate debt,
[58:49] which is capped at 20% of the outstanding debt.
[58:52] SRF loans, so state revolving funds.
[58:56] I don't want to put a dollar in the jar and with ya.
[58:59] So water infrastructure, financing, innovation at loans,
[59:04] and commercial paper.
[59:05] The 2020 policy focused on traditional loans,
[59:08] bonds and lines of credit, and it did not specify variable rate debt or commercial paper within.
[59:16] The third change, debt structure and coverage requirements.
[59:21] So the 2025 policy now sets, and this actually aligns with our rate study principles as well,
[59:28] and now sets a target minimum debt service coverage ratio of 1.5
[59:34] for planning purposes and introduces an additional bonds test for new issuances.
[59:40] The 2020 policy required annual debt service not to exceed 15% of each enterprises annual operating revenue,
[59:48] but it did not specify a coverage ratio mark of 1.5 or additional bonds test.
[59:57] and the 4th and last change.
[1:00:00] 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.
[1:00:29] to different orders.
[1:00:31] So the highlights that Brian made are really the significant changes in the debt policy.
[1:00:37] And then the recommendations also came from your financial advisor, Darren Hodg,
[1:00:42] PFM, and I are serving on a committee with the California Municipal Treasures Association
[1:00:47] Developing Standards for Debt Policies that's almost done.
[1:00:50] So we incorporate a lot of those recommendations into our proposed debt policy.
[1:00:57] Are you finished?
[1:00:58] 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.
[1:01:13] All right.
[1:01:13] Well, before we have any discussion, let's go ahead and have a motion and a second please.
[1:01:19] I'll make the motion.
[1:01:21] Second.
[1:01:22] Fantastic. I believe, Len, you have a question?
[1:01:25] Am I the only one?
[1:01:27] No, you're not.
[1:01:28] All right.
[1:01:28] Right, two questions, Brian, at least on the page 317 that that district step management policy includes utilizing grants for into fund borrowing.
[1:01:39] I didn't understand what I have kind of vague idea.
[1:01:44] Sure, so let it out.
[1:01:46] Yeah, yeah, so the district has three enterprises, so the potable water, recycled water and sanitation.
[1:01:53] And typically we do not want to use any funds
[1:01:57] because within between those different enterprises
[1:02:00] because they're essentially their own operations.
[1:02:04] So what this allows for is for loans
[1:02:07] in short-term circumstances to be made
[1:02:09] between the enterprises but they must be paid back
[1:02:13] within those enterprises.
[1:02:15] So that's what the interfund borrowing is.
[1:02:17] So under a product 218 you can't span
[1:02:19] and like potable water funds on the sanitation activities.
[1:02:25] And the Interfund borrowing provides for a written defined mechanism to do that.
[1:02:30] They would have to be approved by the board prior to it happening.
[1:02:33] Okay.
[1:02:35] Item one, second item was bans, bond anticipation notes.
[1:02:41] I was puzzled by that, too, it's a new instrument.
[1:02:45] Yeah, so it's a short-term financing source.
[1:02:49] So essentially how it works is we would issue these bans, bond anticipation notes for short-term front financing.
[1:02:56] And then when we're ready to issue longer-term financing, we would repay back those bans with the obligation.
[1:03:03] And essentially it's to get a more favorable interest rate.
[1:03:07] And also when you issue municipal bonds, you typically have to spend the bond proceeds within three years.
[1:03:13] So, typically have to spend bond proceeds within three years.
[1:03:18] So if you have a longer term project, you often have to issue bond anticipation that
[1:03:24] it's in order to time the full bond issuance.
[1:03:29] So there's a couple of different reasons interest rates and also just timing the market for
[1:03:34] when you'll be able to spend on the bond proceeds for a larger issuance.
[1:03:39] Okay. And I want to compliment the report because either you or Chat GPT spelled out every
[1:03:48] an acronym ahead of time. That was me.
[1:03:54] I don't want to lose money. I mean, you know.
[1:03:58] One question, you mentioned increasing the coverage ratio to 1.5. So we locked into that or
[1:04:05] is that a recommended?
[1:04:07] With the approval of the updated policy, we would make that part of our coverage ratio
[1:04:15] that we would need to meet, and it would align with what we've established, which was
[1:04:20] actually already approved as a principle for when we're setting rates as well.
[1:04:26] That would be a coverage ratio that we maintain at all times.
[1:04:30] Sorry, Brian.
[1:04:31] It's better than that, too.
[1:04:32] So, required to, I think, is the key question that's so each of our loans and our bonds have a required coverage ratio.
[1:04:43] Like, for example, if he has like 1.2, so you can't dip below that or things can happen.
[1:04:51] The 1.5 coverage ratio is the districts adopted target which provides flexibility and also having a higher coverage ratio increases.
[1:05:01] is the likelihood of getting a higher rating decrease in burn costs over the long term.
[1:05:09] Okay, so if we're not locked into, like if we run into an issue, we're not going to be in violation.
[1:05:16] Because we put this restrictive covenant in the policy.
[1:05:20] Right, so like if many of our debt, how's a 1.5 coverage and like say, got to like 1.45?
[1:05:27] 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.
[1:05:45] And is there a state man, is there a mandated red line you can't cross the 1.2 or something like that?
[1:05:55] Well, the red line you can't cross as whatever is in your loan or bond issuance.
[1:06:01] I don't recall ever seeing one below 1.2.
[1:06:07] Yeah, can I ask what was the impetus for the change in their debt?
[1:06:10] 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.
[1:06:25] So, our policies align more with those big loans that we're going to get.
[1:06:31] And it's also in line with my mention that we were developing standards that we were trying to implement.
[1:06:36] That's, uh, this is a line with, uh, emerging standards.
[1:06:39] I'll call them.
[1:06:40] I like it.
[1:06:41] I like it.
[1:06:41] We're ahead of the game.
[1:06:42] And since this is a red line version, and you usually come back to us another meeting
[1:06:46] with vinyl material, are we going to get a vinyl copy that's clear, clear, clear?
[1:06:51] So I believe the clean version was also attached on it.
[1:06:54] It has a clean version and a red line.
[1:06:56] Okay.
[1:06:58] We were thinking twice about the red line because there's so many red lines.
[1:07:01] Yes.
[1:07:02] We thought it'd be helpful for you to have it.
[1:07:04] We'll share to the debt policy is somewhat new to the district for many years.
[1:07:08] 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.
[1:07:18] And it is something that will change from time to time because of changing government standards and laws and practices around issuance of debt.
[1:07:27] And actually, sorry, it's required now under SB 1029.
[1:07:33] All right,
[1:07:36] very good. Any more questions or comments?
[1:07:39] Seeing none, let's vote on it. All those in favor say aye.
[1:07:43] All those again say nay. Are there any objections?
[1:07:48] Seeing none, moving on. Let's see, item B, CalPERS, pension and other post-employment benefit liabilities update.
[1:07:55] Brian Richie again, Brian, no one he took yesterday.
[1:08:00] Howdy, you're ready, huh,
[1:08:04] the here, pull up this next slide here, there we go.
[1:08:19] So, yeah, so this will be a presentation that I'm going to give regarding an update of our
[1:08:26] pension and op-ed plans.
[1:08:28] So, just a little background, every year on our annual comprehensive financial report, we
[1:08:36] We have to list what's called our net pension liability and our net OPEB liability and essentially
[1:08:42] what it is starting with the pension first is we take our total pension liability which
[1:08:48] currently as of June 30, 2024, so year back is $131.1 million and we have assets that are
[1:08:58] invested by CalPERS as part of a pooled investment that have accumulated now to 103.1 million.
[1:09:08] So that net amount, that total liability, less the actual assets that have been invested,
[1:09:14] is recorded on our annual Comprehensive Financial Report with a net pension liability of 28.0 million.
[1:09:23] So, for CalPERS so far, this past year, the investment earnings for CalPERS was 9.3% and
[1:09:32] if you compare that to what they've been earning over the last 20 years, it's around 6.7%.
[1:09:39] So, last year it was a good year in terms of their investments.
[1:09:42] They have increased their allocation over time into more private equities.
[1:09:47] 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.
[1:10:02] So where are we today?
[1:10:04] So as I mentioned, the measurement date of our pension liabilities is actually always a year behind.
[1:10:11] So they measured it as of June 30th, 2024, and as of that time frame we were a 78.66, 79% funded.
[1:10:24] 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.
[1:10:32] for this upcoming year, the estimated contribution rate is 31.81%.
[1:10:40] So what that means is out of all of our payroll at the district,
[1:10:44] approximately a little under a third of it is related, the cost is related to our pension funding.
[1:10:52] So the estimated contribution rates are projected to stay in that range until around 2032,
[1:10:58] and then decrease the 19% and then, therefore, the projection is 8% annually.
[1:11:07] So by 2031-32, which is around six years, where it estimated to be at 90% funded,
[1:11:13] these percentages can go up and down based on assumption changes.
[1:11:19] So typically, if you can get to 90% funded, it's seen as essentially fully funded at that point in time
[1:11:26] because of the variation that can occur, so that's sort of the goal post that we're looking at.
[1:11:32] So I don't know if you can really see this slide as well, but what I'm attempting to show here
[1:11:38] is the correlation between employer contributions and the funded status. So in the red line,
[1:11:46] that's the contribution percentage that the district is making. And you'll notice that it will
[1:11:53] Trin down, that's the whole point over time to go from 31% at the height, eventually down to 8%.
[1:12:00] And you'll see that corresponding blue line, that's the funded status.
[1:12:04] So we're inching up and you can see where they cross, that's at the 90% mark, and that's at 2032.
[1:12:12] So we're essentially looking to get to that cross mark by 2032 when it would be 90% funded.
[1:12:18] Okay,
[1:12:22] I'm going to keep going here, update on OPEB, other post-employment benefits.
[1:12:28] So, same thing, this gets shown on our act for along with our net pension liabilities,
[1:12:33] our net OPEB liability.
[1:12:35] So we take the total OPEB liability currently for the district is 21.4 million as of June
[1:12:41] 30th, 2024.
[1:12:43] The value of the assets that have been invested with the California Employment Retirement
[1:12:48] benefit trust is 17 million and so the net open liability the difference
[1:12:55] remaining is 4.4 million which is outstanding and we're going to talk a little
[1:12:59] bit about why that is. So the current total liability once again is 21
[1:13:05] million as a fiscal year 2425 the trust balance is 16 million that leaves us with a
[1:13:11] funded status of 79.3% versus prior year, it was 68.66.
[1:13:19] Now, that's quite a jump from year to year.
[1:13:22] We're gonna discuss in a little bit why that is.
[1:13:24] The net opa liability remaining is 4.4 million
[1:13:28] as of the reporting date, which this will actually show
[1:13:31] on the June 30th, 2025 annual comprehensive financial report.
[1:13:38] So this is basically a schedule of changes
[1:13:41] is showing how the net OPEB liability moves.
[1:13:45] And so essentially, there's a lot of detail here,
[1:13:48] but it's reiterating what I've already stated that,
[1:13:51] if you look at the last two total OPEB liability,
[1:13:55] it's shifted, it's actually decreased
[1:13:57] a little bit year over year, from 21.7 million to 21.4 million.
[1:14:03] The plan for do sharing net position,
[1:14:05] that's just the assets, they're investing.
[1:14:07] So that's gone from 14 million,
[1:14:09] it's increased to 16 million. There's a reason for that. And then the Net OPEB liability has gone
[1:14:15] down. So from 6.8 million last year to now it's going to be reported at 4.4 million.
[1:14:24] So an overview of how the account's been doing. So this just gives a stage view of how
[1:14:30] of initially when we started. So the contribution started with this plan in 2009 with 328,000.
[1:14:38] There's been additional contributions of about 13 million since that time.
[1:14:43] You have to subtract out some administrative expenses from the trust.
[1:14:48] We have investment earnings of about 5 million and that has given us a new total as of March 31st.
[1:14:55] So this is a little bit later than the actual reporting of it.
[1:15:01] 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,
[1:15:29] it's at 79%. So there's a major change that happened to increase the funding
[1:15:36] status and I'd like to go over that next. So this chart right here has a couple
[1:15:42] of blue lines, so I'm going to focus on the light blue line here. If you notice
[1:15:47] at around 2020, if you look at that light blue line, you'll start to see that
[1:15:54] But that trend of it, it's sort of level from my 2016 to 2020, not really moving.
[1:16:00] And then all of a sudden, it goes down, 21, 22, 23, 24, 25.
[1:16:06] And what occurred there was we started making additional contributions into the OPEP trust.
[1:16:12] The board understood that it would be a good idea to increase contributions, to update the funding status more aggressively for the OPEP trust.
[1:16:21] and that has really been effective.
[1:16:24] So in 2020, the trust was funded at 31%,
[1:16:28] and now it's funded at nearly 80%.
[1:16:31] So a big change over the last four to five years
[1:16:34] in terms of getting our OPEPS status
[1:16:36] to a very healthy funding status.
[1:16:40] So with that being said,
[1:16:41] the recommendation today is to continue this,
[1:16:45] continue contributing additional funding
[1:16:47] to the California Employment Retirement Benefit Trust,
[1:16:51] and the form of quarterly payments of actualarily determined contributions in addition to the monthly pay go retiree health contributions.
[1:17:01] 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.
[1:17:10] So the recommendation is for that additional $706,803 to be approved.
[1:17:17] And this is included in our fiscal year 2526 budget that will be coming up next for adoption.
[1:17:25] So that completes my report.
[1:17:27] Thank you, Brian.
[1:17:28] Can we get a motion in a second?
[1:17:32] I'll move it.
[1:17:33] I'll second it.
[1:17:34] Fantastic.
[1:17:35] Just a quick question.
[1:17:41] It's more conservative, obviously, to have more of this paid off than not a higher percentage
[1:17:48] of this being funded.
[1:17:49] But do we know what, I mean, other water districts generally are at?
[1:17:56] Are we ahead of, are we behind or are we?
[1:17:59] So, that's a great question.
[1:18:01] On the pension side, I would say that we're a little bit ahead of them, but not much.
[1:18:08] I mean, on average, I would say low 70s is where most agencies are at with their pension.
[1:18:14] And the district is at high 70s, close to 80.
[1:18:18] So I'd say we were ahead of the game on that and in terms of the OPEB, I would say a similar situation
[1:18:24] We're definitely, you know, I think we were a little bit behind if you go back four years
[1:18:29] But the initiatives that the board took at that time have really paid off dividends and now we're in a good place
[1:18:35] In terms of the funded status. Good. Thank you. Yeah, so no surprise
[1:18:40] I probably look at the world a little bit different than some of you guys. So
[1:18:45] That's a good thing. Yeah, so
[1:18:47] So, so a few questions, number one, do I, am I read this, am I reading this right that the service cost?
[1:18:57] Is that the cost of CalPERS, administrating the plan, which was about 2.2 million or about 180 basis points?
[1:19:07] So, is that, I'm just not sure what that cost is.
[1:19:11] Yeah,
[1:19:21] so that's that's the administrative cost for it.
[1:19:24] This is the OPEB slide, but the service cost is.
[1:19:27] So the service cost of the ministry of cost.
[1:19:29] 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.
[1:19:48] So, which period of time is that over?
[1:19:50] I would say that was over fiscal year 2325.
[1:19:55] I assume it was for the year.
[1:19:57] Yeah, so a couple of things, so with OPEB, you don't have to use CalPERS.
[1:20:05] So OPEB is through a CalPERS-mage trust a few years ago, probably four or five years ago,
[1:20:14] We looked at some other alternatives to the CalPERS benefit trust program.
[1:20:22] And at that time, CalPERS was still the best option for banning the OPEP trust.
[1:20:28] I mean, we could, again, in the future, look at other options for the OPEP.
[1:20:33] The CalPERS, we can't go somewhere else.
[1:20:35] CalPERS has to be CalPERS for the pension side.
[1:20:37] But for the OPEP, there is alternatives to the trust that we can review.
[1:20:41] So the 122 million, that's CalPERS or the OPEB?
[1:20:48] The 131 million?
[1:20:50] We're 131 of those on one side.
[1:20:52] Yeah, that's the CalPERS.
[1:20:54] Yes, so that's the one we can't do anything about that.
[1:20:56] No, but the OPEB we can.
[1:20:58] I just, is, is, is staggering.
[1:21:02] I can't even feel my arms right now.
[1:21:03] Should we go back to that slide?
[1:21:05] What is, what is just reasonable number?
[1:21:08] That should be on that amount of funds should be under 50 basis points.
[1:21:13] 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.
[1:21:19] No, no, no, no, it's 2.2 million.
[1:21:20] Where the A's looking for the pension one, though, Dave.
[1:21:23] Oh, I don't have a slide that shows that you're talking about in the report.
[1:21:27] It was in the report.
[1:21:29] It was 2.2 million.
[1:21:31] Well, I would suggest let's find out what that includes and consists of because I would agree that seems awfully high
[1:21:37] if it's just simply to manage the trust.
[1:21:40] I have a feeling that there's more to it than that.
[1:21:43] I think so.
[1:21:45] But I think it's worth us checking on to really find out
[1:21:48] what is covered under that service fee.
[1:21:51] But you would be right, there's not really,
[1:21:53] there's no negotiation with CalPERS.
[1:21:55] They are a massive organization,
[1:21:58] and there's not really an alternative, so.
[1:22:01] But I would agree those numbers seemed high
[1:22:03] if that's just to administer the assets.
[1:22:05] That's, I think it has to be more than that.
[1:22:08] Yeah, and I'll just add, so with the OPEP trust,
[1:22:11] it has to be a 157 trust.
[1:22:13] So there's only a handful of companies in the manage.
[1:22:17] 157 trust, the two most common ones are PARs.
[1:22:21] Public, I forget what it's the answer for.
[1:22:24] PARs is a company and then the CalPERS trust are the two big ones.
[1:22:30] Eastern municipal created their own,
[1:22:33] which is just not even practical for an agency of our size.
[1:22:39] So really, when we looked five years ago, we were comparing pars to the CalPERS CalTrust
[1:22:46] one.
[1:22:48] So that also limits the options that we have, because it has to be somebody who could
[1:22:53] manage a 157 trust.
[1:22:56] Yeah, and so for the service cost, let me actually explain that a little bit more.
[1:23:00] So that's not just the administrative amount.
[1:23:03] That's actually the amount to fund, that's actually the cost to fund the pensions.
[1:23:09] So we have obviously people that are retired and the cost to administrative those payments.
[1:23:15] That's part of the service cost.
[1:23:17] Yeah, that's really important.
[1:23:18] So that's actually making payments to retirees for their pension.
[1:23:22] So it's actually making the payments.
[1:23:24] What, isn't that in the 7.4 million benefit payments, including refunds of employee contributions?
[1:23:32] So I think we might be lucky at CalPERS and OPEB at the same time here.
[1:23:41] I'm looking at the CalPERS.
[1:23:43] Page 404 of the packet.
[1:23:55] Is there a line item that you're looking at?
[1:23:57] 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.
[1:24:07] Same number, it's taken from 404.
[1:24:11] Yeah, and it appears that that is the payments, right, made to the retired employees for their pensions during that measurement period.
[1:24:23] Yeah, because it's got the interest right under it at the $8.6 million.
[1:24:27] So this is just for that one year.
[1:24:30] Well, so if you look on page 404, what is the $7.4 million?
[1:24:37] Let's take a look.
[1:24:39] OK, are you looking at the middle column, column B?
[1:24:43] Yeah, that's in the actual asset side there.
[1:24:45] OK, and I see it on the total pension.
[1:24:48] That's a good payment.
[1:24:55] Yeah, those are the payments going out to the actual
[1:25:00] employees, which seems different than the service cost.
[1:25:05] So why did I suggest this?
[1:25:07] We'll get you a specific.
[1:25:11] So we could, we could get you a specific definition for
[1:25:13] service cost, but again, under CalPERS,
[1:25:16] I mean, there's no negotiating and there's nothing that we
[1:25:18] could do.
[1:25:18] We can do differently, but we could get, send you a concise definition of service cost.
[1:25:24] Of what it is, yeah, I just have no idea.
[1:25:26] I mean, we could also check and make sure that that number's correct, even though we don't
[1:25:31] can't negotiate it with CalPERSM.
[1:25:33] I mean, we can make sure that number is indeed correct.
[1:25:37] 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
[1:25:43] 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.
[1:25:52] But I see there's also an administrative expense.
[1:25:54] It's quite a bit lower, 79,222.
[1:25:58] So I think what we ought to do is just get a better understanding of what these different numbers reflect and mean.
[1:26:03] Yeah, I don't know, sounds good.
[1:26:04] One other thing I'll add, that's helpful.
[1:26:07] We may not have explicitly said it.
[1:26:08] When we say other post-employment benefits, what that is talking about is retirement,
[1:26:13] retirement medical benefits are medical benefit for the retirees.
[1:26:18] The other thing on this that is important is although we talk about these as liabilities,
[1:26:23] they're really accrued, actuarial liabilities.
[1:26:28] And so the assumption inherent in all of these is that all of the employees would be retired
[1:26:34] at once and take all of their benefits.
[1:26:36] 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.
[1:26:52] 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.
[1:27:03] So it's kind of the practice finding the sweet spot and as Brian explain that's we feel like right about 90 percent.
[1:27:11] 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.
[1:27:23] If you look at the net pension liability, which is kind of almost all the way down at the bottom of the table.
[1:27:31] Yep, I'm with you. Right. So in 2021, there was 8.9 million.
[1:27:37] And in 2024 is 27 million.
[1:27:47] We're on page 407.
[1:27:50] Okay, I see the 27 million. Yep.
[1:27:53] And in 2021, there was 8.9 million.
[1:27:56] So the way I look at it is.
[1:27:58] Yeah, we went from about 9 million to almost 28 million in a few years.
[1:28:04] Which is to me as a massive problem.
[1:28:07] Yeah, so let me explain that one a little bit.
[1:28:10] Oh, let me finish.
[1:28:10] Oh, okay.
[1:28:12] And taking into account, in 2024,
[1:28:17] you had like $9 million of earnings,
[1:28:20] which was like probably as bad as good as you're ever gonna do.
[1:28:24] So explain to me, to me, that's a big problem, but you.
[1:28:28] Yeah, so it's looking at it on a net basis.
[1:28:32] So that net number, it's taking the total liability,
[1:28:36] which is up here in 2021 is 112 million and it's comparing it to the 131 million in 2024,
[1:28:45] but it's netting off the assets. So the assets were...
[1:28:53] That's what we're talking about, right? The unfunded...
[1:28:57] Right, so the unfunded, so there's a high investment
[1:29:06] benefits during that year before those pension, net pension amounts came out.
[1:29:12] So it was a very good investment year.
[1:29:13] So what that ended up doing was when we reported it or when CalPERS reported it, it reduced the net liability significantly.
[1:29:21] But if you notice in the next year, the very next year, it had a C-song effect.
[1:29:26] So it went, so, and I don't know, 2020's here, let me see.
[1:29:31] You've seen the fluctuations and the volatility in the portfolio, the CalPERS investment portfolio.
[1:29:39] Right, it went from $21 million to $9 million into $22 million.
[1:29:44] It typically is in the $20 million range.
[1:29:47] That was actually an anomaly that year because we had a really high investment year CalPERS did.
[1:29:52] And so what what they actually did as a result of that too is they reduced the discount rate that we measure the liability
[1:30:01] 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.
[1:30:28] 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.
[1:30:40] 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.
[1:30:47] We actually even wrote a letter to CalPERS because our former director, Charlie Caspery,
[1:30:54] had concerns about how aggressive their investment strategy is.
[1:31:00] And we wrote a letter to CalPERS actually encouraging them to be more conservative in their
[1:31:05] portfolio, which they disregarded as that.
[1:31:10] But at least we're on record.
[1:31:13] The issue is we do enjoy the benefits
[1:31:18] when the portfolio performs really well,
[1:31:20] but also it presents a risk when that portfolio
[1:31:23] and the market doesn't perform well.
[1:31:25] And CalPERS invests in instruments
[1:31:28] that we would never consider.
[1:31:32] And also that are sometimes not,
[1:31:36] we don't have a lot of transparency around.
[1:31:39] and that's primarily private equity and we had some concerns about that, whether that was wise
[1:31:46] and really in the public interest where CalPERS was making investments in private equity
[1:31:52] where there was essentially no public information about the safety of those investments.
[1:32:00] 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.
[1:32:11] And if you listen to all the economists and all this, and especially if they're overly invested in private equity,
[1:32:18] 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.
[1:32:29] in times that are shutting down the funds,
[1:32:31] they're selling at a discount.
[1:32:34] So, you know, my recommendation would be to take a look
[1:32:41] with CalPERS is, could we,
[1:32:45] and I'm not an expert on CalPERS
[1:32:47] and these kinds of things at all, right?
[1:32:49] But what I believe you can do is,
[1:32:53] for at least new employees,
[1:32:55] set up some kind of tearing
[1:32:56] something that would help us over the long term, right, not have such high of an
[1:33:04] unfair because if we don't hit that 6.8% it's going to continue to go the wrong
[1:33:11] direction. One of the things we've done over the years in part to address this is
[1:33:15] we have we have a number of different tiers of retiree benefits and you know
[1:33:20] there was quite an effort on retirement what are called you know defined
[1:33:24] benefit pension programs and sort of limiting the benefit provided. It was the pension reform
[1:33:34] and what year was that? 2015 or 2013? Sorry. So there was quite a big change and reform
[1:33:44] around that and we actually went through the process, we negotiated with our employee group
[1:33:49] so there's actually a tiered set of benefits and so part of the purpose of that was to reduce
[1:33:54] to use the exposure to this long term unfunded?
[1:33:58] So under a CalPERS, so there's two different things.
[1:34:05] So under a CalPERS, the district always did what was called the classic 2% 55 formula.
[1:34:13] In 2013, there was the Pension Employee Reform Act, which reduced the amount of pension available for new employees.
[1:34:23] It limits it every year, based on a dollar amount, and also it increased the retirement age to 62.
[1:34:32] So that, we can't negotiate that.
[1:34:35] So that is defined by CalPERS, we participate in CalPERS agencies that have tried to leave CalPERS.
[1:34:41] Have found that it's not financially able to leave CalPERS because the cost is astronomical.
[1:34:49] So as more and more employees fall under the new tier,
[1:34:54] you'll see over the long term that unfunded liability and
[1:34:58] the pension liability go down, currently over 50% of our employees are under the lower new tier.
[1:35:04] The other thing that the district did affect in the optional post employment benefits was the district used to provide employee plus one,
[1:35:15] basically fully paid medical insurance upon retirement at the PPO rate.
[1:35:20] We now have three tiers on medical retiree benefits that were negotiated over time, that reduce that amount.
[1:35:29] 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
[1:35:45] So, those two steps together over multiple years and decades will significantly reduce the liability of the district.
[1:35:55] But under the CalPERS plan, we can't negotiate different things than everybody else in the state.
[1:36:02] Under the optional post-employment benefits, the retiree health we can.
[1:36:07] So
[1:36:10] when did we do the retiree health?
[1:36:14] 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.
[1:36:29] Well,
[1:36:35] interesting discussion for me, I think it's a good discussion, it's a really important item and actually we had it on consent.
[1:36:44] I felt like it was worth having a discussion about it.
[1:36:47] We spent a fair amount of time on it but I do think it's an important item.
[1:36:52] 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.
[1:37:01] a huge issue. The idle companies all have the same issue.
[1:37:06] Oh, City of Los Angeles is bankrupt technical.
[1:37:09] The last thing I just offer, so when Dave mentioned that we were lobbying to encourage
[1:37:16] CalPERS to have a more transparent, realistic investment portfolio, it was only us in the city
[1:37:23] of Pasadena that provided comments.
[1:37:27] So Randy, can I go?
[1:37:32] So my question is tangential, and I don't
[1:37:36] know if it's even answerable, because I'm
[1:37:39] concerned about the liability of the volatility
[1:37:43] of the current investment world, given the tariffs
[1:37:49] and the challenges it presents is the, I guess the brain trust feel that they're doing
[1:37:59] the best they can is it a good, we don't have a choice in the back, we have to invest
[1:38:05] with them, that's the law.
[1:38:07] So how's this working out?
[1:38:09] It was, it was, when puzzling me is, we're reporting these rates, that's history.
[1:38:16] So does anybody know what's going on today?
[1:38:21] Is it, it's not possible, is that, is that the bottom line?
[1:38:24] In terms of, if you ask how the assets performing, are they maintaining their value?
[1:38:30] So this is my question.
[1:38:31] Yeah, this past year it was a nine, nine percent.
[1:38:34] That was past year, this past year, this past year.
[1:38:37] This year, that I don't know.
[1:38:40] Yeah, that's my question.
[1:38:41] The ultimate way to influence this is to run for election on the CalPERS board
[1:38:46] and the Board of Investments, and they are elected positions from the membership.
[1:38:51] So it is, this crossed my mind before when they didn't respond to our letter.
[1:38:56] And part of it is they have so many members, they're a multi-billion dollar fund.
[1:39:00] And they enjoy a certain amount of autonomy for that.
[1:39:06] But they do report to an elected board that is made up of members.
[1:39:10] And so, you know, theory, any current or even retired CalPERS member could run for the board,
[1:39:18] and ultimately be placed on the board of investments.
[1:39:20] So, I thought that might be a good job for Don at some point.
[1:39:24] I didn't have to kill.
[1:39:25] Interestingly, Don serves on the board of our camp fund, which is a different fund,
[1:39:35] but he does serve on the board of that organization where we invest some of our own funds.
[1:39:40] So, it is something that we could consider in the future.
[1:39:45] It's a fairly significant role and it actually requires a campaign to run for office.
[1:39:50] It's not an easy post to get and it's also pretty sought after given the large dollar amount under, you know, management.
[1:40:01] The other thing I have noticed, they seem to change their chief investment officer frequently.
[1:40:07] So they seem to only last a couple of years at best and then they have a new investment officer.
[1:40:16] Do they send interim reports on how the portfolio is doing?
[1:40:21] I just see the annual reports but-
[1:40:24] They, CalPERS is, well, how do I want to say they're not the most transparent.
[1:40:29] We get reports, you know, pretty far significantly after the end of the fiscal year, reflect
[1:40:34] in the previous fiscal year. There is some information on their website on their investments
[1:40:39] that we can look at. But again, we have spent a lot of effort on that, compared to other
[1:40:46] things because there's nothing we can really do about it.
[1:40:52] So someone can correct me if I'm wrong, but if I remember correctly 20 years ago or so,
[1:40:57] they were running a deficit and that's why they started to invest in more risky investments
[1:41:02] 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.
[1:41:11] 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.
[1:41:26] because luckily the, well, from a financial perspective,
[1:41:30] luckily the district did not do that.
[1:41:32] And then that led ultimately to the deficits that caused the 2013 Pension Reform Act,
[1:41:38] which reduced future benefits for employees hired after 2013.
[1:41:44] So they went from surplus to increased benefits to a pretty significant deficit.
[1:41:50] And then the Pension Reform Act.
[1:41:51] All
[1:41:54] right, any other questions or comments?
[1:41:57] Randy, I'm glad you're on this board.
[1:42:01] Let's go ahead and take a vote.
[1:42:04] All those in favor say aye.
[1:42:06] Aye.
[1:42:07] All those against say nay.
[1:42:09] I'm going to abstain.
[1:42:13] And all those abstain?
[1:42:14] Apparently, Len is abstaining.
[1:42:16] Moving on to the next item.
[1:42:18] Item C. Brian, once again, the fiscal year 2025-26.
[1:42:26] It's like looking in a mirror.
[1:42:29] Good morning, I figure I'd give Brian a little bit of a break.
[1:42:33] And you're going to be discussing the year 25 and 26 proposed budget adoption.
[1:42:39] I certainly am.
[1:42:40] Thank you, President Cordesky, and good morning directors.
[1:42:44] We're seeking the adoption of the proposed budget for fiscal year 2526.
[1:42:51] Excuse me, this budget has presented on the May 20th board meeting represents a continuation
[1:42:59] of the biennial budget plan that was approved in June 2024.
[1:43:07] The total fiscal year 2025-26 budget is $153.5 million, which is an increase of $500,000
[1:43:19] over the approved plan.
[1:43:20] The
[1:43:26] total operating budget
[1:43:32] is $69.3 million, which is 45% of the total budget.
[1:43:42] The net operating income is budgeted at $16.9 million, which is the working capital that is used to fund capital improvement projects.
[1:43:55] In June 2024, the Board approved the phase implementation of the organizational study,
[1:44:02] which resulted in some shifting of funding between departments in order to accomplish that.
[1:44:10] And then the other $500,000 was the approval of the reimbursement agreement on the revenue
[1:44:20] new side and the Ocean Well study that was approved, I believe it was in January of 2025.
[1:44:31] For capital improvement projects, staff took a look at what was originally included for
[1:44:40] the programs within the two-year budget and through some reallocation of resources and
[1:44:47] re-prioritization of projects, they were able to reallocate those resources.
[1:44:55] One of the things that Eric and his staff did, take a deeper look at is the
[1:45:00] 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
[1:45:29] of 26th budget, establish a control systems technician
[1:45:33] program, sorry, position, add a salary range of OU 52
[1:45:38] on the office unit salary schedule, reclassify an existing
[1:45:43] network and security technician position, salary range OU 52
[1:45:48] to a network and security analyst position, salary range SP 65
[1:45:54] on the supervisor, professional and confidential unit,
[1:45:57] 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.
[1:46:27] of the board position for management unit to SPCU,
[1:46:31] salary range SP70, effective upon the position becoming vacant.
[1:46:38] And these were all included in the presentation
[1:46:40] that we gave to you on May 20th.
[1:46:43] So with that, I'm happy to answer any questions.
[1:46:46] Thank you very much.
[1:46:47] And before any questions, can we have a motion?
[1:46:49] And a second, please.
[1:46:51] I'll make the motion.
[1:46:53] Second.
[1:46:53] That's okay.
[1:46:54] Any questions?
[1:46:55] We're Veronica.
[1:46:57] Debbie, sorry.
[1:46:58] Debbie.
[1:46:59] That's okay.
[1:46:59] We look alike.
[1:47:04] It's like looking at a mirror, right?
[1:47:06] Exactly.
[1:47:11] So this doesn't include the JPA, which then doesn't include the pure water project.
[1:47:17] It includes the less virginest or the portion that less virginest will be paying for the
[1:47:25] pure water project.
[1:47:27] On the significant changes for capital projects, these are all just the changes from one project
[1:47:34] to the other.
[1:47:35] They don't include all of the projects.
[1:47:37] But an answer to your question, director Poland, is that the budget does include less virginist
[1:47:43] portion for pure water.
[1:47:48] Thank you.
[1:47:49] That's why it's $153 million and this is a one year, this is a budget from $25 to $26.
[1:47:56] Yes, that is correct.
[1:47:57] It used to be $60, $70 million, so that's the differential.
[1:48:01] That is correct.
[1:48:03] Thank you.
[1:48:08] Anybody else?
[1:48:09] So look at me.
[1:48:10] Yes, go ahead.
[1:48:11] All right, fantastic.
[1:48:13] Seeing that there's no more comments, let's take a vote.
[1:48:16] All those in favor say aye.
[1:48:17] Aye.
[1:48:18] All those against say nay.
[1:48:20] Are there any abstentions?
[1:48:22] Seeing none, moving on.
[1:48:24] Thank you.
[1:48:27] Item D.
[1:48:30] 2025 rate study, cost of service analysis and proposed rates, I believe they call this the main event.
[1:48:36] All right.
[1:48:37] Brian.
[1:48:37] All right.
[1:48:38] The fund continues.
[1:48:43] Okay.
[1:48:50] So today I am here with our consultant, Sanjay Gower, to present to you the 2025 cost of service analysis.
[1:49:01] and proposed rates for 2026 through 2030.
[1:49:06] So today, there will not be an approval of anything.
[1:49:09] It's essentially to give a review of where we're at in the process,
[1:49:13] and to receive any feedback you may have for us.
[1:49:19] So this just gives a brief overview of what's occurred so far.
[1:49:24] So we brought the board policy principles back in November of 2024
[1:49:30] work to set the stage for how we wish to develop these rates.
[1:49:36] We then came back in February and presented a financial plan which took all of the different
[1:49:44] revenue assumptions, expense assumptions, and reflected what we would require for revenues
[1:49:51] to meet those expense assumptions that we had at the time.
[1:49:55] And then we had a cost of service analysis that was recently completed by WRE, who was here today.
[1:50:04] And now here we are today to present to you our proposed rates on 17th.
[1:50:12] Further after that, we're going to have public workshops, so we're going to be meeting with our cities in the district,
[1:50:19] as well as having other outreach related to the rates.
[1:50:24] We're going to be setting a public hearing on August 5th, 2025, and that will to be to present
[1:50:32] the actual rate study at that time.
[1:50:35] And then we're going to be presenting for adoption the actual rates on October 9th, 2025, so in the fall.
[1:50:42] And then the rates would become effective January 1st of 2026.
[1:50:47] and then annually will come back to the board to confirm the rates between 2027 and 2030.
[1:50:54] What that means is we're setting rates at the highest possible, but if circumstances change
[1:51:00] 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.
[1:51:11] Well, previous boards at board actions, so this just gives an outline of what came to the board on November 13th,
[1:51:17] which are our policy principles here.
[1:51:20] The fifth one was actually a new one that wasn't part
[1:51:23] of the previous rate study and this was mentioned also earlier
[1:51:27] in the policy updates where we were proposing rates
[1:51:30] that allow the district to meet a minimum
[1:51:31] debt service coverage ratio of 1.50.
[1:51:38] And also this just gives an overview of what our assumptions were
[1:51:42] that went into the actual revenue requirements analysis
[1:51:46] that was presented to the board on February 18th.
[1:51:50] So our operating expenses, we had capital expense assumptions,
[1:51:54] including our latest 10-year IIP that was approved by the board
[1:51:59] in November.
[1:52:00] We're including fully funded reserves and all of our assumptions.
[1:52:05] And of course, we have that service projections
[1:52:08] that are primarily related to the pure water project.
[1:52:13] Hey, Brian.
[1:52:14] Yes.
[1:52:14] Can you go back to the last slide first?
[1:52:15] Yes.
[1:52:16] This one or the one before?
[1:52:17] The one before?
[1:52:18] Sure.
[1:52:23] I'm just asking the question.
[1:52:25] On number three, with all these lawsuits regarding the budget rates, right?
[1:52:34] Do we want that in there, from the standpoint of a lot of these lawsuits where the rulings
[1:52:44] were that you can have budget rates without a problem but not to, not for conservation purposes
[1:52:51] right. So I don't know if that, does that create any issues having that as a, as a principle?
[1:53:11] I'll try to address that directly being the, the way the course look at this it really becomes
[1:53:18] comes a question of do the rates exceed the cost of service and what is that cost of service?
[1:53:25] So I think every agency has competing demands, right?
[1:53:28] You want to make sure that what you're not overcharging, but we're being forced in some ways
[1:53:34] through other legislation to promote conservation statewide.
[1:53:38] And so to the extent that you can maintain an adequate and prudent reserve and meet your cost
[1:53:45] to service, I don't see a problem into having a policy statement that we're going to promote
[1:53:52] conservation as well. I don't think it can be your sole motivation. I don't think these
[1:53:59] principles support it being the sole motivation, but that'd be my view on it. But as you know,
[1:54:06] there's, wish there were black and white answers to this stuff in the case law because the
[1:54:10] In case the case decisions are sometimes variance, but I think having this saying that it will promote conservation is not an illegal concept.
[1:54:21] Okay, as long as you're comfortable.
[1:54:25] Thank
[1:54:28] you.
[1:54:29] No problem.
[1:54:32] Okay, so, here we go.
[1:54:34] So, also at the previous board, we came to the board with proposed revenue adjustments.
[1:54:42] And so, you can sort of see the impact here in the top column, potable water and sanitation,
[1:54:48] combined impact, 5.5 percent, 2026, then 5, 5, 5, and 4, or combined potable and sanitation
[1:54:58] impact.
[1:55:00] And then, um, Director Lewett, we included in a slide in here that wanted to basically show the impact of the pure water project.
[1:55:12] And so essentially what we have in the top section here is a life without the pure water project.
[1:55:18] 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.
[1:55:27] or we wouldn't need revenue adjustment for those years and the out years it would be about 2%.
[1:55:35] And then on average if you see in that very far right column it's a little under 3%
[1:55:41] over that 10 year horizon there.
[1:55:46] The second section the green section is what we currently have
[1:55:50] with the pure water project that actually reflects our rates as they would be our revenue need sorry
[1:55:55] as they would be. And so you can see if you go across that top column, five and a half, five, five, five, four,
[1:56:03] then if you go all the way to the very end, it's a little under five percent. So 4.6 percent
[1:56:09] over that horizon from 2026 to 2035. So a little under two percent differential there
[1:56:18] between pure water project with or without.
[1:56:21] 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.
[1:56:33] So, Brian, are you saying that the average,
[1:56:40] I understand this, $11.36?
[1:56:44] Yeah, let me explain that.
[1:56:46] So what that's saying is from that $263 in 2026, over to $375 in 2035, that's the increase for an average bill.
[1:56:59] What it's saying is that's $11 per month per year, so month-per-year.
[1:57:06] Per month per year, yeah.
[1:57:08] So can I, so if I understand this, average monthly bill is an ab, what can you, what is this?
[1:57:19] There's some asterisk.
[1:57:20] Yeah, yeah.
[1:57:21] So the average monthly bill were essentially very small asterisks, huh?
[1:57:25] Yeah.
[1:57:25] Yeah.
[1:57:27] Intentionally.
[1:57:28] Intentionally small.
[1:57:28] Nothing to see here.
[1:57:30] No, no, no.
[1:57:31] No work.
[1:57:32] It's just like an abstraction number.
[1:57:34] Are you on besides the screen?
[1:57:35] Oh, this is just in the PowerPoint, yep.
[1:57:39] So we're essentially, as we know, we have various customers that usage and everything
[1:57:44] is different.
[1:57:46] And so we're using our average customer, the amount that's being used as part of this
[1:57:51] study is 29 HCF, 100 cubic feet of water for that customer.
[1:57:58] And so that's what we're facing this off.
[1:58:00] If they use 29 HCF and their landscaping we have a landscaping of, I think the average was 77,600.
[1:58:11] We're taking that into consideration.
[1:58:13] We're sort of plugging it all in.
[1:58:15] That average bill for 2026 would be $263.
[1:58:21] And then if you extrapolate that forward with the revenue adjustments that we're proposing,
[1:58:27] 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.
[1:58:40] So in 10 years it's going from 263 a month to 375 a month?
[1:58:44] Correct.
[1:58:45] And that's because of pure water.
[1:58:47] Well partly, I mean, we have other costs as well.
[1:58:50] The pure water impact is the variance between that top portion.
[1:58:54] So it would have gone from 250 to 307, and now it's going from 263 to 375.
[1:59:01] Okay, and then still the average bill is kind of, I don't know what that means.
[1:59:08] I mean, I like it broken down.
[1:59:11] So if someone, we encourage people to be efficient, whether you have a huge house and
[1:59:16] you can get more water or a small house and you can get less water, we want someone to be efficient.
[1:59:22] So what I'd like to know is if you're efficient and
[1:59:28] what percent is your, so if you're efficient and
[1:59:32] you're efficient in your water bills $100 a month and you're efficient.
[1:59:41] In 2030, what is your bill go to and then in 2036,
[1:59:47] what is your bill go to?
[1:59:49] Let's say it's $100 as a go to, and then if you're
[1:59:52] inefficient and you're a huge water user but you're inefficient where does your bill go to?
[1:59:57] Sure, no that's a great question and we actually have a
[2:00:00] 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
[2:00:29] that impact it has on their bill from 2025 to 2026, which will be, I think, really helpful.
[2:00:35] And then the whole time messaging that this is not our choice, it was regulation driven,
[2:00:40] but also we're going to get 30% more water into our portfolio.
[2:00:46] Absolutely.
[2:00:47] And just one other thing I want to.
[2:00:49] So the revenue needs, we have all of our financial models now got 10 years.
[2:00:54] So the revenue needs financial model goes out 10 years.
[2:00:57] The rate design only goes out five years because the rate design we only do with the rate study.
[2:01:04] So after 2030, the board will give us policy direction and could redistribute those costs differently.
[2:01:11] So to show the difference between now and 2030 is what Sanjay is going to show.
[2:01:17] But then after 2030, they'll be a whole nother rate study, a whole nother rate design.
[2:01:22] And it could change depending on the board and its policy at the time.
[2:01:26] But I think the rates will want to go down.
[2:01:30] I never said that, but I will remind the board that there was a couple times where we
[2:01:39] brought back to the board.
[2:01:41] One was pretty significant where we did not recommend moving forward with the entire
[2:01:46] Prop 218 approved rate increase because we do review it annually and sometimes if we don't
[2:01:53] need it? Well, recommend something lower than the Prop 218 notice, which is the maximum increases.
[2:02:00] Thank you. But I do like this graph, though. I think, you know, it says over the next 10 years,
[2:02:06] without the pure water projects, the average bill would increase by about 50 bucks, and with the
[2:02:11] 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.
[2:02:20] 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.
[2:02:47] I can see where, I mean, I'm a repair myself.
[2:02:53] What were those 10 years ago?
[2:02:56] It just seems very, very, very high.
[2:02:59] So one thing to keep in mind, so we don't add those numbers in that way in an arithmetic sum.
[2:03:05] But I realize you could, but you have to keep in mind that we're not, the cost of money is not the same.
[2:03:11] So we're experiencing inflationary impacts.
[2:03:13] And so you really have to think about that, everything is costing more every year.
[2:03:19] And so I would encourage you to think of it in that term as compared to the effective inflation on utility operations.
[2:03:30] 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.
[2:03:39] And I'm low compared to many other people who use a lot more water.
[2:03:42] 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
[2:03:53] too is the combined the combination of both water and sewer so we're about $70 million that we're financing
[2:04:00] ourselves on the pure water project at this moment if I remember the graph from the other day is that about right
[2:04:06] We had about yeah roughly right so what else can we do is board to find more funding
[2:04:14] 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.
[2:04:34] 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.
[2:04:45] 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.
[2:04:57] I realize I was a little bit ahead, but I'm also questioning what are other water districts
[2:05:03] all throughout the state and certainly in our local area?
[2:05:06] What are their torches going currently and going to be, because I don't really have
[2:05:10] that kind of graph.
[2:05:12] Yeah, and I think that would be, Sanjay can speak to that a bit because Sanjay I'll share
[2:05:16] is doing right studies for many, many different agencies, but I'll also say that it very significantly
[2:05:23] depending on the circumstances, but there's tremendous pressure,
[2:05:28] rate pressure on water rates.
[2:05:31] And this is not something that hasn't received a lot of, you know,
[2:05:36] press, you know, metropolitan San Diego.
[2:05:39] I mean, all of the major water agencies are experiencing the need
[2:05:44] to make significant investments in water because of a changing climate,
[2:05:48] aging infrastructure, and the escalating cost of operations.
[2:05:52] Just one brief question. We mentioned yesterday in the strategic planning that Malibu was very expensive.
[2:05:58] Do you have some idea for what the average number was there when you were mentioning that?
[2:06:02] 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.
[2:06:12] And you will always find District 29 on the far right, which is the highest.
[2:06:17] And it's not even close, as I recall.
[2:06:21] But I also think you need to remember that we are the only district that's being forced
[2:06:27] to put in an AWP, the Peerwater project.
[2:06:30] And so that is the driver of any different, most of the differential in price.
[2:06:37] So we have no choice but to do it.
[2:06:39] I don't know why you would compare against neighboring districts since they are not being
[2:06:43] forced to do it.
[2:06:45] I would imagine that DWP will have quite, for example, a very expensive water due to
[2:06:54] their pure water project, and that was San Diego, as very expensive water due to their
[2:06:57] pure water project.
[2:07:00] So I'm not sure what the benefit would be to compare against another district.
[2:07:06] It might be helpful to go through the presentation and get to San Drays, and then we can see
[2:07:14] see what the impacts would be on customers and in general,
[2:07:18] subject can mention how our proposed increases compared to other water districts in general.
[2:07:23] I think you'll find them very favorable.
[2:07:26] If you look at this chart, for example, I may have inflation averages 3%,
[2:07:30] we're not that much above that.
[2:07:34] And accomplishing water security, diversification,
[2:07:38] replacing age and infrastructure, increased met costs, there's a lot of pressures.
[2:07:43] 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.
[2:07:59] You want to take it on?
[2:08:00] Sure, I will, at this time, turn it over to Sanjay.
[2:08:06] Sorry, one last slide.
[2:08:08] So Sanjay is going to be reviewing the cost of service results, proposed changes to the
[2:08:15] rate structure in the proposed rates of 2026 to 2030.
[2:08:21] And I'll add that, although many other water districts aren't being forced to, and MWD is
[2:08:26] not necessarily being forced to, they're all putting in pure water plants throughout
[2:08:30] California and the whole country.
[2:08:35] Brian, thank you. President, board member, staff and
[2:08:37] public. It's my pleasure to be here to go over the rate study. We have a comprehensive
[2:08:44] presentation. During my presentation, if you have any comments, definitely interrupt me. Let's
[2:08:48] 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
[2:08:53] anyways. So our agenda today is to talk about the rate study process. How do we do this rate studies?
[2:08:58] What are the things we look at? Then we go over the rate structure changes. There is quite a
[2:09:01] bit of changes we are proposing on the water side, so there'll be a last step on me over.
[2:09:08] Through that, the good news is no real change on sanitation recycled, so the heavy lifting is on water.
[2:09:14] 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.
[2:09:21] And then we're going to talk about the impacts of the customers, because that's a really important factor as discussed earlier.
[2:09:26] So we want to really understand what as to do our customers, discussions, and next steps.
[2:09:32] So what's the goal of the study?
[2:09:33] The goal of the study is a couple of fold.
[2:09:35] First, as mentioned, to develop this 10-year financial plan that's non-mentioned.
[2:09:40] And we really look at the financial health of those three enterprises.
[2:09:44] Financial health are always coverage ratios and reserve targets.
[2:09:48] Then we do the cost of service.
[2:09:49] The cost of service is not proportionality as discussed earlier about, what is the cost
[2:09:55] to provide that service to that individual parcel.
[2:09:59] Based on that information, then we can do the proposed rate,
[2:10:02] which is the five year rate schedule.
[2:10:04] We are also going to be looking at capacity fees
[2:10:07] and miscellaneous fees, capacity fees
[2:10:08] are the one-time fee for development to occur.
[2:10:11] Not as much development is happening in our service area,
[2:10:13] but we want to update that.
[2:10:15] Miscellaneous fees are the voluntary fees
[2:10:17] if I'm going somewhere for the summer.
[2:10:19] I want my meter to be shut off.
[2:10:21] How much would that cost?
[2:10:22] We're going to do those two parts of that study
[2:10:24] after we get this major chunk, so we're not going to really talk that much about it today.
[2:10:29] Throughout the process, education outreach, we're going to be doing that very extensive
[2:10:33] over the summer.
[2:10:35] Brian can talk more about that.
[2:10:37] And the next successful rate of adoption is the goal, ultimate goal of the study.
[2:10:42] So the Rates Day process, a couple of fold, first we want to understand the policy framework
[2:10:47] and what are we trying to achieve in our Rates Study.
[2:10:49] Now this is a sense of matter as discussed earlier with Prop 218 and the legal framework.
[2:10:55] So whatever we do, we want to make sure it's cost-bases.
[2:10:59] So if you remember, if you're reading, it took any public policy classes.
[2:11:03] There's the VIN diagram where you have cost of service, the first circle.
[2:11:07] And then you have these different policies.
[2:11:09] And we want to make sure we hit that place where it overlaps.
[2:11:13] So that's how we meet cost of service and conservation programs and
[2:11:18] other goals and objectives.
[2:11:19] We do the financial plan, Excel model that's been developed,
[2:11:23] staff has a copy of that non-proprietary.
[2:11:26] They're going to do the cost of service, which is a proportionality,
[2:11:29] rate design, which we're going to be talking about today.
[2:11:31] And then the next step in our process after today's board meeting is a documentation,
[2:11:36] it's the report.
[2:11:37] The report will be lengthy, it's legal defense, but it shows all the math.
[2:11:41] So if somebody has any question, we recommend that the report is available to the public.
[2:11:46] 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.
[2:11:59] 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.
[2:12:07] So if they have a question or concern, it's an opportunity for them to speak up in the process.
[2:12:12] And that's a new assembly bill that we want to take advantage of.
[2:12:16] And it basically limits the ambulance chasing that has occurred in this service area, unfortunately.
[2:12:23] So there's two concepts I want to make sure we understand.
[2:12:26] Unfortunately, these words get interchanged quite a bit.
[2:12:29] There's financial plan and cost of service.
[2:12:32] Financial plan is really about the revenue adjustment that we use these are really specific word revenue adjustments.
[2:12:37] And it's about how much revenue we need to collect on an annual basis to pay for
[2:12:42] a specific project such as pure water.
[2:12:44] So we're looking at how we're going to fund that, how much cash, how much debt, reserves, coverage ratio.
[2:12:50] The metaphor I like to use is how many pizzas I need to order for Super Bowl Sunday.
[2:12:55] That's the revenue requirement.
[2:12:57] Cost of service is about how do we allocate the cost.
[2:13:01] So we're looking at the business of providing service, looking at your budget,
[2:13:05] We're looking at your customers, how they use the system, and we connect that thought.
[2:13:10] We make a rationality.
[2:13:12] And that's where the judge is and the cost of service, and that's where it gets hits the road.
[2:13:16] Because if we don't have a logic and a rationality, then we're attacks.
[2:13:21] And so we need to show, we're not attacked, we're a fee for service, so we need to show that proportionality.
[2:13:26] And that's what we've done through this analysis, and that's what we'll be documenting after today's board meeting.
[2:13:32] So, the metaphor, again, with the pizza is, do I do single cuts, do I do bigger cuts
[2:13:38] for the pizza, you know, do I make square slices, et cetera, so that's how do we slice
[2:13:43] the pie?
[2:13:46] So, one of the things, as we go through the step, the first step of analysis is, I always
[2:13:50] ask myself, is, where are we with the revenues that we collect that are fixed and variable?
[2:13:56] In the past, as a water community, we've been trying, like, you know, 20 years or 30 years
[2:14:01] We put more of the costs on the variable and less on the fix.
[2:14:05] That achieves our objectives, but exposed us to droughts and decrease in demand.
[2:14:11] And we saw that happen to us.
[2:14:13] And you heard that story about when droughts occur, customers complain, you asked me to cut back and my bill goes up.
[2:14:19] And so as an agency, we want to over time increase our fixed charge because it actually helps our customers.
[2:14:25] There is a short term cost, but in the long term, it's better financial resiliency.
[2:14:30] And that's where we're trying to achieve.
[2:14:31] And we're trying to also change the mindset that we are providing a service, not a commodity.
[2:14:37] So currently you collect 70% of your costs or fix.
[2:14:40] And if we look at your fixed costs, you're only collecting 50%, ideally we collect more.
[2:14:45] And that's what we're trying to, that's what our objective of the study.
[2:14:48] One of the things we've noticed when we went through our analysis is that you do have a fixed
[2:14:52] cost by metropolitan water district, readiness to serve charge.
[2:14:56] And it makes sense for that charge to be a fixed charge.
[2:14:59] some metrics.
[2:15:00] Pallot in charge of that. You as a fixed charge. That's also charged that to the customer,
[2:15:04] but to the Paul tenant, and this to it on meter size, by doing that, we slightly increase
[2:15:08] the fixed charge. Now we're covering 60% of our fixed cost and that helps with that financial
[2:15:14] resiliency. You know, one could argue that maybe we shouldn't go more aggressive, and while
[2:15:19] that makes sense, there is also a balance act of affordability. So we feel like this is
[2:15:23] the sweet spot here where we have a very simple story to explain to the customers.
[2:15:29] We help with financial resiliency and we still maintain affordability.
[2:15:35] The next one, this is a new charge and this is a private fire lines.
[2:15:39] So one of the things, as you know, when we manage a water system, is we deal with fires, right, unfortunately.
[2:15:46] And, or fortunately, I should say, we're in the sense that we make sure we mitigate it.
[2:15:50] So the system is sized for fire conditions.
[2:15:53] And there's two types of fires, if you think about, there's public fires.
[2:15:56] Those are the public fire hydrants.
[2:15:57] and there's private fires, these are the fire sprinklers.
[2:16:01] So, all these commercial establishments have fire sprinklers
[2:16:04] and there's an idle capacity there needed,
[2:16:07] if needed, if a fire occurs.
[2:16:10] And that capacity you built for them.
[2:16:13] So, what we're trying to do is, is cover that cost.
[2:16:15] So, we're not charging them for a fire.
[2:16:18] You know, we're charging for the capacity
[2:16:20] to have that water available if a fire occurs.
[2:16:25] That's what we're doing.
[2:16:25] And they actually benefit from fire sprinklers because their insurance actually goes down
[2:16:29] when you show that requirement.
[2:16:32] So there is a methodology with developing private fire lines.
[2:16:36] We look at the cost of providing fire service.
[2:16:38] We figure out how much is hydrants, how much are private fire lines.
[2:16:43] We look at the diameters of the meters.
[2:16:45] We develop a ratio based on that and then we develop the cost based on the fire line.
[2:16:51] So it's not a fire meter.
[2:16:52] These individuals don't have meters or a line.
[2:16:54] They're actually the diamond of the lines.
[2:16:56] I'm going to pause there because that's a lot of information and basically it collects $239,000.
[2:17:01] But it will be only on commercial or institutions that have fire sprinklers.
[2:17:08] What about question?
[2:17:10] I was going to say that we, you know, we're not, we have to help out with a wildfire which is not
[2:17:15] sprinklers or hydrants. I guess it's some hydrants, but do we have a cost associated with that?
[2:17:21] 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
[2:17:28] So that's a cost that everyone pays for that's the public benefit of providing fire service
[2:17:32] So those are the
[2:17:34] hydrants and any storage facilities that you have for instantaneous needs. So that's factored into this. Yeah
[2:17:40] 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
[2:17:48] residential construction
[2:17:49] and codes, a house over a certain size required
[2:17:54] to have fire sprinklers.
[2:17:56] Correct.
[2:17:56] So it's going to filter down slowly, but I mean,
[2:18:01] my house is 2,400 square feet.
[2:18:03] I doubt I'll have to need a fire sprinkler system.
[2:18:05] But nevertheless, there's a huge amount.
[2:18:08] So how do you?
[2:18:11] Yes, so don't strip me that cost.
[2:18:12] Correct.
[2:18:13] So those people are upsized.
[2:18:15] Usually, as new development occurs,
[2:18:17] instead of getting a 5-8-3-4-inch meter,
[2:18:19] they'll get a 1-inch meter.
[2:18:20] Yeah, and does anyone want maybe comment on the one inch meter policy of private fire for residential? I can't recall what you
[2:18:33] Sorry, I didn't mean to put anything. Do you want do you want to take the sir?
[2:18:37] Yeah, I could as mentioned I think historically in the past when we do have a
[2:18:43] Need for sprinkler at homes. There is an increase in the meter size
[2:18:48] But there is a larger capacity that that meter can provide.
[2:18:53] More recently we have looked at alternatives as well for new construction.
[2:18:58] And one of the benefits there is we would have the capacity for domestic service could still be maintained through a smaller meter.
[2:19:07] Three quarter inch for example, let's say in the situation with a branched system for providing fire protection in the form of sprinklers.
[2:19:16] So we are we have looked at different opportunities as well that actually benefits our customers and our rate payers
[2:19:23] So they're not paying potentially for a larger capacity fee for water that's not being used
[2:19:30] 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
[2:19:39] Most if not almost all residential has a single service where they branch off their own
[2:19:46] fire sprinkler system. So we're looking at this slide, a new private fire
[2:19:51] line charge. That's typically for your large commercial with six, eight inch
[2:19:55] diameter, separate fire services.
[2:19:59] Yeah, but if you have, let's see, Nathan Hills, how many houses have sprinkler
[2:20:04] systems? I'll bet half of them, close to it, so it's not an insignificant number.
[2:20:14] Yeah, I think agreed, you know, all new homes actually by code are required to have fires
[2:20:18] regardless of the size.
[2:20:20] But I think as Joe pointed out, in the residential market, it's very unusual that you would
[2:20:26] have a separate fire line to the residential property.
[2:20:31] This is something that you see in commercial facilities, you know, you're familiar with seeing
[2:20:37] in the FDC and so I think it's really not a residential issue.
[2:20:44] And right now, so the LV lost purchase is one of the few districts that doesn't have a private line charge.
[2:20:55] So this actually, I think, better puts that charge on those that are benefiting from it.
[2:21:02] because right now, this $203,000, $9,000 is being paid for in part by every single customer.
[2:21:08] So under the philosophy of Prop 218, this is a stronger way to charge those that have
[2:21:18] this service for that service.
[2:21:23] So the next thing I want to talk about is a new case law that just occurred in Kozioch versus
[2:21:30] OTI. This is one of those laws that was discussed a bit earlier today about how the judge did not
[2:21:39] like first using industry numbers. Standard, he wanted the agency to use specific data from
[2:21:46] that billing system, which is what we do, and I used general information. He also didn't like
[2:21:52] the idea of, for just regarding Prop 18 and just focusing on conservation or affordability.
[2:22:00] So our argument is that we can achieve cost of service.
[2:22:04] We can still do that, and achieve these other objectives, but those other objectives can't be the sole priority.
[2:22:09] So we want to make sure everything is cost-bases, but we also want to achieve these different objectives.
[2:22:16] 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.
[2:22:28] and simplify it actually.
[2:22:30] And so we were recommending is a three tiered rate structure
[2:22:33] where all customer class has the same tiers.
[2:22:36] So it sort of simplifies the story of credit right now.
[2:22:38] We have different tiers and different prices.
[2:22:40] This will be a much more easier story to explain to customers
[2:22:44] where tier one is deficient water,
[2:22:46] which is the indoor and outdoor.
[2:22:47] Tier two is 50% above that.
[2:22:50] And then tier three is anything above that amount.
[2:22:53] So it simplifies the story.
[2:22:54] it's consistent with all your customer classes.
[2:22:58] The other thing, so just as with portable rate structure, as I mentioned, we're looking
[2:23:03] at three tiers.
[2:23:04] We're looking at the private fire lines, and the last thing we're looking at is the residential
[2:23:07] indoor budget.
[2:23:09] So residential indoor budget is currently at 55 gallons.
[2:23:12] The state is mandating a new conservation actually already took in place to 47 gallons, so
[2:23:19] we're suggesting that our rate structure water budget takes that into account, and we're assuming
[2:23:23] that that's a reduction in water use that's that will occur.
[2:23:28] So as I mentioned there's a lot of
[2:23:29] changes on water. So my apologies is the last slide on the change and the last one is pure water.
[2:23:35] So as we all know pure water will be coming online in 2029. We want it and it will be taking place
[2:23:41] in the five-year horizon. So we want to take that into account in our study. So what and the thing
[2:23:47] about pure water is two things. One is that you aren't going to receive from metropolitan credit for
[2:23:52] developing that. We want to take that into account in the rate structure. That will reduce
[2:23:57] the cost of purchasing a metropolitan water, which should be reflected in Tier 1. And then
[2:24:01] the cost of pure water should be reflected in higher tiers, Tier 2 and 3. So, we are
[2:24:06] actually looking at the amount of water that pure water will produce, how much will residual
[2:24:11] you have from metropolitan, which will be in Tier 1 and 2. And then Tier 2 and 3 will be the
[2:24:15] remainder of pure water. So, that was also reflected in the rate structure.
[2:24:19] Just a quick question, would we looked at some rates earlier and there was an average rate?
[2:24:24] Would that be in peer 2?
[2:24:26] The average rate customer would be in tier 1.
[2:24:30] So they would benefit from the metropolitan reduction because tier 1 is the budget.
[2:24:35] It's the 29.
[2:24:36] And that example would be 29.
[2:24:39] So on that example that we saw earlier, is that reflected?
[2:24:44] No, because that one didn't have pure water yet.
[2:24:46] So pure water is going to happen in 2029.
[2:24:49] So that was just next year, and I'm going to show you the rate schedule in a second.
[2:24:52] All right.
[2:24:53] So Jay, sorry.
[2:24:54] Yeah.
[2:24:54] I just wanted to make sure that this point was clear.
[2:24:57] So Tier 1 is 100% MWD water.
[2:25:00] Mm-hmm.
[2:25:00] Tier 2, based on our water usage is 29 and 30 is a blend between metropolitan and pure water.
[2:25:08] And then Tier 3 is 100% pure water based on anticipated production.
[2:25:12] Mm-hmm.
[2:25:17] So as I meant, so we, that was the heavy lifting.
[2:25:20] So thank you for your patience, Sarah.
[2:25:21] So recycling, as I mentioned, no change, sanitation, no change.
[2:25:25] 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.
[2:25:34] We're establishing the private fire line, because that's something new.
[2:25:38] We're reducing the indoor budget from 55 to 47.
[2:25:42] We're creating a consistent three tiers for all customer class.
[2:25:45] We are including the pure water in 2029 in Outward and we've also updated the elevation
[2:25:51] surcharge, just some miscellaneous stuff, and as mentioned no change in recycled sanitation.
[2:25:58] So this information is consistent with Brian just showed you that these are the percentages
[2:26:02] that we're looking at.
[2:26:03] So I do want to comment on Director Burns, your comment about the percentage increase, you
[2:26:09] are correct what you're saying in that in California and I work specifically in California.
[2:26:15] 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.
[2:26:29] 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.
[2:26:41] the engine needs to be changed, and there's a lot more cost, a lot more to do it.
[2:26:45] In addition, water use has been reduced, which we think would be a great thing, but as
[2:26:50] we all know, we collect our revenue on the water use.
[2:26:53] So we have a double whammy there, because if just basic math, the denominator, numerator
[2:26:58] has gone up, denominator has gone down, so now we have a double whammy.
[2:27:02] And on top of that, we have also new requirements, so you're forced to do pure water.
[2:27:06] So that's something, other agencies are dealing with PFAS issues, they're dealing with
[2:27:12] other contaminant issues, and then you also have conservation.
[2:27:15] So you have a bunch of factors, unfortunately, that's creating this, in financial world
[2:27:20] we call it the Black Swan, right, in fact, you're creating this fact that we're seeing and
[2:27:24] it's going to be rippling out.
[2:27:26] So as a person of bear of bad news, unfortunately, this ride that we're going through this tidal
[2:27:32] wave of increase will continue. Unfortunately, I'm sorry to say that. And that's just the nature
[2:27:39] of this beast. So that's why it's so important for water agencies to really talk about the
[2:27:44] value you provide in your community. You provide life, right? And so it's really important for
[2:27:50] us to start talking about that more and more and the challenges that we face. Because this
[2:27:55] is going to be a significant challenge. Now, the good news, I do have one good news, is
[2:27:59] is that these percentages increases are mild compared to other agencies.
[2:28:03] So a lot of agencies I'm working with right now are seeing 20%, 30% increase.
[2:28:08] They even have one agency I've been working with, I'll be out there public hearing next week.
[2:28:13] They had rates adopted, but because of the drought and because of other factors, capital costs,
[2:28:18] they had to redo a prop to 18 notice.
[2:28:22] And now they're looking at significant rate increases because of that.
[2:28:25] So, so these are mild compared to a lot of other agencies.
[2:28:29] So that's the good news.
[2:28:30] So that shows stewardship, leadership and stewardship,
[2:28:33] that you've been able to navigate these challenges,
[2:28:35] because what's happened is that we had COVID,
[2:28:37] a lot of agencies did not do rate increase,
[2:28:40] we had reduction in demand,
[2:28:41] and then we had all the inflationary costs that we saw last three years.
[2:28:46] I have one question on what you just went over in the summary.
[2:28:50] Why are the elevation cost allocations going off this?
[2:28:53] is it costing more to punks?
[2:28:57] Okay.
[2:28:58] What was the answer, Dowell?
[2:29:00] Energy.
[2:29:00] Energy and other costs to move the water up higher in elevation.
[2:29:05] And, Dom, when you said, and I remember from something yesterday, I think, even though the allocation
[2:29:11] is pure MWD for tier one and blended, it's not actual water that's that way.
[2:29:17] It's a blend all the time.
[2:29:19] It's just that we're apportioning the cost.
[2:29:21] And I think the consumers need to know that.
[2:29:22] So you are crying brought it up.
[2:29:26] So the quick comment, you know what,
[2:29:27] by some of the places are raising 20%.
[2:29:31] A lot of our city council, you know,
[2:29:33] it's been one of us to, they don't want
[2:29:35] to announce that they go years and years
[2:29:37] without any raises and they realize
[2:29:40] all we have to raise rights.
[2:29:41] So they raise and we've raised
[2:29:42] not a longer avoid that.
[2:29:44] Exactly.
[2:29:44] But you can go back one slide.
[2:29:46] Just we know 55 gallons per day.
[2:29:49] We, we went through lobbying pretty hard
[2:29:52] to have an exception because of our pure water because our pure water rates are based on
[2:29:56] 55 and if we have to have 47 gallons, I think I'll reach...
[2:30:01] 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.
[2:30:30] on when he signed the bill he did in his signing memo called on the Department of Water
[2:30:37] Resources in the State Water Board to prepare a study to evaluate the impacts of the lower
[2:30:43] number, the 42, before it actually is enacted.
[2:30:47] So that study is actually happening.
[2:30:49] A number of our associations including Water Reuse are working on that and we've been following
[2:30:53] it.
[2:30:54] So there's a possibility that before that 42 is enacted, that there could be a
[2:31:00] relook at the number and whether that's actually a realistic and viable number.
[2:31:05] The 47 though, it wasn't really sort of, I would say held up by that.
[2:31:10] It was really the 42 being linked to this study.
[2:31:15] So it's going to go to 47.
[2:31:18] So the 47 has been in place.
[2:31:20] Yeah, it's actually, it's already gone to 47.
[2:31:23] We have an effective January 1st.
[2:31:25] So we have, we have affected all of our pure water numbers based on that.
[2:31:29] We are adjusting those figures, yeah.
[2:31:32] All of our latest projections, so we have two different financial models.
[2:31:37] You know, we have the PFF-1 and the water resource economics ones.
[2:31:41] They are in sync at this time, so they're the same.
[2:31:44] And things based on 47 correct.
[2:31:47] And one thing to keep in mind about this and it's, this is all complex but the law does
[2:31:52] does not require every customer to only use 47 gallons.
[2:31:56] It doesn't actually even require that we ensure that our indoor usage is 47 for all the customers.
[2:32:03] It just means when you develop a budget and they develop a budget for the whole district,
[2:32:08] that they only allocate us for 47 gallons per person per day for the indoor usage.
[2:32:14] So we can have customers that continue to use 55,
[2:32:18] But we'll have to sort of make up the difference in the outdoor usage.
[2:32:23] So there is flexibility around this.
[2:32:27] And it's important to make that point because it doesn't mean we have to tell every customer
[2:32:31] you can only use 47.
[2:32:32] And you know, when you use the 48th gallon, you know, you're going to be sort of cut off.
[2:32:38] Oh, and I'm not talking about being cut off, but we're being charged more for using 48.
[2:32:43] Yeah, they will be higher.
[2:32:45] They will be allocated that in terms of the billing.
[2:32:48] And yes, the Trump administration has removed the two and a half gallon requirement on showers and other areas.
[2:32:54] 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.
[2:33:00] 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.
[2:33:08] And we think that as we're out discussing the proposed rates in the summer, it's an easier message.
[2:33:14] if we could point to something beyond our control like in the state law that ties back
[2:33:21] to what we're proposing to charge.
[2:33:29] So now I'm going to go through a series of tables for my apologies, but this is the
[2:33:34] rates that will be put in a pop to 18 notice.
[2:33:37] So it is important for us to show these rates so for everyone sees it, who sees it later
[2:33:43] on today.
[2:33:44] But what we're showing you is this is the fixed charge raising is to serve by meter size.
[2:33:50] Larger the meter, more instantaneous capacity they have of the system, so more they should pay.
[2:33:55] Most of your customers are three, four, one inch meters.
[2:33:58] The large meters that you see, those are the institutions, landscapes, industries that you may have.
[2:34:06] So they pay a lot more.
[2:34:08] So we have the current rate, we have the proposed rates, and then we have the MWD fixed charge.
[2:34:12] We do know what that is in 2026, and then the out years will be passed on of whatever that is.
[2:34:18] So this is just the first component of the bill, this is the fixed charge.
[2:34:22] The second component of the bill, these are excuse me for commercial, these are the private fire lines.
[2:34:27] These are the new charges that we just mentioned.
[2:34:31] As you can see, they're not necessarily a lot, but because there is, it's just that instantaneous capacity of fire lines.
[2:34:37] So they're not using water, there isn't a maintenance, there is just a line for
[2:34:42] instantaneous capacity for reservoirs, excuse me, or distribution systems.
[2:34:49] Now this is the political rate, this one I want to take a little time to talk about.
[2:34:53] First thing, as we mentioned, we are proposing three tiers.
[2:34:56] These three tiered rates are the same for all customer class, so
[2:35:00] that includes residential, commercial, and irrigation.
[2:35:03] So you'll note that in 2026 and onward, we have the same rate for
[2:35:08] 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.
[2:35:17] That's when we're expecting that project to come online.
[2:35:19] There is a negative number if you notice in tier one and that's that MWD credit that we get for developing the project.
[2:35:27] That's reflected there and then we have tier two and three reflecting the cost of pure water.
[2:35:32] 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.
[2:35:47] Yes.
[2:35:47] Is it a typo of the irrigation Tier 1 efficient is different than residential Tier 1 efficient in the current rates?
[2:35:54] So that's how it is currently.
[2:35:57] In the current rate structure, your current rate structure, you have different rates for commercial, irrigation, and residential.
[2:36:03] And everything else is the same.
[2:36:06] You have a big 69 number.
[2:36:08] The.
[2:36:11] Yeah, five, six, nine is.
[2:36:14] No, so commercial has five, forty for its current.
[2:36:18] 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,
[2:36:28] 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.
[2:36:49] Tier 2 is outdoor efficient, currently outdoor efficient is 569.
[2:36:55] So irrigation does not have indoor, so it just skips to our current tier 2.
[2:37:03] So the irrigation 569 rate is currently the efficient outdoor rate for residential.
[2:37:11] But as Sanjay mentioned, under all the activity that's happened in prop to a team, we're simplifying
[2:37:19] the rate structure, so there's three tiers for everything and all three tiers are going to be the same
[2:37:23] for every classic customer. So that's why it's different now.
[2:37:31] Yeah, so the key point there is
[2:37:32] the rates are the same for the different classes of customer and the current rates are not structured
[2:37:39] that way.
[2:37:43] We're modifying the rate structure because of these case laws. It also from just even without
[2:37:48] the case law, you know, if we just think about this, this is, it makes sense, right? It's easier to explain
[2:37:53] to customers, we're just saying everyone tier one is the same rate, everyone tier two is the same.
[2:37:57] If you're efficient, you're efficient, right?
[2:37:59] Regardless of your commercial or residential irrigation, so they should all pay the same rate.
[2:38:04] And I also highlight the best thing on the slide.
[2:38:07] If you look at residential tier one efficient, the current rate 528th that proposed rate 456.
[2:38:16] So that's able to be accomplished through all the other changes that Sanjay's discussed.
[2:38:29] So there's a lot of changes here, so I'm going to have a slide that shows the actual customer
[2:38:33] impacts in a second.
[2:38:35] So I'll go that about one of the first, this is the recycled customers.
[2:38:39] As mentioned, we're not really making any changes here with the rate structure.
[2:38:43] This is the fixed charge and the variable charge over here.
[2:38:46] We also have the sanitation rate structure.
[2:38:49] Again, no structural changes with the rate structure, these are just the percentage increase
[2:38:53] across the board, and then we have also as requested, we're showing you the usage patterns
[2:39:00] of different customer classes, how much of customers are within their bills, how much
[2:39:06] are outside in the inefficient, how much are excessive.
[2:39:10] As you can see, most customers, roughly 70% of the bills except for commercial are within
[2:39:17] in their budget, and then the inefficient customers
[2:39:20] you can see is more so, and the inefficient is commercial,
[2:39:25] and then the access of is irrigation,
[2:39:27] which is what you typically see in usage.
[2:39:30] How do we have 171,000 residential bills?
[2:39:37] So you're multiplying it out by, you know,
[2:39:39] the number of customers times 12 bills per month.
[2:39:44] in a year. Monthly bills in a year.
[2:39:50] We get to the number of customers you just divided by 12.
[2:39:54] The problem is that some people's bills varies, right?
[2:39:58] I could be efficient in one month. I can be excessive in another month.
[2:40:02] I could be inefficient in another month.
[2:40:03] Of course. Yeah, so that's why we wanted to look at it.
[2:40:07] So now I just want to make one comment.
[2:40:10] But based on what you said, it sounds like our new external outreach executive should
[2:40:17] be very much promoting everything about.
[2:40:21] That's much of what the material you've provided and we should be doing a great amount
[2:40:26] of outreach to explain what's going on and comparison to other Beverly Hills and Gross Point
[2:40:33] Michigan and other places that have the same kind of neighbors and repairs that we have
[2:40:38] here.
[2:40:42] So this is, in some sense, the most important slide that I'm going to be talking about today.
[2:40:50] And this is the customer impact with a water and sanitation bill together.
[2:40:56] This is for a three-fourth inch, one-inch meter.
[2:40:59] This is an individual that uses that 29 as Brian talked about, that water budget, they're
[2:41:04] on their budget.
[2:41:05] They have three people in their household.
[2:41:06] So currently the total bill is $267.20, if they're efficient, now the bill will actually
[2:41:14] drop by $3.71 or 1% reduction.
[2:41:18] And that's with everything that we've talked about.
[2:41:20] Of course, there are some customers who will see more of an increase.
[2:41:24] So if you look at the inefficient customer, this is the person that uses 36 units, their
[2:41:30] bill is currently $312.77, they will go up by $317.25. So they do see almost a $4.50 increase.
[2:41:40] And if you're very inefficient using 51, $420.29 currently now it's $442.04. So that's
[2:41:49] a $21.75 increase in that person's bill. That's a 5% increase. So there are going to be winners
[2:41:57] There's in losers as we change the water rate structure, as we talked about, there's a lot of changes there.
[2:42:03] But those customers that are efficient, and we'll see a benefit of this proposed rate structure.
[2:42:16] 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.
[2:42:23] Let's do the next steps.
[2:42:25] Okay, next steps?
[2:42:26] This really quick, the two issues I always struggle with is the weather because if it's
[2:42:33] really hot it's going to be different than if it's, I know that the budget-based reds
[2:42:38] takes into account weather but that's always the variable if it's the heat and the heat
[2:42:44] and the heat.
[2:42:44] People don't change their sprinklers when it's hot and keep it low if it's cool they keep
[2:42:50] it low water because it's, you know, people do it manually and they're not really on top
[2:42:55] of it. So that's just one thing that I guess everyone has to
[2:42:59] struggle. Correct. But I guess with all of the
[2:43:03] rachios and all of the work that Craig has done, we should
[2:43:07] be able to influence that because the rachios changes things
[2:43:10] automatically as it's hotter and cooler.
[2:43:13] It's not necessarily that accurate but it does make a
[2:43:16] difference and we should be promoting that as well considering
[2:43:19] we give it practically for free. Right, I think there's so
[2:43:22] So there's a couple of thoughts that I have.
[2:43:24] So over the last 10 years, the board, your board, has made several decisions that have
[2:43:33] made us more financially resilient and less dependent on how much water we sell.
[2:43:37] So Sanjay addressed part of that from increasing our fixed cost when Dave and I started here.
[2:43:44] Yeah, the fixed cost was recovering very microscopic portion of our fixed fees.
[2:43:49] So that gets to the waters of service, and you have to pay for the reliability of that service.
[2:43:55] The budget-based rates in our, also takes an account, weather, and factors like Director Lewett mentioned.
[2:44:04] The fact that our costs go down as water sales go down, because a large portion of our budget is based on purchase water.
[2:44:13] So that also makes us financially resilient.
[2:44:15] And so unlike numerous other water districts during drought or heavy rain because they both have the same effect on the on the budget
[2:44:23] We've never had to and institute cuts. We've never had to institute
[2:44:29] 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
[2:44:37] financial rates more
[2:44:41] Resilient
[2:44:41] So,
[2:44:47] I'll hold on a second, we skipped over something quite early, which was, I was learning
[2:44:54] about the anticipated tier 3 rates.
[2:45:01] 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.
[2:45:18] 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.
[2:45:32] uses? No, I wouldn't say that because that would be a cross subsidy and that would violate
[2:45:38] Prop. 18. I would say that we're just allocating the cost of providing that service to our
[2:45:44] tier 3 to how much it costs. So tier 3, there's a first tier 1 benefit. You do have some other
[2:45:52] sources of revenue. You have what we call in our terminology, we call revenue offsets, but
[2:45:58] but that's like property tax, non-rate revenue.
[2:46:02] So all that money that you do generate or receive,
[2:46:07] I should say, goes to tier one.
[2:46:08] So everyone benefits from it.
[2:46:10] So everyone who goes, even if you're in tier three,
[2:46:13] you go through tier one first, right?
[2:46:14] So that's the property tax that you receive,
[2:46:17] that's the non-rate revenue.
[2:46:18] Then tier two and three reflects the cost
[2:46:21] of conservation programs.
[2:46:23] So those individuals that want to be in tier three,
[2:46:27] That's a choice right it's a financial choice. I choose to be there with my bill. I can do that
[2:46:33] Then I'm paying also for services associated with conservation programs and the district provides conservation programs
[2:46:40] Those individuals they tried to help them get out of tier three. Um, maybe they don't want to get out tier three
[2:46:46] That's a choice or in case somebody has a large piece of property. Well the water, but
[2:46:51] the GTF, you have the factors and all that, but still the award demand.
[2:46:57] Yeah, I mean, the water budget should take into account the landscape area, where someone
[2:47:02] may be interested is like, for whatever reason, they just love to change their pool water
[2:47:07] every month.
[2:47:09] Let's just, you know, it's a little bit extreme.
[2:47:10] That's agreed you so far.
[2:47:11] Yeah, but everyone, you know, that's the great thing about being in America, right?
[2:47:16] It's all right.
[2:47:16] And so you can do that if you want to.
[2:47:18] You can get mostly, get your water.
[2:47:19] You can get your, we'll get you the water, but you'll have to pay for it.
[2:47:22] So,
[2:47:27] I just have a question, did you, are you done?
[2:47:31] Yes.
[2:47:32] So, thank you.
[2:47:33] We don't really touch much on commercial, but I see the rates are the same,
[2:47:36] and I would assume that most commercial businesses do not really focus very much on economy,
[2:47:45] and they just use whatever water they need.
[2:47:48] Is there a reason for not charging commercial units more, or the fact that their rates are going
[2:47:52] to go up to which is not necessarily great for business and so let me address our quick
[2:47:57] and then if we get to the next step slightly. So you may recall in our previous discussions
[2:48:04] and one of the concepts of prop to ATN is everything has to be proportional. So under reflecting
[2:48:10] prop to ATN and all the recent decisions we have to have the same rates for each class
[2:48:17] a customer.
[2:48:23] So on the proposed rates, we'll see commercial irrigation and residential
[2:48:27] all the rates are the same under our proposed rates.
[2:48:35] So currently there's different factors
[2:48:37] that went into different issues. So if we could get, so let's halt the next step slide.
[2:48:45] So
[2:48:47] 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
[2:48:56] start developing an administrative record and that's a lengthy document that basically we have this
[2:49:02] Excel model on steroids you can some sense think of and we're gonna put in a document so that someone can
[2:49:09] actually follow the map we don't want to have any black boxes or steps so we can actually see
[2:49:14] how the rates were derived and that's sort of the requirement of Prop. 18. It also helps with transparency.
[2:49:20] It also gives opportunity for your customers to read the document and provide comments.
[2:49:26] 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.
[2:49:34] 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.
[2:49:43] We would send out the nail notice on April 5th, public outreach, August 5th, thank you.
[2:49:51] And then the public hearing is scheduled for October 9th.
[2:49:57] And is that, I don't know if it's a morning or evening meeting.
[2:50:02] Josie, it's morning, right?
[2:50:04] Morning.
[2:50:04] Morning meeting.
[2:50:05] Same time, 9AM.
[2:50:06] Got it.
[2:50:06] Okay.
[2:50:07] So I can put on my counter.
[2:50:10] Sorry.
[2:50:10] And then after that, we have the capacity fee and miscellaneous fee studies.
[2:50:14] Just want to question one comment, you said, just because they don't respond doesn't mean they're good with the rates.
[2:50:21] They just not responding.
[2:50:22] Yeah, so a couple of takeaways here.
[2:50:25] So during the summer, we're going to have extensive public outreach.
[2:50:28] We already have several things on schedule.
[2:50:31] So myself, Brian, have been working closely with Rickian Steven on the outreach effort.
[2:50:38] As early as later this week, there's going to be a dedicated web page for the proposed
[2:50:43] rate changes, including the calculator that was met mentioned, sorry.
[2:50:49] And just, I mean, overall, as Sanjay mentioned, I think what we're proposing to you accomplishes
[2:50:56] all the policy objectives that the board adopted in November, and we've been able to have
[2:51:02] We have very, we're this carefully, very reasonable increases as
[2:51:08] comparatorica are other agencies with small incremental increases.
[2:51:13] And what we're looking for today is the go ahead to move forward with the public outreach,
[2:51:18] which would include sharing these rates with everyone and basically moving forward with the rates as proposed.
[2:51:26] But you don't have to prove them, but we want to blessing.
[2:51:28] So before you go out in public, I think the message is always a better if you keep it
[2:51:35] really simple and keep us on the same page as you.
[2:51:39] So if someone comes up to us and says I see that your rates are public, what are the
[2:51:44] three reasons why rates went up?
[2:51:46] You want to say inflation?
[2:51:48] I mean, what do you want to say?
[2:51:49] And always coupled with that, we're the low, like we want to see where we are.
[2:51:52] I didn't see on the chart where we are with other water districts even though we're different.
[2:51:56] But mainly like what are the messages that we would say like in the elevator to someone why the rates are going up?
[2:52:03] I think that well I thought we would talk about top two so I give you the top two.
[2:52:08] The top two is reliability and diversification of the water supply.
[2:52:13] And then how do we compare, then what do we talk about comparing to other water districts?
[2:52:18] We have an update chart we're on the, we're not the lowest but
[2:52:22] We're further on the lowest side than the middle or the right side, which is higher.
[2:52:29] resiliency and diversification. Resiliency of water supply and diversification of water supply.
[2:52:34] I agree with Director Lewett, except that I'd like to see the communication page.
[2:52:40] 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.
[2:52:46] And we should put that on email to all of us so we know exactly what to say.
[2:52:49] They should maybe even a little card that we can hand out something that as we're approached and we approach everyone
[2:52:56] This is going to when they see those other top-end rates. There's going to be a lot of complaints
[2:53:01] This is not going to go on
[2:53:05] Reviewed I can assure you I would suggest that we we could share the outreach material with you
[2:53:10] 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
[2:53:20] So that we see it before it's just out there?
[2:53:25] Otherwise we're being surprised by it.
[2:53:27] Yeah, we'll talk internally and figure out the best way to accomplish that.
[2:53:31] Yeah, I think we can do that. I think what I would prefer not to do those is
[2:53:36] to have it approved by the board. It's something normally staff does.
[2:53:39] We can certainly share it. And if there is feedback, we'll do our best to incorporate that.
[2:53:44] So I think that's a reasonable request.
[2:53:46] I agree with the director Burns, we should be able to see it before the surprise, yeah, I don't know.
[2:53:51] Yeah, and I'm confirming that we'll do that.
[2:53:54] 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.
[2:54:02] That was effective, it became effective January of this year.
[2:54:06] And so there are some substantive requirements that the notice has to include the basis for the rates, how they're calculated, et cetera.
[2:54:13] And what that provides is a kind of, you may be familiar with this term exhaustion of administrative remedies
[2:54:19] where you have to work your way through one process before you can go to court.
[2:54:23] And that's what this is designed to do, so that you're going to send out the notices.
[2:54:28] You may get some what are called written objections and you have to respond to those objections.
[2:54:33] And if we do all the, we dot all our eyes and cross the teased with regards to this process,
[2:54:39] Yes, it really limits the amount of people who can challenge the rates post adoption.
[2:54:44] So there will be some, I know you're talking about messaging, but there's also some statutory
[2:54:49] requirements that have to be met in the notice that will be included as well.
[2:54:53] And Steven, I respect that.
[2:54:55] That's obviously important.
[2:54:57] Fantastic.
[2:54:58] So is there any more discussion or can we roll on?
[2:55:03] It's like we can roll on.
[2:55:04] Thank you so much.
[2:55:05] Thank you for your time.
[2:55:06] Appreciate it.
[2:55:12] All right, moving on to item 10, non-action items.
[2:55:15] General manager's reports.
[2:55:18] Thank you, Peter.
[2:55:20] So I've got a couple items.
[2:55:21] If you saw me looking at my phone, it was because some information
[2:55:25] is coming in while we're in this meeting.
[2:55:27] And I wanted to share it.
[2:55:30] And I'll start with this afternoon at 1 o'clock.
[2:55:33] We have the City of Burbank coming to visit us.
[2:55:37] That will include the Mayor and Nikki Perez.
[2:55:39] as the City of Burbank is working on a pure water project
[2:55:43] of their own, and actually we're increasingly
[2:55:45] hearing from other cities and water agencies that want
[2:55:48] to come see our pure water demo facility
[2:55:51] and just understand the process that we've gone through.
[2:55:54] So that is happening.
[2:55:55] President Cordesky will be joining us
[2:55:57] along with Director Levine.
[2:55:59] And generally, whenever we have elected officials coming
[2:56:01] to the district, we'll always let the president know
[2:56:05] and include the board.
[2:56:07] And I feel like that's proper protocol.
[2:56:09] also will be doing that this afternoon at 1 o'clock.
[2:56:12] The city of Glendale has actually also expressed a similar
[2:56:15] interest so we'll have that potentially coming in the future.
[2:56:20] We heard I just learned during earlier today the president
[2:56:24] did nominate the commissioner of the Bureau of Reclamation.
[2:56:30] We've been waiting and without a commissioner for quite
[2:56:32] some time since the president took office in January.
[2:56:37] The commissioner is critically important because of all of the activity on the Colorado
[2:56:42] River that needs to be resolved and the individual nominated is Ted Cook.
[2:56:49] Ted is the former head of the Central Arizona project.
[2:56:54] He retired in 2023 and so he's very knowledgeable on water issues and knows the Colorado River,
[2:57:02] River very, very well.
[2:57:04] So he will then be subject to confirmation by the Senate.
[2:57:12] And my, without knowing anything more, I would expect that he would be confirmed.
[2:57:17] But I have not heard that as of yet.
[2:57:21] The other major announcement is that we learned just today also from Anashwab that
[2:57:30] a application that we submitted for Oceanwell to Senator Alex Padilla was included in his
[2:57:40] package for what is called Congressional Directed Spending, which is an earmark.
[2:57:46] So all of our representatives, senators, and representatives in the house, they are allowed
[2:57:53] a certain number of earmark requests for special projects and priorities of their office.
[2:58:01] And the senator picked our project out of many that were submitted to him.
[2:58:06] He is able to submit a total of 40 projects and that would be statewide.
[2:58:10] And so he selected our work with Oceanwell for a $1.1 million essentially grant.
[2:58:17] 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.
[2:58:27] 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.
[2:58:39] It also would be an important element to allow the project to be eligible for other federal funding
[2:58:46] like from the U.S. Bureau of Reclamation, because that funding requires an approved feasibility
[2:58:52] study.
[2:58:54] So really exciting that that happened.
[2:58:56] We're not at the final approval yet, though, it does still need to be included in an appropriations
[2:59:02] bill that is approved by Congress, so that's no small matter.
[2:59:07] But it will be included in the bill, this would be the interior appropriations bill.
[2:59:12] And so assuming that that's not nixed,
[2:59:15] that really exciting step forward for our partnership
[2:59:19] with Oceanwell.
[2:59:21] Number four, yesterday we had our strategic planning meeting.
[2:59:25] Thank you for the engagement on that.
[2:59:27] Sorry, it was, the audio was a little bit difficult
[2:59:30] to hear in there, but we always try to pick
[2:59:32] a different venue and I like that we do that.
[2:59:36] But I think we'll look at other locations
[2:59:39] where we can hear each other a little bit better.
[2:59:42] I think that is important, but what I wanted to speak to is we talked about the Irvine
[2:59:49] Ranch water district proposal for water banking.
[2:59:53] I shared quite a bit with you.
[2:59:55] I know it was a lot.
[2:59:56] Irvine Ranch was actually on standby in the...
[3:00:00] 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.
[3:00:28] So, me, some of the directors from Irvine Ranch Water District, and you'll have an opportunity
[3:00:33] to talk with them, and also go up there and meet their partners in Rosedale Real Bravo
[3:00:38] who actually operate the water bank.
[3:00:40] I did this years ago when I was working for Irvine Ranch.
[3:00:44] I think you know I worked there before, and I made that trip, and it was really, really
[3:00:50] helpful for me so that you can kind of visualize what's actually happening, and it's not just
[3:00:55] There's sort of a complicated series of boxes and arrows on a paper.
[3:01:01] They did suggest that the week of June 30th would be good for them.
[3:01:06] They have to kind of arrange a fair amount on their side.
[3:01:09] I looked at the calendar and we have a regular LV board meeting on July 1st, that's at Tuesday.
[3:01:17] So one idea just throwing out there and subject to your availability, we could make it a special
[3:01:24] board meeting of sorts and include a trip up there to go look at the water
[3:01:29] bank. So I'll just throw that out there and if you are able to look at your
[3:01:35] calendars and perhaps let me or Josie know if that might work if it doesn't
[3:01:39] will look for another date. This is a one-day trip? This would be a one-day trip, yeah.
[3:01:44] Why do you think July 2nd? July 1st. It's a Tuesday. Works for me.
[3:01:50] How far is it from here?
[3:01:52] It's probably, so it's in Kern, County.
[3:01:56] It's probably, let's see, it's a couple hour drive.
[3:02:00] It's probably about a two hour drive.
[3:02:02] So me here, me here in the morning,
[3:02:03] and then like a whole day thing.
[3:02:05] Yeah, I'm not starting a bigger field, right, itself.
[3:02:07] Yeah, it's South of Bakersfield.
[3:02:10] And this time of the year, it'd be wonderfully cool.
[3:02:12] Yeah, it'd be nice and cool.
[3:02:14] We might want to get an early start to do it
[3:02:17] And what we would do is arrange a van and transportation and the concept would be it'd be
[3:02:25] two part.
[3:02:25] You'd actually go to see the actual recharge facilities, the canals, the pumps and everything.
[3:02:32] And then we'd probably go into the office of Rosedale Rio Bravo where we'd have a bit
[3:02:37] of an orientation, meet and greet and talk through it.
[3:02:42] And they could also explain, you know, sort of how it all works and kind of put all the
[3:02:47] pieces together. So two parts, kind of an outside part, and then a briefing inside. And
[3:02:53] I'm not sure which order makes more sense. Maybe the briefing first, and then the outdoor
[3:02:58] part. But we'll kind of think through that and plan it.
[3:03:02] So have no meeting July 1st. We don't need a meeting July 1st.
[3:03:05] So I would like to circle back with Josie and the team just to see what we have on the agenda
[3:03:12] forecast to make sure that we don't... There's probably items on there that we need
[3:03:17] need to work on and we can look at that, but we'll figure out a plan and if it doesn't
[3:03:22] sound like I'm hearing anyone has a conflict that's jumping out at you.
[3:03:26] It's just a short read, which is a life work.
[3:03:29] Yeah.
[3:03:29] It's just a business.
[3:03:30] All I mean, Tuesday, we've got better on the 8th, but I don't know what it is.
[3:03:34] Yeah, I know.
[3:03:34] It's on the 8th.
[3:03:35] Do you have meetings on the 8th?
[3:03:37] I'm out of time, too.
[3:03:38] I'm out of time.
[3:03:39] We'll met you probably.
[3:03:41] The second short week is good, no one works the week.
[3:03:44] No.
[3:03:47] Dave, I'll just mention the agenda is very light.
[3:03:50] There's handful of consent items and one formal item as of right now.
[3:03:56] Yeah, that would be great if we can do that.
[3:03:58] Yeah, that would be great.
[3:03:59] Adjust.
[3:04:01] Yeah, because I have an appointment in the afternoon on the first.
[3:04:04] I can reschedule.
[3:04:05] I just need to know.
[3:04:06] Yeah, let's do it.
[3:04:06] Looks good.
[3:04:07] Yeah.
[3:04:08] Yeah.
[3:04:08] I think this will be really beneficial.
[3:04:11] Even if we decide not, we decide not to pursue this, it will be very educational for all
[3:04:18] of us and help develop some partnerships that we don't really have.
[3:04:22] And Irvine Ranch can go with this or no?
[3:04:24] Yeah, they're going to host us.
[3:04:25] They'll host us.
[3:04:26] So they will go, several of their directors will attend and they will include some of the
[3:04:33] directors from Rosedale Real Bravo, who are really the banking partners and they're, I
[3:04:38] would say, very sophisticated in.
[3:04:40] And in my lighthearted way, if we're going to go up there, I request that we have some
[3:04:46] security since we're going to a bank.
[3:04:55] So then just one final item, an announcement that we have completed the recruitment and
[3:05:00] selection process for our director of finance and technology, and we've selected Brian Rich.
[3:05:13] That
[3:05:17] concludes my report.
[3:05:18] Any questions or comments for the general manager?
[3:05:22] Seeing none, let's move on to item 10B, which is Director's comments and reports on
[3:05:27] outside meetings.
[3:05:28] Why don't we start with Mr. Burns when
[3:05:36] we start with Randy?
[3:05:37] I have no comments, Mr. Paul.
[3:05:43] Well, I wanted to comment on yesterday's meeting that we had the Strategic Planning Committee
[3:05:49] meet the strategic meeting and the observation that the complications of our position have
[3:05:59] increased enormously due to the pure water and just life in general, ocean well, and all
[3:06:04] these.
[3:06:05] I just thought the idea of another whole JPA and we had just modified our existing JPA
[3:06:14] and we found out a complicated process in order to put the pure water project in place.
[3:06:19] And I remember all the discussions and long thought process that went into it.
[3:06:25] So this is going to be a challenging year for sure.
[3:06:30] I just wanted to pass that comment, won't everybody let them know that we're aware of the complexity that's facing us.
[3:06:40] So, yeah, so thank you, and so, yes, as Jay mentioned, Don and Jay and I went up to Sacramento last week.
[3:06:48] And we lobbied for the Governor's trailer bill, which once again,
[3:06:52] And the trailer build doesn't green light the DCP, the Delta Kavans project.
[3:07:00] It merely enables more efficiently to study whether the project is going to be worthwhile
[3:07:08] for the stakeholders.
[3:07:10] And so once that study is done, then the stakeholders can decide whether or not they want to proceed
[3:07:15] with the DCP, with the Delta Kavans project.
[3:07:20] In addition to, so the three of us were in a group.
[3:07:25] We also had Caiagus with us.
[3:07:30] So Raoul was with us and Charlotte was with us.
[3:07:32] As Jay mentioned, we had a gentleman from groundswell with us for one or two of the meetings.
[3:07:38] And we had a union representative as well, an engineering union representative with us
[3:07:45] as well.
[3:07:45] 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.
[3:08:06] We all discussed how many people we represented and how important was to everybody that we represented.
[3:08:11] And I think we really did help, I think it really did help and I think the fact that
[3:08:17] we had that many people was really beneficial.
[3:08:21] One of the issues that we have to deal with is that there are a lot of people that are
[3:08:30] complaining about it and it really is the people, the really is the people for whom the Delta
[3:08:36] is in their backyard. They think it's going to destroy the entire environment of the Delta.
[3:08:46] Unfortunately, because that's so physically, so far away from us, and probably, you know,
[3:08:52] mentally as well, our electives down here don't often hear their constituents advocate for this
[3:09:00] project and so it puts us in a bit of a bad position to be honest, you know, we don't
[3:09:08] have a position of strength and I'm not sure how to activate our local constituents
[3:09:14] to contact their electives but I think it's important, I don't know how we can, if we can
[3:09:22] do it even with just really need three or four people from our last versionist to call and
[3:09:28] to call any of our electeds and it would be helpful to them and to us but I'm not sure
[3:09:37] how to actually make that work.
[3:09:40] Yeah, just to piggyback on that, the Delta folks, it's probably their number one issue
[3:09:46] of all their issues and down here I don't know if it cracks the top 20 in Southern California.
[3:09:52] People think their water comes from their faucet.
[3:09:54] As my role as the Met Legislative Chair, and I've only been this role for a couple of months,
[3:10:00] but what I think is there's 26 met member agencies in Southern California.
[3:10:05] And every met director I've met is really close to their elected in Sacramento.
[3:10:09] And on the flight, actually, I was on the plane next to the Summary Men's Shults who came to our pure water event.
[3:10:16] And he was, I sat next to him, and he's good friends with Marsha Ramos, because he was a met director.
[3:10:20] And they served on the Burbank City Council.
[3:10:23] So they're very good friends and he said to me if Marsha didn't want to be a met director
[3:10:27] he didn't know what he would do to replace her.
[3:10:30] But it's everyone I met that I know has really close relationships with their electives,
[3:10:34] multiple electives.
[3:10:35] And so we're not really using those relationships.
[3:10:38] So what I want to do is get the met board members and the met member agencies like they would
[3:10:44] come to us and they would say you're responsible for these five electives and just maybe it's
[3:10:48] every couple of months meeting with them either down here in the district or up in Sacramento
[3:10:53] on these issues and letting them know about the water issues.
[3:10:56] We don't do a good enough job in the water community advocating on our issues.
[3:10:59] And then when we need to have something to help us, we're not, we don't have the, there's
[3:11:04] a Senator Jerry McNerney up there who's very vocal and he, he, they hear about him and his
[3:11:12] Delta conveying how he's against the Delta conveying project all the time but they don't hear
[3:11:15] everything from us, so it doesn't cost anything to trade their vote on this project.
[3:11:21] So I think we need to do a better job, and that's one of my main goals to engage our,
[3:11:27] we have the relationship, just leverage them and use them, so hopefully we can make a change there.
[3:11:33] And then yesterday, you got to go to the Resiliency Summit for LA County, the LA County water plan.
[3:11:39] And first of all, it was only the second time they've had this summit and was done at the public works in Alhambra,
[3:11:45] California, I think to Craig Jones for driving us and actually drove the first mayor of
[3:11:52] Agura and the former state center friend Pavley in the car along with Gary Burns and
[3:11:55] Director Cordesky and myself.
[3:11:57] And while we're there, I mean it was a who's who of LA County, the two city council members
[3:12:02] of Malibu and Lindsey Horbath was the one who was hosting it and she was there of course.
[3:12:07] The chair of Metropolitan was there, other members of Metropolitan board members and staff
[3:12:14] And so it was really like a great, and of course, our
[3:12:18] General Manager, Dave Peterson, on the center stage,
[3:12:20] talking about how lost Virginess has been through some major,
[3:12:24] major crisis in water and fires and droughts and came
[3:12:28] through unscathed pretty much.
[3:12:32] I mean, charred and burnt, but unscathed and telling our story,
[3:12:37] which is a great story.
[3:12:38] And we were the continue to be leaders in the water
[3:12:43] our community. So it was just nice to see and sorry we were a little tardy for the strategic
[3:12:50] planning. And also, yeah, I think next time we pick a room, we had a room once in West
[3:12:54] Lake. It was perfect. So we can just pick rooms ahead at times. I'm going to do the due diligence
[3:12:58] and check out the range of acoustics. I think acoustics, I think the air conditioning was behind
[3:13:05] us in very loud. And if we can't find one, I'm okay doing it here. I mean, because we can
[3:13:10] We need to set up tables here if you want more of a dialogue.
[3:13:13] 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.
[3:13:20] Yeah, fantastic.
[3:13:21] All right, moving on, item number seven feature.
[3:13:24] I have one more question which came up this point in time.
[3:13:28] How long we talked about the governor as authorizing it in the trailer bill, a study of the DCP.
[3:13:38] Is there any time frame given for that?
[3:13:41] No, there's not.
[3:13:44] No, there's not.
[3:13:45] I think it was discussed a little bit.
[3:13:49] I mean, it could be years if it's not streamlined.
[3:13:53] Maybe years.
[3:13:54] Anyway, even if it is streamlined, but I mean,
[3:13:57] it's better to have a streamlined than not.
[3:14:01] I mean, what?
[3:14:02] Just coming from Metropolitan.
[3:14:04] There's 27 state contractors.
[3:14:06] There's metropolitan's the largest, and I think it could be safely said that the Delta
[3:14:10] conveyance project, if metropolitan's not involved, it probably doesn't happen.
[3:14:14] It doesn't happen, and if we can't get this trailer bill streamlined, I don't know if
[3:14:20] metropolitan can make a decision to go forward, I don't think, by 27.
[3:14:24] I think, I mean, it always comes up since the peripheral canals and Governor Brown,
[3:14:30] the father.
[3:14:31] So might come back in another iteration, but it might not be in our lifetimes.
[3:14:34] All
[3:14:37] right, so Gary, I think you've gathered your thoughts?
[3:14:39] Yes, now I needed to update what I had done.
[3:14:42] So I've attended two more AWA webinars.
[3:14:47] One on PFAS, that was really interesting.
[3:14:49] Someone's come up with a technique
[3:14:51] to put a chemical in the water and actually dissolve the PFAS.
[3:14:56] This was very interesting, and what's really interesting
[3:14:58] is, really,
[3:15:00] 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.
[3:15:28] No, I vote.
[3:15:32] I vote.
[3:15:32] Excellent.
[3:15:33] Thank you, Gary.
[3:15:33] Oh, and what I got out of yesterday, which I didn't hear either of you say, was the fact
[3:15:38] that we're going to all coordinate more between the agencies and the districts.
[3:15:43] I thought that was where Dave, your presentation was and Lindsay's and all of that was really
[3:15:49] that everybody wanted to communicate because we're all in the same situation together and
[3:15:54] And the fact that streets and water stop at certain county boundaries is foolish.
[3:16:01] It's the way it's developed, but other than that, it sounds like we're going to coordinate much better.
[3:16:07] I don't know if that's going to help with rates, but we're going to coordinate.
[3:16:12] All right, I think we're good.
[3:16:15] We're all right, we're moving on, we're moving on to item 11, future agenda items.
[3:16:19] Does anybody on the board wish to request a future agenda item?
[3:16:25] seeing and hearing none. Why don't we go into Josie five minutes? Fantastic. We're going to close session five minutes.
[3:16:34] All right fantastic. Now let's see the close session is over. It has adjourned and we have a report out from our council.
[3:17:01] Thank you so much and it's 12.38 for whoever's counting.