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The analysis of costs and outcomes with direct well intake. What about reuse, reclamation alternatives? Have serious studies measured the possibility of these alternatives with far lower carbon footprints? So yes, they have been considered. In fact, as you may or may not know, that South Coast Water District does have a brackish groundwater well and treatment plant. And we are permitted.

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to pull up to 1300 acre feet a year from the San Juan Basin, which is a subterranean stream,

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not a full groundwater aquifer. So that's why we're limited to 1300 acre feet a year.

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We already have the capacity and have pulled about approximately 1150 acre feet a year.

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So we've gotten pretty close to that.

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We've looked at additional brackish groundwater wells through the EIR process that was adopted

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in 2019.

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We also looked at this in the slant well workshop and our South Coast Water District Integrated

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Water Resources Plan.

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We've considered all of, or we've considered these alternatives in passport meetings and

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workshops, but tonight we're going to dedicate this to the financial analysis. But you're welcome

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and we can provide the links to the information that I referenced above. In addition, on water

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reuse and reclamation alternatives, this district has been a leader in water recycling since

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since the 1980s, and in fact, we're recycling about 900 acre feet a year with a goal, a target,

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to recycle 1,300 acre feet a year in the future.

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So that, along with practice groundwater and conservation, has been the foundation of

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South Coast Water District prior to looking for these new water supplies such as diesel.

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So, I'm going to go on to number 8.

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Have alternatives to experimental slant wells been adequately considered?

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Why are only slant wells being considered?

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Has there been an independent peer review from someone not also selling slant well technology?

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Am I the only one who feels a little nervous about a new technology that has yet to be tested

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in full production mode, even in Monterey?

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It doesn't seek to require projects to consider alternatives, including a no-build,

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the build diesel with slant wells and see something else, like direct well diesel or reduced reclamation.

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My understanding is that the brackish groundwater, or brackish water pulled from an inland site,

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has far less salinity than ocean water and will have significantly less waste.

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Has this alternative been seriously considered?

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I'm no expert, but doesn't it make sense to draw water from a source closer to the plant,

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where natural materials will be filtering the water and desal should be far less costly?

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The district's response is that this has been fully vetted by district staff,

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I'm sorry, presented to the board, and I did cover a lot of this in the earlier response to

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I'm sorry to do number seven, question number seven above.

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So I'm going to move on to number eight.

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What about impacts on an eroding

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coastline affected by sea level rise?

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Anyone who has visited the Haney Beach recently

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can attest to the severe impacts of the sea level rise

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and coastal erosion.

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Is it a good idea to be tampering with an already fragile

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coastline where when it may be possible to use direct wells

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closer to the plant?

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The response is this was addressed

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in the 2019 EIR. In fact, as part of that, after staff has gone through this fully comprehensive

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analysis, the wells at the county park that we're looking at, and that's the one for those of you

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who are familiar out here that has been newsworthy in terms of the erosion happening there. We reprioritized

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those wells to a much lower priority, obviously, from that. These concepts will also be

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further vetted during the project's Coastal Commission permitting process.

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So moving on to number 10, what about coastal access to a public beach?

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Is it a good idea to be installing slant wells on a public beach at all?

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What happens when a well gets clogged and maintenance is required at the height of the summer season,

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impacting coastal access and enjoyment?

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The response is that planned routine maintenance of the wells will be completed during the off season.

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Maintenance is not anticipated to affect access to the beach at any time, and the well sites

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will be located fully below ground inland from the sandy beach areas.

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Number 11, what about environmental impacts from Brian and chemicals?

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In terms of the Brian and Waste produced by the diesel plant, have sufficient studies

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been done to ensure the Brian plus chemicals used to neutralize acidity, will not in any

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way damaged to prolific sea mammals and fish that populate our coastal waters.

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As they say, dilution is still pollution.

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This is another reason to carefully consider direct inland wells, which will not only protect

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our coastline but produce far less waste and have a lower carbon footprint.

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So the response to that is we are ensuring that we comply with all of the California ocean plan

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requirements and that's it's one sentence there but there's a lot of studies that have gone on

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into that to make sure that we are not causing harm to these mammals and fish that are referenced

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in here and that is covered throughout our permitting documents and that will all be public information

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as well. So that consists of our direct responses to the 11 questions. I'm sorry I went, took a long time to answer that, but I appreciate everyone's patience over.

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President Irkanov, we also have, I believe Tony Nelson is on the phone. I believe Roger Buto is available now, and we have a third request to speak from Wendy Ritterbush.

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Okay, well let's stay with Ms. Nelson. Glad to have her on the phone. Hopefully she caught most of the responses to her written questions.

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Ms. Nelson, you have three minutes to address the board. And if you missed anybody coming on the call now or on this meeting,

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I mean, we determined that Jody will give you a 30-second notice when you have 30 seconds

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left and then when you reach your three minutes, please wrap up your final thought and we'll

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stay with that protocol.

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Thank you.

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Ms. Nelson.

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Can you hear me?

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Yeah, there you go.

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Can you hear me?

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Yes.

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Okay.

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I hate this ring thing.

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Just don't start the timer yet, but this ring thing does not work.

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I tried to open it up on my computer and it doesn't accept computer audio from my Mac.

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I can't see anybody, I can't see any of the materials, it's just annoying, but just put

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that aside.

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I probably need a lot more than three minutes to respond to everything that you said, but

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let me just use my time to focus on two major issues.

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The first one is, I really have concerns about the huge debt that we're taking on.

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We are a little tiny district.

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It's mainly people in Dana Point.

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We are a small town.

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We are all very, very much aware of what happened when there is a much larger project

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that you are all familiar with, which is the TCA Transportation Corridor Agency.

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And at the time when that was contemplated, there were all these wonderful projections that

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talked about how, you know, there would be so many people riding those toll roads that

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they would pay off that debt in 30 years and we turned off the huge debt.

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And we turned, oh no, I'm hearing myself,

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there's something wrong with the audio.

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You sound perfectly good.

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I'll try again.

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No, you sound perfect.

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I'm just hearing myself in the audience, sorry, give me a little bit more time.

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Anyway, my point on the TCA is that they had these wonderful projections.

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Everyone thought the debt would be repaid in 30 years.

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Well, now we're looking at some 50 years for that debt to be repaid.

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And debt that has tripled from what they anticipated in the beginning, they ended up not being able

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to pay their interest.

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They had to capitalize their interest.

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They had to issue these bonds that basically accreted interest onto the principal and made

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made this huge debt for everybody, for the taxpayers of California.

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So, seeing what happened there, I just want the board to be extremely careful.

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You're taking on a huge, huge debt on behalf of all of us, and you'd better be really sure

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that those numbers are correct, that you're not going to come up with all kinds of operational

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problems because that debt service will keep ticking while problems are occurring.

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you're going to have to pay the debt and you can issue revenue bonds, you can use your line of

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credit, but eventually you have to pay the Piper and it's going to, and it's us, you're doing this on

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our behalf. So I want to state just on the record that as a rate payer, as a community advocate, I am so

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extremely uncomfortable with South Coast going alone on this. I really think the project should be

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abandoned, unless you can do it at the regional project, that's my main

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opinion. And then number two on the coast. Okay, I appreciate that you abandoned the

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idea of putting slant wells on tapesterno beach because God knows there's no

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many seconds left. But if you take a walk down Don Haney, especially in the south

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parking lot. The same thing's happening there. It's all one coast, and I'm very, very uncomfortable,

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and I think the Coastal Commission will be uncomfortable, and serve riders should be uncomfortable,

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about doing anything on this beach. If there's any alternative, if there's any other way

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to get that water somewhere else, you know, or in some other method away from the beach, I recommend

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that you do that. I don't know the science behind it, but I just don't like the idea of you digging

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him to our beach. So that's fine at that. Thank you.

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Thank you very much for your comments.

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I saw our general manager taking notes, so I know that we will address those issues if not tonight

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at a further time. All right, Jody, you mentioned two other speakers. I believe Roger Boutot was one

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of the names, is that correct?

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That's correct.

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Okay.

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Mr. Boutot, you have three minutes to address the board.

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I see him on the call.

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Okay.

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How can you hear me?

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Now we can hear you. Go ahead and start.

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First, I want to ask a question for my time starts.

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Why is it that you put Mr. Nelson's PDF

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up on the screen and not clean water now?

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I'll address that.

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Well, we had a staff meeting with our consultants

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and her letter came to the board and came to our general manager.

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And I personally felt that those were relevant questions.

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I know you did submit something.

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Unfortunately, that meeting had started,

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and we didn't have time to address your laundry list of concerns.

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Although they will be in for the record, and we will sift through your letter

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and address that internally, and that is the reason why we addressed her concerns,

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because she made some relevant points that are relevant for this meeting, and that is the

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reasoning. We'll start your three minutes.

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Okay, am I doing fur by that, Mr. Chair, that Claymore and I was comments were not relevant,

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and secondly, could I ask when, when is South Coast Water

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just going to reply to my written comments?

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There's no information that we're not inferring

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that your comments are not valid or your questions are not valid.

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I'm just simply saying that we had a meeting schedule.

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The questions that Miss Nelson supplied to the board

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and to staff in my opinion we're relevant to tonight's meeting and we had

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time to address those. Okay, I can move on. I know when I'm being

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danced. I'm a Marine. I'm a Vietnam veteran. I know when I'm getting

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danced. Okay, once again Roger butto founder and executive director of Clean

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Water Now. We are an NGO watchdog in our 23rd year. The first thing I'd like to

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On this particular conference, I would defy you to please give me one other NGO that

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it has as closely tracked this project since inception 20 years ago.

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There isn't one.

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Clean water now has been a constant, including coming to your board members, your board meetings

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when they were alive.

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So I don't come and I am myself a professional consultant.

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I am also a veteran of the Orange County Water District citizens desalination oversight committee and I did serve on your sustainability committee.

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And let me set the record straight right now. Clean water now, myself, never in spite of what

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your reproductive work is. We never signed off on this desalination project as proposed.

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That we were purported, that we were portrayed as being not only participants on your committee,

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but also supportive of your desalination is false. We are supportive of desalination, but

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that as this board and anyone listening knows,

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there's ocean desalination and there's upstream

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or brackish water desalination.

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Moving on, clean water now would like to state

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for the record that it is ironic that the chair

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who represents the South County Chapter of Surfrider,

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it has been Surfrider's constant at Surfrider corporate,

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their constant position, that desalination is unnecessary

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And clean water now occurs as did coast keepers the only reason your project received any

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acclaim by coast keeper or serve writer was because instead of an open ocean intake you

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have a subterranean or slant well intake.

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Your intake system is just a lesser of evils and as I've already pointed out that slant

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well technology and geosciences advisory work are in a conflict of interest and I'll leave

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you with this, if Surfrider, which was once committed to respecting the beach, truly wanted

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this project, Surfrider corporate, they would chastise or at least restrain this chair from

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supporting this project because this is your 30th second morning.

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Thank you, thank you, Jody. Thank you very much. Thank you for island of civility. So once

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again in conclusion, those listening in on this, we're actually concurring with Coastkeeper

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and serve writer, which is no small irony. That is their corporate positions. We believe

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that a combination of indirect and direct photo-reuse and regional supply, as we put in our submission

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or a paid submission today, suffices, that you went down this cul-de-sac and can't get

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turned around, is your problem, not clean water now. And we will kill this at every point,

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kill

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A real quick question for Mr. Bhutto.

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Clean water now is an NGO.

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What is your EIN number?

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Oh, come on.

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Don't ask me around again.

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Clean water now has never purported or portrayed itself as a non-profit.

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That is a false narrative.

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We are an unincorporated association.

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We never, let me repeat.

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We never told anyone.

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You will not find any literature that we portrayed ourselves as a non-profit.

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it. That is gas lighting. No, it's not gas lighting. It's simply asking a question. And

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you've answered the question before you asked it. I simply asked a question if you have

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an EIN number that's all there is if you don't, you don't, and that's fine. I just want

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that for the record. Is that less than our credibility in your estimation?

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Mr. Butteau, this is not a time for a debate or a dialogue.

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I be feeling well and unarmed band anyway, thank you.

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So thank you for your comments.

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With regard to my position in the Surfrider Foundation, I currently am the vice chairman

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as volunteer.

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here. Long before I was ever elected, spoke with the folks at Surfrider Global Headquarters.

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They said there's absolutely no conflict of interest. At our EIR, for this project,

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a Surfrider headquarters was present. And as was the other organization that you spoke about,

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Both of those organizations did not put up any pushback for this 5MGD project for the record.

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Jody, you mentioned that there was another person wishing to address the board.

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The last request to speak comes from Wendy Ritterbush.

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All right. Mr. Ritterbush, can you unmute and you have three minutes to address the board?

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Can you hear me?

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Yes, I can and I believe the rest of the meeting can as well. Thank you.

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Good evening Mr. President and members of the South Coast Water District Board.

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I'm Wendy Ritterbush on Executive Director of CalD South,

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where statewide organization that educates and communicates the benefits of the increased use of both

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brackish and sea water desalination and salinity management in California.

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We believe that the Doheny Project represents a critical component of Southern California's

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Water Resilience Portfolio to locally diversify to secure and to protect against interruptions

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or hardships in water supply delivery like earthquakes and stubborn droughts.

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Governor Newsom's Water Resilience Portfolio lays out the foundational structure of utilizing

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all the tools in the water supply toolbox including increased conservation and efficiency,

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water and storm water recycling, above ground and groundwater storage, direct

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potable reuse, and desalination. We don't have the luxury of choosing one

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or other types of water supply. It's imperative that it's all of the above where

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locally feasible. And we just like to take a moment to say congratulations to the

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South Coast Water District's Board of Directors, really for demonstrating local

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and regional leadership by being long-term visionaries of the Dohemie Project.

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Now we find ourselves in a difficult and uncomfortable time again with this huge route,

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along with the increasing effects of climate change.

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You have proved exceptionally thoughtful in your analysis and plans for improving

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the water diversification in South Orange County.

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All your local legislators and congressmen support this project and we are proud to join them

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and support the Ford movement of the Duhini project.

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Thank you.

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All right, thank you for your comments, Ms. Ritterbush,

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and turning back to our clerk, Ms. Brennan.

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Do we have anybody else wishing to speak

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or have we received any other correspondence

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from the public regarding tonight's meeting?

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No, the only request to speak

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and no other correspondence.

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Okay. Thank you for that. So that concludes our item C. Oral Communications Public

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Comments. Now we'll move into our new business item, our only item, which is characterized

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in the staff report, which will be delivered by our General Manager, Mr. Rick Chintaka,

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Rick, the floor cheers. All right. Thank you, Mr. President, members

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of the board. And thanks everybody. I'm looking at a lot of faces and names who attended this meeting.

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We really appreciate you spending your valuable time with us tonight. I'll try to get through

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our, my side of the presentation really quickly, but I'm just going to intro the topic. And

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for any of you interested partners or actually everybody, everyone's concerned about diesel and water

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here. There's a good reason why I'm wearing a low husher instead of a suit tonight. One because

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I was lazy to go to my dry cleaner, but more importantly is that I am not a salesman.

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I was one of the worst door-to-door salesmen when I played Little League, you know, selling

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whatever I needed to sell, and my parents could tell you that, and that is why they pointed

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me in the engineering plans and specs direction, but I can tell you one thing when a product

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sells itself, and I'll tell you a quick story. There was a Hawaiian back in the day, a

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Hawaiian Chinese man, who Mr. Ching actually had the best Hawaiian imu kalopig recipe ever

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where we would dig the imu in his backyard, and we would sell that for little league kalopig.

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and that product sold itself. So that was the one time in history. I was a decent salesman.

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So I am not going to stand here and tell you all these glorious things about the project.

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What we're going to do is tell you the facts and some financial options that you're going to see tonight,

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along with the impacts to rate pairs. So, Jody, next slide please. Actually, I don't see the

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here it comes,

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next slide please.

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So this is agenda for tonight's meeting. Basically

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I'm going to give the executive summary and then David Moore, who you heard earlier

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from Clean Energy Capital, will be describing the water cost analysis that he and his firm

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conducted for us. And HF and H who are our financial consultants did look at the impact on

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rates with the results of the water cost analysis.

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So I'm going to go through, my part is basically the need for the project and then the project

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want.

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We're going to cover the rate payer survey that we did.

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And then I'll briefly touch on the financial impacts to the rate payers.

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So next slide please.

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So the first thing we're going to start out is with water reliability and need.

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And I touched on this on my earlier comments.

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The district didn't go straight into ocean water diesel.

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The district since the 1980s had really invested in recycled water here at our district.

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And we actually have a full scale recycle water system that serves the majority of our service area.

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We also invested quite a bit in conservation and we can't take the full credit.

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It's our customers who saved close to 30% during the last drought and have sustained that savings level through today.

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We also are proud of our water loss factor.

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So we have, you know, in the older terms, we're using the 2 to 3% water loss for our district.

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I know they have different terms nowadays, but 2 to 3% loss from our pipes.

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and that's one of the better numbers in the region and it's done on purpose.

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We make the right investments, we have a really solid operations team that identifies issues

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and upcoming issues and we're proud of that.

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We also invested in brackish groundwater as we talked about a little earlier and through

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our groundwater recovery plant and our well at the Stonehill area.

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So I'm going to next slide please.

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I wanted to talk about that because this slide looks, doesn't look all that great in terms

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of our current drinking water supplies.

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You're only going to see two slices of the pie there.

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And for our drinking water, we're roughly 85 to 100 percent dependent on metropolitan water

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on a year-to-year basis, 85 percent when the San Juan subterranean stream is robust in terms

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the hydrology, then we can fully pump the stone hill well and treat that and put that into the

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drinking water supply. However, in dry hydrologies that could go all the way to 0% pumping from that

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groundwater well and where we're 100% dependent on metropolitan. Next slide please.

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So all of you are aware

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in the news right now that we have in the worst negative way the perfect storm. So we have a drought

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throughout the state of California.

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Primarily focused in Northern California because of Southern California's investments in conservation and recycling.

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That's been very helpful along the way, but we have a statewide drought for sure.

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We also have the first shortage declared in the Colorado River Basin, and that happened last month in August.

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And we do have the effect of climate change that we're seeing.

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where the added stress from climate change is resulting in quicker snowfall or snowpack

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melts where more water is wasted and goes out to the ocean rather than conserved.

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So if you have a dense snowpack that melts at a normal level, then you're able to capture

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that water, but we're seeing the effects of climate change recently.

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And I know people talk about the Colorado River basin pretty trivially, but those of us

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in water as all of you on the call here, we know that that has been the overall capacity

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to the Colorado River basin is enormous and we can see that that percentage of storage

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has gone down over the years and it's only going in one direction and that's the wrong

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direction.

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So, something had to be done and they reached a shortage level and here we are, we're in

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the first ever shortage declaration there, next slide please.

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So,

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this defines one of the major reasons why we're embarking, we as the district and

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the board embarking in this ocean water diesel project.

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The figure you see to the left shows the state and the orange x's that you see are the potential

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earthquake, significant earthquake locations, and you've all heard of the risk of Delta-Levy

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failures.

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But basically, the bottom line is metropolitan water district who again serves us approximately 90% of our supply relies on the Northern California water.

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So through the state water project, along with the Colorado River Aqueduct to serve their service area.

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And the water from Northern California provides approximately 50% of their supply.

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So you can imagine if we had a large earthquake and we had Delta failures, we would have a significant reduction in our supply for metropolitan.

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So that's a big risk.

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And we're talking about six months a year, even more, that if something major happened, we would have a significantly reduced supply.

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The exhibit on the right is the more worrisome exhibit to us locally.

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So, I apologize, it's pretty small on the screen, but what you're seeing at the top of the

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Number one, if you will, is the DMR treatment plan. And that's metropolitan's plant in your

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Belinda. And that is basically the treatment plant that serves all of southern Orange County,

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and basically Orange County, but southern Orange County is dependent on the water from the

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DMR treatment plan. And it comes through a couple of feeders to this area. Now, you see the red

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exes in that exhibit. There's basically five significant fault lines between that treatment plant

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and South Orange County. And if one of those treatment or those faults were to sever,

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then we would need to be prepared to serve water in a complete met outage for 60 days.

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And that's the number that I talked about earlier in responding to that question that we in South

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coast water district have about 11 days.

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Most of South Orange County is between 10 and 20 days

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of emergency storage.

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So we're all looking towards solutions.

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And from my standpoint, my personal standpoint,

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I think we're obligated.

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And then we're obligated to look for a solution

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as your water purveyor in this area,

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to make sure that you have a reliable supply

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during an emergency situation.

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And I'll go into a little bit more of that in the next few slides here.

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Next slide, please.

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One back, please.

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Okay.

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So there's a vast difference between North Orange County and South Orange County.

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And I just so happen to be a water manager in both there.

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So I had the privilege of being an engineering manager at the City of Anaheim for 15 years

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before I came here, and I know very well that we had, we basically were reliant on that

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groundwater basin for 75% of our supplies, so they have a very large aquifer and they're

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able to provide about 75% on a year to year, excuse me,

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00:32:16,060 --> 00:32:19,100
on a year to year basis to their agencies.

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And that's basically everywhere in Orange County from the north side to Irvine.

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In fact, we have one in our area and that's called the San Juan groundwater basin, which is not even characterized as a groundwater basin, but it's subterranean stream, so it has significantly less capacity than our North Orange County neighbors.

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So much so that we are 90% dependent on metropolitan water while they are 25% dependent on metropolitan water.

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00:32:57,200 --> 00:32:57,960
Next slide please.

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00:33:01,420 --> 00:33:04,240
So I'm going to talk a little bit about the project here.

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Next slide, sorry.

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So for those who haven't seen this before, here's an aerial view of the project site along with the slant well pod locations.

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This shaded, I guess it's a rectangle in the middle of the screen, is the 10 acre footprint

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that is owned by the district and slated for the full scale decel plan.

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00:33:33,160 --> 00:33:37,920
And that's the up to 15 million gallon per day decel plan.

385
00:33:38,080 --> 00:33:39,740
And that's the one for the future.

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00:33:40,440 --> 00:33:45,460
That's more of the regional project that's the one that I talked about being approved by

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00:33:45,460 --> 00:33:52,860
the programmatic EIR. But we would also house a 5MGD project there as well. So it's

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a significant area that we have dedicated for that. Even to the point where we have

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some of the area reserved for alternative energy and R&D research and development as

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00:34:03,740 --> 00:34:03,900
well.

391
00:34:06,980 --> 00:34:15,820
Excuse me. At this site, we also are located fortunately next to the joint regional

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00:34:15,820 --> 00:34:23,020
water supply system. So this is the regional water system, and it's roughly 35 miles of large

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00:34:23,020 --> 00:34:30,260
diameter transmission main along with two large storage reservoirs that serve the area of

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00:34:30,260 --> 00:34:36,400
serve metropolitan water throughout Irvine, from the Irvine area, I'm sorry, through the northern

395
00:34:40,660 --> 00:34:47,520
So a number of us agencies in South Orange County can't have turnouts from this joint

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00:34:47,520 --> 00:34:52,900
regional water supply system and it just so happens that it is adjacent to our site here.

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So we're able to find a regional solution by putting water there.

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00:34:58,780 --> 00:35:11,180
Another positive aspect of this location is the geology, the sand beneath the ocean where you see the blue lines.

399
00:35:11,400 --> 00:35:14,360
Those are the projected well locations.

400
00:35:16,100 --> 00:35:17,380
Let me back up real quick.

401
00:35:17,760 --> 00:35:20,780
You see on this figure five different pods.

402
00:35:21,880 --> 00:35:25,380
For example, the pod on the right has two blue lines coming out of it.

403
00:35:25,380 --> 00:35:29,140
And so those would be actual wells, two 1,000 foot wells.

404
00:35:29,360 --> 00:35:37,380
It come out from a single pod location, and for the 5MGD project, we do not need all of those blue lines we need about four of them.

405
00:35:39,800 --> 00:35:42,440
Well, the geology in this area is fantastic.

406
00:35:42,820 --> 00:35:45,900
And that's another positive aspect of this site.

407
00:35:46,680 --> 00:35:48,440
You see the red line on the picture.

408
00:35:48,440 --> 00:35:52,400
that is the SOCWA outfall pipe coming from J.B. Latham.

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00:35:52,640 --> 00:35:58,800
So the J.B. Latham treatment plant is located to the left of the shaded area on the figure

410
00:36:00,680 --> 00:36:08,500
and in regards to discharging our salt brine into that outfall, that is the environmental

411
00:36:09,190 --> 00:36:15,320
and regulatory preferred method to get rid of your brine, your brine waste from a diesel project.

412
00:36:16,940 --> 00:36:21,300
And so is the wells, the slant wells that you see in the picture.

413
00:36:21,500 --> 00:36:24,720
And these are fully submerged slant wells for those who aren't familiar with it.

414
00:36:25,320 --> 00:36:30,340
It goes at about a 10 to 12 degree angle beneath the ocean floor.

415
00:36:30,520 --> 00:36:33,080
So it's fully submerged, it never breaches the surface.

416
00:36:34,000 --> 00:36:38,760
And these wells are also the environmental and regulatory preferred approach.

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00:36:40,720 --> 00:36:58,840
which this site also is adjacent to the electrical infrastructure that we need to fully serve the treatment plant and the wells and a high pressure gas lines located nearby if we were to go to an energy alternative such as fuel cells, if you will.

418
00:36:59,900 --> 00:37:00,920
Next slide, please.

419
00:37:06,680 --> 00:37:13,160
So I'm not going to read through all of this, but due diligence was a key component of

420
00:37:14,000 --> 00:37:19,340
the planning process here, and our board has really took a responsible stance on this

421
00:37:19,340 --> 00:37:25,520
and collaboratively the board and staff have developed a number of studies and adjacent agencies

422
00:37:25,520 --> 00:37:30,500
and concerned rate peers have chimed in.

423
00:37:30,760 --> 00:37:35,740
And this is a list of due diligence that we pursued

424
00:37:36,860 --> 00:37:40,840
looking at construction costs again, delivery method assessment.

425
00:37:41,040 --> 00:37:42,120
So that's a big deal.

426
00:37:43,120 --> 00:37:46,700
And we launched our short, we settled on design build operate.

427
00:37:47,420 --> 00:37:51,420
And that is the delivery mechanism that we feel provides the,

428
00:37:51,640 --> 00:37:54,120
minimizes the risk to our rate peers.

429
00:37:54,120 --> 00:38:09,900
And in fact, we've had to go through a legislative fix, SB 1752, a couple of years ago now allowed us to do a design bill to operate delivery and keep state funding.

430
00:38:10,940 --> 00:38:14,860
And that was authored by Petri Norris here.

431
00:38:14,860 --> 00:38:20,240
So, that was successful and it allowed us to keep our $10 million from the state and

432
00:38:20,240 --> 00:38:25,380
allow us to apply for a drinking water state revolving fund loan.

433
00:38:26,380 --> 00:38:32,000
Slantwell risk workshops, so that was brought up to us and we really wanted to look further into the risks of slantwells.

434
00:38:32,520 --> 00:38:38,100
We've done that, we conducted a rate payer survey, I'm going to cover that in a little bit.

435
00:38:38,100 --> 00:38:43,900
I'm looking at alternative power solutions, power solutions that would provide reliability

436
00:38:43,900 --> 00:38:52,300
at the site and would also provide a cost effective long-term power for this project.

437
00:38:53,100 --> 00:39:00,100
We looked at the hydrogeology, theoretically you're sinking wells and 93% of that water

438
00:39:00,100 --> 00:39:05,720
will be taken from the ocean, 7% of that water in theory will be taken from the adjacent

439
00:39:05,720 --> 00:39:12,160
sound one groundwater basin and there are impacts on that and there are impacts on potential

440
00:39:12,160 --> 00:39:16,880
projects that other agencies will be pursuing. So we've been working collaboratively with

441
00:39:16,880 --> 00:39:24,720
the Santa Margarita water district on that and hired a series of or team, I should say, hydrogeologic

442
00:39:24,720 --> 00:39:33,900
experts to help us through that process. We as I indicated earlier, we contracted with DUDEC

443
00:39:33,900 --> 00:39:37,520
who's working with the University of Southern California and

444
00:39:37,520 --> 00:39:41,260
trustal technologies on completing a concept study,

445
00:39:41,660 --> 00:39:45,540
the feasibility study, looking at the pros and cons and concerns.

446
00:39:46,480 --> 00:39:51,260
And other things we would need to know as we embark in a future phase,

447
00:39:51,900 --> 00:39:57,180
which could be blended direct potable reuse and ocean water diesel project.

448
00:39:57,880 --> 00:40:00,200
We looked at configuration options, so

449
00:40:00,200 --> 00:40:04,140
So that's a fancy word for, you know, this is what's actually during the pandemic.

450
00:40:04,440 --> 00:40:06,280
Are there cheaper options to this?

451
00:40:07,260 --> 00:40:09,060
Can we start in a different phased approach?

452
00:40:09,380 --> 00:40:11,820
So we completed that study and presented that to the board.

453
00:40:14,860 --> 00:40:18,260
And last but not least was the Integrated Water Resources Plan.

454
00:40:18,420 --> 00:40:21,260
So that's our roadmap for the future.

455
00:40:21,460 --> 00:40:27,080
And our board, we went through a number of workshops, over half a dozen workshops with our board.

456
00:40:27,580 --> 00:40:36,320
and we ended up with the Integrated Water Resources Plan Portfolio, or D-SAL, or 2MGD of a D-SAL project was

457
00:40:37,100 --> 00:40:39,800
incorporated in that, and I'll go through that as well. So, next slide.

458
00:40:45,260 --> 00:40:46,280
Speaking of which, so I'm

459
00:40:46,280 --> 00:40:52,880
going to go through the Portfolio now. What you're seeing here is a pie chart of our total water

460
00:40:52,880 --> 00:40:59,340
portfolio. So, this total means drinking water and recycled water. The big blue slice of the pie,

461
00:41:00,500 --> 00:41:05,120
75% of our total water supply is metropolitan.

462
00:41:06,220 --> 00:41:11,040
The orange slice, 11% is our groundwater recovery, our brackish groundwater that we

463
00:41:11,040 --> 00:41:15,500
treat, would reverse osmosis and put directly into our drinking water supply.

464
00:41:16,200 --> 00:41:23,100
The 14% purple is the recycled water that we treat at our advanced water treatment facility

465
00:41:23,100 --> 00:41:24,980
and serve throughout our service area.

466
00:41:26,020 --> 00:41:27,660
So that's our current water portfolio.

467
00:41:27,660 --> 00:41:35,160
Now, if you drilled that down into a drinking water portfolio, it's basically only the blue and the orange.

468
00:41:35,720 --> 00:41:44,440
So, it's metropolitan water and local groundwater, and I'm sending that up for the next set of slides.

469
00:41:44,720 --> 00:41:54,900
That's what we're dependent on, but going back to what I was saying, we are 85% to 100% reliant on metropolitan water for drinking water.

470
00:41:54,900 --> 00:42:00,580
So, it doesn't take an advanced planner to know that we cannot conserve that amount.

471
00:42:00,980 --> 00:42:07,000
If we were cut off from metropolitan for 60 days, we cannot conserve that amount and

472
00:42:07,000 --> 00:42:12,420
still live in our houses and our businesses, et cetera, in this service era.

473
00:42:12,980 --> 00:42:16,940
So, that is why, that was a call for us to do something, next slide.

474
00:42:20,110 --> 00:42:24,590
So, this is directly from our Integrated Water Resources Plan.

475
00:42:24,590 --> 00:42:32,350
So in year 2027, this is where we like our portfolio to look like if we follow this path.

476
00:42:33,670 --> 00:42:41,270
So metropolitan, you can see all of a sudden it goes down to 36% of this pie of our total

477
00:42:41,270 --> 00:42:42,610
water supply portfolio.

478
00:42:43,130 --> 00:42:48,990
Now in terms of drinking water, that would bring metropolitan to roughly 44% of our drinking

479
00:42:48,990 --> 00:42:49,470
water.

480
00:42:49,470 --> 00:42:59,170
So during an extreme emergency, if we were fully cut off from metropolitan, to cut 44% is possible.

481
00:42:59,470 --> 00:43:10,710
It is possible. Like I explained earlier, if everybody turned off their irrigation, everybody, then we could cut 50% from our supply and theory.

482
00:43:11,230 --> 00:43:18,050
So, this makes us feel a lot better, and this is where you see the Doheny Ocean DCL

483
00:43:18,050 --> 00:43:22,490
satisfy a portion of our local needs, and that's 37%.

484
00:43:22,490 --> 00:43:27,310
Local groundwater is still in the picture at 11%, recycled water.

485
00:43:27,810 --> 00:43:33,570
We upped the acre feet per year, and it upped the percentage to 15%, that's part of our targets

486
00:43:33,570 --> 00:43:39,770
to maximize recycled water, and you see new water conservation.

487
00:43:39,770 --> 00:43:49,310
So we're not going to rest on our laurels, we're going to keep pushing conservation and our board has directed us to do so in terms of landscape, turf programs,

488
00:43:50,490 --> 00:43:57,110
other type of landscape problems and I'm sorry, landscape rebates and indoor rebates as well.

489
00:43:57,590 --> 00:43:58,110
So next slide.

490
00:44:02,210 --> 00:44:05,650
So this is what our portfolio looks like in year 2035.

491
00:44:06,370 --> 00:44:11,810
And the main difference you see in here is we added the green potential IPR DPR.

492
00:44:11,810 --> 00:44:21,690
So our board has been looking at a partnering with Santa Margarita Water District in their upstream projects.

493
00:44:21,690 --> 00:44:26,750
And one of them that they're really looking at is indirect potable reuse in the San Juan Creek area.

494
00:44:27,110 --> 00:44:29,130
So we're very, very interested in that.

495
00:44:29,290 --> 00:44:33,390
So we wanted to reserve a slice of the pie for that, along with DPR.

496
00:44:33,390 --> 00:44:42,790
And DPR, as I explained earlier, could be used in future phases of this project as a blended direct potable reuse ocean water diesel project.

497
00:44:43,070 --> 00:44:43,630
Next slide, please.

498
00:44:46,310 --> 00:44:55,630
And by the way, that you don't have to go back to it, but by the way, that brings the metropolitan percentage of drinking water supplies down to 30%.

499
00:44:55,630 --> 00:44:59,970
So it's 25% of our total water, 30% of our drinking water.

500
00:45:00,000 --> 00:45:06,840
And we all know that we can conserve that in an emergency. So, that's why we are looking at the diesel project in a nutshell.

501
00:45:09,020 --> 00:45:29,900
So, the 2020 ratepayers survey findings, and I give our board credit manner staff that during June of 2020, you might recall that this pandemic really started in March of 2020. So, a few months after, we put out a ratepayers survey on this diesel

502
00:45:29,900 --> 00:45:37,360
and we surveyed knowing that we're really in a tense time in uncertain period and people would give us

503
00:45:37,360 --> 00:45:41,420
a very honest feedback during the time.

504
00:45:43,890 --> 00:45:44,170
Excuse me.

505
00:45:44,710 --> 00:45:48,930
So we surveyed 400 rate peers throughout the service area.

506
00:45:51,110 --> 00:45:56,230
Developed third-party questions without board and staff input. That was important.

507
00:45:56,490 --> 00:45:58,170
We didn't want to bias this survey.

508
00:46:00,250 --> 00:46:02,090
And next slide please,

509
00:46:05,030 --> 00:46:08,750
and this was, this included, this was part of the results here.

510
00:46:09,610 --> 00:46:16,050
And you see the total, this was, as you can see on the subject title, the sentiment about

511
00:46:16,050 --> 00:46:16,910
doheny decel.

512
00:46:17,290 --> 00:46:19,110
That's a context it was asked in.

513
00:46:19,250 --> 00:46:22,830
So, 74% favored a doheny decel.

514
00:46:23,790 --> 00:46:27,830
15% opposed it, and 11% didn't know.

515
00:46:27,830 --> 00:46:33,570
And it was significant to get this feedback because it was during the pandemic, as I said,

516
00:46:33,770 --> 00:46:36,630
and it was before this drought that we're talking about.

517
00:46:36,970 --> 00:46:42,550
So we didn't have the drought there as a trigger for diesel in these lines of questions.

518
00:46:42,870 --> 00:46:43,690
So next slide, please.

519
00:46:47,150 --> 00:46:54,030
This is a summary, and why I took the time to put this slide in here is, first let me

520
00:46:54,030 --> 00:46:58,890
situate you, on the top row, you see the three different categories.

521
00:46:58,890 --> 00:47:06,910
One was we asked them how they feel about decal or dohini decal with a brief project description only.

522
00:47:07,590 --> 00:47:15,870
Then the second column is after we further educated them of the key components of the dohini ocean decal project, you know, how did they fill there?

523
00:47:16,910 --> 00:47:24,210
And then we injected some critical statements and let me just read some excerpts from the critical statements.

524
00:47:25,210 --> 00:47:32,510
We made an economic argument and therein told them, look, this would lead to increases in your water bill.

525
00:47:33,350 --> 00:47:40,350
You're in the midst of a coronavirus epidemic, which could lead to the long-term economic recession.

526
00:47:41,250 --> 00:47:47,030
This could make it harder for seniors on a fixed income, depending what that increase in the water bill would be.

527
00:47:47,030 --> 00:47:51,850
the middle cap would make it tough for a middle class families and local small business owners.

528
00:47:53,830 --> 00:48:01,890
And by the way, the district could also crack down more on water wasteers and wasteful spending.

529
00:48:02,070 --> 00:48:10,370
So we were putting a lot of these statements to cast doubt on the project, whether we feel it was true for or not.

530
00:48:10,470 --> 00:48:15,030
We wanted to put it out there because there's a lot of things on there that we know we're already doing.

531
00:48:15,030 --> 00:48:17,230
We're already cracking down on the water wasteers.

532
00:48:17,830 --> 00:48:24,390
We're already looking, looking at cost effectiveness of our spending and so on.

533
00:48:24,490 --> 00:48:27,530
We also threw on environmental aspects there and

534
00:48:27,530 --> 00:48:30,530
we put in rather than building a whole new decel facility,

535
00:48:30,950 --> 00:48:43,390
the districts should look at other more reliable environmentally friendly water sources that do not impact our coastal waters such as increasing the use of recycled water for landscaping or just asking residents to be more efficient with their water use.

536
00:48:43,390 --> 00:48:50,670
So we really wanted to interject critical statements and we asked the consultant to come up with with these types of critical statements.

537
00:48:50,970 --> 00:49:01,810
So with the project description, we had a 74% favor rating after more education, it became a 80% and after those critical statements,

538
00:49:01,810 --> 00:49:07,130
it went down to 72% but still in that 70 plus percent range. Next slide, please.

539
00:49:07,130 --> 00:49:08,130
So,

540
00:49:12,290 --> 00:49:17,330
the second main category of questions we asked was willingness to pay, and you can

541
00:49:17,330 --> 00:49:24,510
see here from top to bottom, 78% were willing to pay $5 more per month, 76% to pay $7 or

542
00:49:24,510 --> 00:49:31,570
more, 69% to pay $10 or more per month, and 63% were willing to pay $15 or more,

543
00:49:33,830 --> 00:49:38,390
$50

544
00:49:38,390 --> 00:49:46,030
is if we do a partnered project, and this is the 5MGD project, and I'm going to define that right now for the audience.

545
00:49:46,410 --> 00:49:50,470
You're going to see this throughout, this pepper throughout the presentations of 5MGD project.

546
00:49:52,570 --> 00:49:59,050
Well, that's a total 5MGD project so that we can take advantage of the economies of scale.

547
00:49:59,690 --> 00:50:04,890
But what that means is still South Coast is only going to sign up for 2MGD of that.

548
00:50:04,890 --> 00:50:09,270
So 40% shareholders, if you will, of a 5-MGD project.

549
00:50:09,810 --> 00:50:16,330
So if we took 2-MGD of this partnered project, then our rate impact you're going to see is

550
00:50:16,330 --> 00:50:20,110
slightly more than $2 per month for the average residents.

551
00:50:21,670 --> 00:50:28,030
The second, the lower box that you see there is the 2-MGD standalone project.

552
00:50:28,030 --> 00:50:34,610
So, if we didn't partner and built a 2MGD standalone project for ourselves, the impact

553
00:50:34,610 --> 00:50:38,550
for an average residence would be $7 more per month.

554
00:50:39,330 --> 00:50:39,830
Next slide please.

555
00:50:42,980 --> 00:50:48,200
So, now I'm going to talk about what David Moore and John Farncock are going to talk more

556
00:50:48,200 --> 00:50:50,460
about in terms of the two cost studies.

557
00:50:51,180 --> 00:50:55,120
And one is to evaluate the cost of water and one is to evaluate the rate impacts.

558
00:50:56,400 --> 00:50:57,420
Next slide please.

559
00:50:59,940 --> 00:51:03,340
So you're going to see this in David Moore's presentation, so I'm not going to take too

560
00:51:03,340 --> 00:51:03,880
long with this.

561
00:51:04,060 --> 00:51:12,640
Again, this is a 5-MGD project with South Coast taking a 2-MGD share versus Met Costs.

562
00:51:13,780 --> 00:51:19,900
So what you're seeing on the X-axis are the years.

563
00:51:20,300 --> 00:51:26,140
So we're starting out from year 2021 all the way to 2056 on your figure.

564
00:51:26,140 --> 00:51:32,240
Here, on the Y-axis is your unit cost, your dollar per acre foot cost.

565
00:51:34,860 --> 00:51:40,960
And as David will explain, this project is, we're assuming this project goes online during

566
00:51:40,960 --> 00:51:46,500
fiscal year 2627, so you see a dotted line until project start date.

567
00:51:46,860 --> 00:51:53,060
So in year 2021 dollars, I know he'll explain why we're doing it in 2021 dollars and why

568
00:51:53,060 --> 00:52:00,800
John's looking at it in 20, $27, $26, $27, but in year 2021, you're going to see the

569
00:52:00,800 --> 00:52:08,220
project cost at $14.79 per acre foot, and the metropolitan cost during that same time

570
00:52:08,600 --> 00:52:11,840
at $12.07 per acre foot.

571
00:52:12,440 --> 00:52:18,860
You're going to see two orange met lines, as you see here, one is a met high forecast, which

572
00:52:18,860 --> 00:52:26,220
which is 5% per year, assuming that MET increases at 5% per year, and a MET medium forecast,

573
00:52:26,440 --> 00:52:30,360
which assumes MET increases at 4.2% per year.

574
00:52:31,100 --> 00:52:36,120
And to put this in perspective, MET has been over the last 20 years, increasing at roughly

575
00:52:36,120 --> 00:52:39,760
5.5 or 5.6% per year.

576
00:52:39,760 --> 00:52:50,340
So, we're using between 4.2 and 5% as the comparison met future forecasts, because as many

577
00:52:50,340 --> 00:52:56,840
of you know, this water, this project water would directly replace that amount of metropolitan

578
00:52:56,840 --> 00:52:57,400
water.

579
00:52:57,560 --> 00:53:03,080
So, if we're signed up for 2MGD, that would replace 2MGD of our met cost.

580
00:53:03,080 --> 00:53:13,020
So it would be the total unit cost as you see in here 14.79 per acre foot minus 12.07 per acre foot.

581
00:53:13,180 --> 00:53:18,560
And that's the additional amount that we're paying for this new reliable water supply.

582
00:53:19,200 --> 00:53:19,780
Next slide please.

583
00:53:22,490 --> 00:53:26,170
So this is as 2mgd stand alone and you can see the economies of scale there.

584
00:53:26,310 --> 00:53:31,330
You see the gap widens and David is going to talk a lot more about that during his presentation.

585
00:53:31,550 --> 00:53:32,150
Next slide please.

586
00:53:32,150 --> 00:53:47,940
So, the water cost analysis findings that David will present, and you'll see here, and again, this is in 2021 dollars, and the first one is for the five MGD project and South Coast Water Districts 2 MGD share.

587
00:53:48,340 --> 00:53:52,540
So, we're just looking at it from the South Coast Water District lens and how it affects us.

588
00:53:54,960 --> 00:54:01,780
You'll see that there's a difference of $181 to $214 per acre foot.

589
00:54:01,920 --> 00:54:08,540
So the difference between the project cost and the met cost is roughly $200 per acre foot there.

590
00:54:09,620 --> 00:54:18,120
Another way to look at it is it's roughly $385,000 to $460,000 more expensive per year than metropolitan.

591
00:54:19,000 --> 00:54:26,700
If we did a 2MGD standalone project, we're looking at numbers of roughly $650 per acre

592
00:54:26,700 --> 00:54:32,360
foot higher compared with the roughly $200 more for the partner project.

593
00:54:33,680 --> 00:54:40,500
And the other way to look at is about 1.3, 1.35 million more expensive as a 2MGD project

594
00:54:40,500 --> 00:54:42,880
per year than metropolitan water.

595
00:54:42,880 --> 00:54:47,360
So you can see right here the economies of scale that you're seeing next slide please.

596
00:54:50,580 --> 00:54:55,700
So key considerations are put this slide on here for our board mainly to think about

597
00:54:56,420 --> 00:55:04,040
and when you're evaluating as everybody knows that it's important to look at it from

598
00:55:04,040 --> 00:55:32,780
You know, a few lenses and two of these include does does the I'm sorry, it is water supply verification, including emergency supplies and local control, you know, the benefits of this project is that does that have value to the district and then the second part is

599
00:55:32,780 --> 00:55:39,540
This is this rate impact of this new water supply acceptable to district rate peers.

600
00:55:40,980 --> 00:55:45,660
And those are two good questions that the public and the boards should be asking themselves

601
00:55:45,660 --> 00:55:52,220
when looking at a project to make a unbiased determination whether to move forward or not.

602
00:55:52,900 --> 00:55:53,560
Next slide, please.

603
00:55:57,840 --> 00:55:58,220
Next slide.

604
00:55:58,720 --> 00:56:01,060
So this is the rate impacts that I'll quickly go over.

605
00:56:01,220 --> 00:56:04,180
And this is what John Farnkov is going to present along with the details.

606
00:56:04,180 --> 00:56:07,980
But I wanted to give you a preview of what the results are going to be.

607
00:56:08,780 --> 00:56:17,140
So this is for an average resident, an average homeowner here, real numbers.

608
00:56:17,940 --> 00:56:21,600
First full year of operation in fiscal year 2627.

609
00:56:22,020 --> 00:56:32,520
Their additional monthly cost would be $2.38 for that 5MGD project if South Coast takes a 2MGD share.

610
00:56:32,520 --> 00:56:39,700
So it's roughly 2% addition to our overall revenue requirements, and John will get into that.

611
00:56:40,160 --> 00:56:46,960
So the second part of this is the 2MGD standalone project which would be $7.20 more to that average

612
00:56:46,960 --> 00:56:47,560
residence.

613
00:56:47,860 --> 00:56:48,580
Next slide please.

614
00:56:51,840 --> 00:56:54,280
And these are the impacts for small commercial.

615
00:56:54,540 --> 00:57:01,660
So the small commercial retail at a strict mall that uses about five billing units per

616
00:57:01,660 --> 00:57:07,720
per month would pay an additional $1.54 under the partner project or 466 average restaurant

617
00:57:07,720 --> 00:57:15,060
using about 100 billing units per month would pay 17 and 52 respectively and a medium-sized

618
00:57:15,060 --> 00:57:22,940
hotel using about 1,000 billing units per month would pay 166 and $500 respectively next

619
00:57:22,940 --> 00:57:23,400
slide please.

620
00:57:26,850 --> 00:57:31,650
And I'm going to turn it over to David Moore from Clean Energy Capital to provide his analysis.

621
00:57:32,030 --> 00:57:32,330
Thank you.

622
00:57:37,000 --> 00:57:45,600
Great. Good evening, everyone. Next slide, please. So I'm going to go through our analysis and

623
00:57:46,280 --> 00:57:54,240
but before I start, I just I wanted to congratulate the board on its staff that's working on this.

624
00:57:54,240 --> 00:58:02,160
Rick Shintaku could easily give my presentation, and also the next presentation, as could Mark

625
00:58:02,160 --> 00:58:04,260
Serna, as could Pamela, Ron's came.

626
00:58:04,940 --> 00:58:12,640
Your staff is deeply involved in this project, and as Rick says, looking at it to find the

627
00:58:12,640 --> 00:58:13,080
right answers.

628
00:58:13,680 --> 00:58:16,920
So it's been a real pleasure to work with that team.

629
00:58:17,720 --> 00:58:18,520
Next slide, please.

630
00:58:21,960 --> 00:58:23,800
So my firm is Clean Energy Capital.

631
00:58:23,800 --> 00:58:29,040
We're a registered municipal advisor that means we're licensed with the Municipal Securities

632
00:58:29,040 --> 00:58:30,860
Rulemaking Board and the SEC.

633
00:58:32,000 --> 00:58:36,620
We specialize in water utility project finance in California.

634
00:58:37,140 --> 00:58:42,780
We concentrate on public finance, public private partnerships and regional projects.

635
00:58:43,480 --> 00:58:49,500
I talked briefly about three diesel projects where we served as financial advisor in addition

636
00:58:49,500 --> 00:58:52,740
and to South Coast, they're listed here.

637
00:58:53,320 --> 00:58:55,400
We've shown a set of our representative clients,

638
00:58:55,400 --> 00:58:58,060
mostly their county water districts,

639
00:58:58,360 --> 00:59:02,200
many of them doing multi-district regional projects.

640
00:59:02,920 --> 00:59:05,980
I'm David Moore, I'm the firm's founder

641
00:59:05,980 --> 00:59:09,320
and it's managing director, next slide, please.

642
00:59:12,640 --> 00:59:15,940
So we were engaged in January of last year

643
00:59:16,840 --> 00:59:20,920
to do a cost study for the Dohenny D. Sal project.

644
00:59:20,920 --> 00:59:25,440
and our scope included performing cost due diligence.

645
00:59:26,080 --> 00:59:29,460
So we looked critically at each of the inputs,

646
00:59:29,880 --> 00:59:31,160
the economic drivers.

647
00:59:33,160 --> 00:59:35,200
And as I go through my presentation,

648
00:59:35,640 --> 00:59:39,700
I think you'll get a feel for how we've vetted the numbers.

649
00:59:40,620 --> 00:59:43,400
And then what we've also did is we put the numbers

650
00:59:43,400 --> 00:59:45,120
into a pro forma financial model.

651
00:59:45,320 --> 00:59:48,320
And that model models the construction period,

652
00:59:48,320 --> 00:59:52,920
it models. The operating period shows the dead amortization, shows the full length of the project.

653
00:59:53,220 --> 00:59:59,680
It's that performer model that generated those line graphs that Rick showed.

654
01:00:00,300 --> 01:00:06,660
And then also our scope included evaluating a project alternative. And I'll get into that just

655
01:00:06,660 --> 01:00:12,740
in one with the two main alternatives being a 2MGD project that would just serve the district

656
01:00:12,740 --> 01:00:17,740
and a 5MGD project that would be a regional project. And there's financial and organizational

657
01:00:17,740 --> 01:00:26,560
differences between those as well as economies of scale. The objective of our report is to

658
01:00:26,560 --> 01:00:33,320
develop a cost projection for the proposed project. Rick has already shown that now. I'll be really

659
01:00:33,320 --> 01:00:39,820
explaining kind of what's behind it. And to outline potential financial implementation strategies,

660
01:00:39,820 --> 01:00:45,380
this is especially for the five MGD project, which would be a partnering opportunity for the

661
01:00:45,380 --> 01:00:51,320
district. And then it's really to support the district decision making regarding next steps.

662
01:00:54,380 --> 01:00:56,540
So that's

663
01:00:56,540 --> 01:00:57,680
So

664
01:01:00,120 --> 01:01:10,680
you've seen these slides on the left-hand side of the 5MGD project and on the right side is the 2MGD project.

665
01:01:11,380 --> 01:01:14,700
The net water avoided cost projections are the same.

666
01:01:15,100 --> 01:01:19,760
So those are just repeated for reference in the 5MGD graph and the 2MGD graph.

667
01:01:19,760 --> 01:01:26,540
And I'll explain later what went into those avoided cost projections.

668
01:01:26,920 --> 01:01:29,320
And then the blue lines are the project cost.

669
01:01:29,900 --> 01:01:33,160
And you can see at the beginning of the blue line there's a little dotted line.

670
01:01:34,140 --> 01:01:39,640
We modeled the project as commencing operations in on January 1, 2026.

671
01:01:40,260 --> 01:01:43,080
So it's really the calendar year ending 2027.

672
01:01:43,080 --> 01:01:46,080
That's the first year that the plant is in operations.

673
01:01:46,080 --> 01:02:04,740
We've shown dotted, a dotted blue line going to the left in order to bring that first year of operations cost back to 2021 dollars is written described in that 2021 dollar amount is a 1,479

674
01:02:04,740 --> 01:02:11,460
dollars per acre foot for the five MGD and a higher number of $1,928 per acre foot.

675
01:02:11,960 --> 01:02:21,720
We put also in the orange text where that stands with Matt Waters cost, the cost that you're

676
01:02:21,720 --> 01:02:23,300
paying now for the water binds.

677
01:02:24,300 --> 01:02:26,160
So if you could go to the next slide, please.

678
01:02:28,840 --> 01:02:32,060
So this is what I'll be going through.

679
01:02:32,240 --> 01:02:34,840
So I have, I think, one slide for each of these.

680
01:02:34,840 --> 01:02:41,080
So, I'll talk about the project alternatives, the capital cost, the financing and debt

681
01:02:41,080 --> 01:02:46,500
service assumptions that went into our modeling, how we look at electricity costs, how we

682
01:02:46,500 --> 01:02:53,320
look at O&M's operations and maintenance, R&R's renewal and replacement, we'll describe

683
01:02:53,320 --> 01:02:54,880
it at a high level our assumptions there.

684
01:02:55,620 --> 01:03:02,220
We'll talk about the local resources program or LRP subsidy that Matt Water provides.

685
01:03:02,220 --> 01:03:10,420
We'll talk about the avoided cost projection, we'll touch on regional considerations that

686
01:03:10,420 --> 01:03:14,720
are specific to the five MGD project, and then we'll say our findings and conclusions.

687
01:03:15,520 --> 01:03:23,240
I've included in the board materials, disclaimers on forward looking statements, and I'll leave

688
01:03:23,240 --> 01:03:26,040
those for you to read, and don't feel any need to present those.

689
01:03:26,040 --> 01:03:27,880
Next slide, please.

690
01:03:31,070 --> 01:03:37,630
So this is a really foundational to the cost study.

691
01:03:37,790 --> 01:03:43,850
So we look at a five-MGD project and a two-MGD project and in each case we see the district

692
01:03:43,850 --> 01:03:52,610
is taking two-MGD, two-MGD for the district's diversification of its supply portfolio.

693
01:03:52,610 --> 01:03:59,270
2MGD is a material volume of water.

694
01:03:59,930 --> 01:04:02,770
The 5MGD project would produce more water

695
01:04:02,770 --> 01:04:04,990
than the district would itself take.

696
01:04:05,210 --> 01:04:08,270
And so the 5MGD project has excess capacity,

697
01:04:08,270 --> 01:04:11,070
excess capacity requires partners.

698
01:04:12,430 --> 01:04:15,610
And the partners would take 3MGD out of the five.

699
01:04:16,230 --> 01:04:19,150
The 2MGD project is a burden in the hand.

700
01:04:19,250 --> 01:04:22,350
It's more expensive because there's the economy

701
01:04:22,350 --> 01:04:29,290
the scale aren't as great, but that would be sized to the district's demand itself without

702
01:04:29,290 --> 01:04:29,650
partners.

703
01:04:31,210 --> 01:04:39,290
In terms of the mode of implementation, the 5MGD project could be done on balance sheet

704
01:04:39,290 --> 01:04:43,470
by a South Coast water district, meaning that South Coast water district would own the plant,

705
01:04:43,910 --> 01:04:51,490
issue bonds, and then sell water to a partner, or it could be done through a newly formed municipal

706
01:04:51,490 --> 01:04:58,450
joint powers authority and that JPA structure we would think is the more typical mode of implementation.

707
01:04:58,910 --> 01:05:03,430
This would be a board decision whether to do it on your own balance sheet or do it through

708
01:05:03,430 --> 01:05:09,770
a JPA. The JPA would in that scenario would be a municipal entity. It would just have one

709
01:05:09,770 --> 01:05:15,590
business and that's Doheni DeSal and it would issue the bonds and it would have you as a customer

710
01:05:15,590 --> 01:05:17,710
and it would have your regional partners a customer.

711
01:05:19,310 --> 01:05:23,870
So the 5MGD project just to continue down that column,

712
01:05:24,590 --> 01:05:27,910
the project owner could be you, or could be a JPA,

713
01:05:28,990 --> 01:05:33,970
and the purchaser of access capacity would be identified

714
01:05:34,750 --> 01:05:37,870
where the 2MGD project you would own it,

715
01:05:38,010 --> 01:05:41,430
and there would be no purchaser of access capacity.

716
01:05:41,830 --> 01:05:43,510
It's size for your own capacity.

717
01:05:44,910 --> 01:05:45,830
Next slide, please.

718
01:05:50,950 --> 01:05:56,270
So excuse the density of the slide, there's a lot of information here and I'd like to

719
01:05:56,270 --> 01:05:57,270
go through it.

720
01:05:57,950 --> 01:06:05,130
So it shows two columns, the five MGD column and the two MGD column and there's an asterisk

721
01:06:05,130 --> 01:06:11,170
on the five MGD column and that asterisk is that 40% of these costs would be yours, where

722
01:06:11,170 --> 01:06:13,450
on the two MGD, all of them would be yours.

723
01:06:13,450 --> 01:06:18,610
So, just as an example, if you look at the total capitalized cost, the bottom line 111 million,

724
01:06:18,770 --> 01:06:25,950
that's the amount of bonds that need to be issued or with your loan or SRF loan or

725
01:06:25,950 --> 01:06:26,330
combination.

726
01:06:26,750 --> 01:06:35,110
So, that 111 million is a bigger number, but you would have 40% of that or 44 million in

727
01:06:35,110 --> 01:06:35,690
rough numbers.

728
01:06:35,890 --> 01:06:43,110
So, we look at the dead burden in terms of total capitalized cost as 44 million for a piece

729
01:06:43,110 --> 01:06:48,050
of a larger project or 55 million for all of the two MGD projects.

730
01:06:49,550 --> 01:06:52,370
So let me move up to the top and just and walk through these.

731
01:06:52,550 --> 01:06:59,110
So the construction cost estimate is 118 million for the five MGD project.

732
01:06:59,510 --> 01:07:04,070
That number has in it a 15 to 20 percent contingency.

733
01:07:04,910 --> 01:07:11,310
And that number is a consensus between GHD who you engaged to do preliminary cost estimate

734
01:07:11,310 --> 01:07:19,190
for Dogey-Nigu-Sal, and then California-American water up in Monterey who are doing a similar project.

735
01:07:20,410 --> 01:07:27,710
They did a peer review of the GHD numbers. They informed their review with actual bid results

736
01:07:27,710 --> 01:07:35,770
from their projects, and so the 118 million is a hybrid, as is the 66 million. And just as an

737
01:07:35,770 --> 01:07:42,230
example of our due diligence. We looked at the two studies, we also looked at other benchmarks,

738
01:07:42,710 --> 01:07:47,590
and then we organized a series of conference calls with the CalAM team, with the GHD team,

739
01:07:47,690 --> 01:07:57,530
and so these are really consensus estimates. In both cases, our model of Brazil's

740
01:07:57,530 --> 01:08:06,830
a construction and commencement date of January 1, 2023, so we've escalated the cost

741
01:08:06,830 --> 01:08:16,390
for which is a point of financing, there's a little noise, it went away, and so the construction

742
01:08:16,390 --> 01:08:22,210
cost, the next line is the construction cost per million gallons, so the five MGD project

743
01:08:22,210 --> 01:08:25,790
is $25 million per million gallons.

744
01:08:26,730 --> 01:08:29,390
The smaller project is $35 million,

745
01:08:29,470 --> 01:08:31,570
and that's one of the dis-economies of scale.

746
01:08:31,770 --> 01:08:33,910
That, and I'll make that same point

747
01:08:33,910 --> 01:08:37,230
on the non-electricity operating costs.

748
01:08:37,770 --> 01:08:40,490
Those are the sort of dis-economies of scale associated

749
01:08:40,490 --> 01:08:41,750
with the two MGD project,

750
01:08:42,010 --> 01:08:45,410
and that's why the cost of water is higher on that project.

751
01:08:46,850 --> 01:08:51,470
In each case, construction costs are offset by grants,

752
01:08:51,470 --> 01:08:56,130
and staff has been, your staff has been a successful,

753
01:08:56,130 --> 01:08:59,930
they've done a great job getting 28 million in grant money.

754
01:09:00,190 --> 01:09:01,970
It's a little bit more, but some of it's already been spent

755
01:09:01,970 --> 01:09:04,250
on development costs for the five MGD.

756
01:09:05,030 --> 01:09:08,830
It would be a lesser grant amount, 26 million on the 2MGD.

757
01:09:09,410 --> 01:09:14,490
That's because the USBR grant bureau has a 25% max.

758
01:09:15,010 --> 01:09:17,450
So there's some little grant money left on the table

759
01:09:17,450 --> 01:09:18,890
in the 2MGD configuration.

760
01:09:20,630 --> 01:09:25,490
So the construction costs minus the grants and then there's other items which we've added

761
01:09:25,490 --> 01:09:28,010
in to project the amount of debt.

762
01:09:28,890 --> 01:09:33,170
First is remaining development costs of the district.

763
01:09:33,170 --> 01:09:37,990
These would be capitalized and repaid on financial closing.

764
01:09:38,970 --> 01:09:40,230
There's capitalized interest.

765
01:09:40,450 --> 01:09:46,430
This would carry the debt service through construction and to commercial operations.

766
01:09:48,610 --> 01:09:52,390
We put in $5 million of owner's cost during construction.

767
01:09:52,550 --> 01:09:55,490
These would be costs of the district to manage the construction program.

768
01:09:55,490 --> 01:09:59,710
These would be costs that the builder that you engage does not assume.

769
01:09:59,910 --> 01:10:09,230
But you pay to monitor the building and take care of reporting and compliance responsibilities that aren't transferred to the builder.

770
01:10:10,550 --> 01:10:14,690
And then we added a line item RTS transition charges.

771
01:10:14,690 --> 01:10:22,890
And Metropolitan has a four-year ramp down in the RTS components of their charge.

772
01:10:23,250 --> 01:10:28,210
And so, in the first year of operations, you would pay all of that RTS charge.

773
01:10:28,370 --> 01:10:31,350
In the second year, you'd pay three quarters, and third year, you'd pay half.

774
01:10:31,790 --> 01:10:40,350
It went us down, and we've added it as a cost of the project and put it into the bond issuance

775
01:10:40,350 --> 01:10:48,230
in order to to amortize that cost of transitioning away from metropolitan into our cost projection and

776
01:10:48,230 --> 01:10:57,070
then the last item is financing costs. So there's a significant line item of other costs that's

777
01:10:57,070 --> 01:11:02,990
typical in these infrastructure projects and that brings us to the total capitalized costs that's

778
01:11:02,990 --> 01:11:09,650
shown on the bottom of this slide. And I should maybe pause here and ask the board president would you

779
01:11:09,650 --> 01:11:16,530
like me just to bull on through or do you want to pause for board questions as we go through these?

780
01:11:16,650 --> 01:11:23,130
What's your preference? Thank you for that. You know what let's let's just do a quick round the

781
01:11:23,130 --> 01:11:31,630
horn with the board to see if there's any questions up into this point. Generally board members will

782
01:11:32,310 --> 01:11:38,810
ask a question, you know, as they see fit during a presentation. So we'll start

783
01:11:38,810 --> 01:11:44,110
with Director Goldman because I see you're up here on the top of the screen

784
01:11:44,110 --> 01:11:49,530
here. Good evening, Scott. Do you have any questions of David at this time?

785
01:11:50,310 --> 01:11:54,790
Yeah, Rick. Thank you, David. Very good presentation and I'm not having an

786
01:11:54,790 --> 01:12:01,490
opportunity to go through this with Rick yesterday. And so he answered

787
01:12:01,490 --> 01:12:07,830
most of my questions. So no, it's very, I shouldn't say very clear, but I understand what you're

788
01:12:07,830 --> 01:12:16,790
presenting and interested to see as you go forward. So thank you for that. We'll move to Director

789
01:12:16,790 --> 01:12:26,510
Green, Bill. Any questions or comments at this point? Thank you, Mr. Chairman. Yes, David. Thank you

790
01:12:26,510 --> 01:12:28,830
for all your work here.

791
01:12:29,170 --> 01:12:29,870
I appreciate it.

792
01:12:30,030 --> 01:12:31,670
It's good to find the bottom line.

793
01:12:31,990 --> 01:12:33,350
I always like to go to the bottom line

794
01:12:33,350 --> 01:12:34,970
as well as our ratepayers.

795
01:12:35,690 --> 01:12:39,910
You know, a question I'd have is you talk about

796
01:12:39,910 --> 01:12:40,810
some alternatives.

797
01:12:41,770 --> 01:12:45,710
Have you evaluated the, or have you made an allowances?

798
01:12:45,950 --> 01:12:49,290
You said 15, 20% I think it was contingencies.

799
01:12:49,810 --> 01:12:53,010
However, what if we have started replacing slant wells

800
01:12:53,010 --> 01:12:53,970
and membranes?

801
01:12:53,970 --> 01:13:05,930
Is that calculated in and what would? Yeah, that's a great question, Director Green. The 5MGD project,

802
01:13:05,970 --> 01:13:12,150
the capital cost, these costs are the first four slant wells and for the 2MGD project, two slant

803
01:13:12,150 --> 01:13:20,730
wells. We have in the renewal and replacement budgets, replacement over the 30 year term of all

804
01:13:20,730 --> 01:13:25,610
of the slant wells. So that's replacement of all four slant wells in the 5MGD and

805
01:13:25,610 --> 01:13:36,370
of two slant wells in the 2MGD. And so we've assumed that cost is born as an R&R expense

806
01:13:36,370 --> 01:13:50,710
meaning that the district would make a contribution to a renewal and replacement account and we've

807
01:13:50,710 --> 01:14:02,210
A general manager should talk, we'll mention we have redundant wells that styled into the cost, the extra wells, I guess, in case one goes out.

808
01:14:03,310 --> 01:14:18,050
Yeah, as I understand it in the 5MGD configuration, the fourth well is redundant well. Three wells in operations would provide the intake water with the fourth well and sort of stand by mode.

809
01:14:18,690 --> 01:14:24,790
So, if we wanted to go that, if we were to go the 2MG MDG, we'd almost have to build

810
01:14:24,790 --> 01:14:29,730
the extra third well, and that may not be in the cost perhaps, and that would increase

811
01:14:29,730 --> 01:14:32,150
the cost of the two, if I'm looking at it right.

812
01:14:32,630 --> 01:14:38,550
Can I interrupt real quick, sorry, David, and thank you, Director Green, and I'll invite

813
01:14:38,550 --> 01:14:44,190
Mark Donovan to talk about it, but the capacity is such that you would still have standby capacity

814
01:14:44,190 --> 01:14:45,790
for the 2MGD, I believe.

815
01:14:45,790 --> 01:14:50,530
So I would ask Mark Donovan to please confirm that the

816
01:14:54,790 --> 01:14:59,910
modeling that geosciences that predicts a little over 4mgd

817
01:15:14,400 --> 01:15:14,980
All

818
01:15:17,670 --> 01:15:23,930
right, we'll move to Director Wayne Rayfield. Wayne, any comments or questions at this point?

819
01:15:23,930 --> 01:15:27,130
Thank you, Rick, none of this time over.

820
01:15:28,090 --> 01:15:31,890
All right, and we'll move to Mr. Erdman.

821
01:15:32,750 --> 01:15:35,130
And I don't see him on my list right now.

822
01:15:35,190 --> 01:15:35,510
I'm here.

823
01:15:36,070 --> 01:15:36,530
Oh, there you are.

824
01:15:36,670 --> 01:15:36,830
Good.

825
01:15:37,070 --> 01:15:39,270
Yeah, I have no questions this time over.

826
01:15:40,510 --> 01:15:41,410
OK, thank you.

827
01:15:41,710 --> 01:15:44,450
I have one quick question.

828
01:15:45,030 --> 01:15:46,950
Hopefully this won't derail, and you

829
01:15:46,950 --> 01:15:48,410
don't have to spend a lot of time on it.

830
01:15:48,910 --> 01:15:51,190
But one of our members of the public

831
01:15:51,190 --> 01:15:58,890
spoke about the transportation corridor agency, the TCA and how I'll use

832
01:15:58,890 --> 01:16:03,290
upon off the rails they got with their financials. Is there anything that you

833
01:16:03,290 --> 01:16:08,810
can compare real kind of high-level between this potential project and the

834
01:16:08,810 --> 01:16:14,130
TCA and the differences in the financials and why and how this project

835
01:16:14,130 --> 01:16:19,650
most likely wouldn't get off the rails and the scale that the TCA got off the

836
01:16:21,290 --> 01:16:26,790
Yeah, well, I'm not an expert in TCA, but as I understand their revenue model, it

837
01:16:26,790 --> 01:16:31,330
depended on drivers using the route and paying tolls.

838
01:16:31,430 --> 01:16:33,690
This project would have a different driver.

839
01:16:33,810 --> 01:16:38,850
It would be your decision as a water district to operate the plant.

840
01:16:40,250 --> 01:16:46,930
What's typical in ocean water diesel plants, this is the way the Carlsbad plant is running.

841
01:16:47,090 --> 01:16:48,830
It's really run as a base load facility.

842
01:16:48,830 --> 01:16:53,210
So because of its capital cost, it's run as much as it can operate.

843
01:16:54,850 --> 01:17:02,870
And so the kind of the marginal cost of this plan is the electricity cost.

844
01:17:03,050 --> 01:17:07,550
It's conceivable that you would want to save the electricity cost and put the plant

845
01:17:07,550 --> 01:17:15,690
into a standby mode, but that would, you're paying the capital cost, whether it's standby

846
01:17:15,690 --> 01:17:16,310
or not.

847
01:17:16,310 --> 01:17:26,110
And so that kind of that marginal cost of operations typically would result in a decision to operate the plant in order to get the water output.

848
01:17:26,450 --> 01:17:37,390
So the kind of economic drivers for the plant is such that you would very likely operate it and incorporate that water supply into your portfolio.

849
01:17:39,190 --> 01:17:56,050
Fair enough, good. Thanks for that. All right, we'll continue on and great job so far. I just want to put that in there. It's a lot, but it is very detailed and thank you so far. So continue.

850
01:17:56,050 --> 01:17:56,670
Thank you.

851
01:17:56,670 --> 01:17:56,770
Good.

852
01:17:56,950 --> 01:17:57,250
Thank you.

853
01:17:57,470 --> 01:17:58,490
Next slide, please.

854
01:18:03,390 --> 01:18:09,970
So the capital cost then results in financing and debt service.

855
01:18:10,390 --> 01:18:16,230
And we've worked very carefully on this with the district finance director and also the

856
01:18:16,230 --> 01:18:19,490
fieldman role app, your debt financial advisors.

857
01:18:21,210 --> 01:18:27,710
We have used a weighted average cost of capital that assumes borrowing that's shown here.

858
01:18:27,710 --> 01:18:32,170
And the first is the EPA, this is the federal WIFI alone program.

859
01:18:32,330 --> 01:18:39,130
It's a subsidized loan program up to 49% and WIFI has invited the district

860
01:18:39,130 --> 01:18:44,470
to move forward with a specific application for financing on DOHINI diesel.

861
01:18:45,170 --> 01:18:49,730
We've assumed that that's 49% of the capital raise.

862
01:18:51,090 --> 01:18:53,530
WIFIIR requires a match, 51% match.

863
01:18:53,530 --> 01:18:59,110
we've assumed that that matches split 50-50 between the California SRF loan

864
01:18:59,110 --> 01:19:03,930
program that's another subsidized governmental lending program it has the

865
01:19:03,930 --> 01:19:12,010
lowest capital cost which is shown in this table is 1.67% and that then we've

866
01:19:12,010 --> 01:19:17,250
assumed also issuance of municipal revenue bonds despite the districts very high

867
01:19:17,250 --> 01:19:22,590
credit rating those we see as the highest capital cost and these interest rates

868
01:19:22,590 --> 01:19:27,990
are themselves an average of historical interest rates and we've taken an approach that weights

869
01:19:27,990 --> 01:19:34,350
more heavily the most recent couple of years where interest rates have been super low but also

870
01:19:34,350 --> 01:19:41,110
looks back 10 years for kind of to balance those two long-term history and a short-term history

871
01:19:41,110 --> 01:19:49,250
to come up with these interest rates forecasts. The table below shows the assumed amortization

872
01:19:49,250 --> 01:19:58,130
of the borrowing, so the amortization is such that the annual debt service increases 2.5% per year.

873
01:19:58,830 --> 01:20:06,630
And this would be a decision for the board or this project was a regional project for the board and also your partners.

874
01:20:09,730 --> 01:20:16,450
The bar graph here shows in gold the principal repayment and then in green the interest on that.

875
01:20:17,670 --> 01:20:23,450
It's a very favorable environment because interest rates are so low to defer loan repayment.

876
01:20:23,550 --> 01:20:27,050
This is deferring loan repayment to the extent that's shown in the graph.

877
01:20:28,290 --> 01:20:33,450
The objective here is to ramp in costs so the front end costs are lower.

878
01:20:33,730 --> 01:20:39,330
And that comes obviously at the expenses of back end costs being somewhat higher.

879
01:20:40,570 --> 01:20:45,290
The total interest cost differential between this and if you were just to do a level debt service

880
01:20:45,290 --> 01:20:49,490
It's only like three or four million dollars in interest over the 30 years.

881
01:20:49,710 --> 01:20:53,470
So it's, again, that's because interest rates are so low.

882
01:20:54,610 --> 01:21:01,290
This mode of financing is intentional in order to have the cost curve kind of follow the

883
01:21:01,290 --> 01:21:03,990
projected met water cost curve.

884
01:21:04,590 --> 01:21:10,890
We think that regional partners would prefer this mode of financing because it's better for

885
01:21:10,890 --> 01:21:16,710
their repairs, and we think that the same for the district, but this is obviously would

886
01:21:16,710 --> 01:21:24,930
be your choice. And then I comment further that this offered sloping debt service profile

887
01:21:24,930 --> 01:21:30,530
served for all the jargon, but I think you know what I mean at a high level. This is how

888
01:21:30,530 --> 01:21:36,130
the San Diego County Water Authority determined to finance the Karlsbad desalination project

889
01:21:36,130 --> 01:21:39,670
for the exact same reasons that I'm describing.

890
01:21:40,890 --> 01:21:41,630
Next slide, please.

891
01:21:46,950 --> 01:21:50,070
So, we did a lot of work on electricity costs,

892
01:21:50,230 --> 01:21:52,930
and we know that that's been a real concern

893
01:21:52,930 --> 01:21:55,410
of the district and correctly.

894
01:21:55,790 --> 01:21:58,410
So, it's the largest,

895
01:21:58,630 --> 01:22:00,370
it's the lion's share of the operating costs

896
01:22:00,370 --> 01:22:02,030
for a diesel project.

897
01:22:02,870 --> 01:22:05,370
So, we start with the power consumption,

898
01:22:05,710 --> 01:22:08,330
and this is numbers for the five MGD project,

899
01:22:08,330 --> 01:22:18,070
the 2MGDs is obviously a lesser amount. So this project is takes five megawatt hours

900
01:22:18,070 --> 01:22:26,910
per acre foot of production capacity, or 27,000 megawatt hours per annum, and that's we

901
01:22:26,910 --> 01:22:32,970
looked at on the right. We benchmarked the power consumption of this project with the

902
01:22:32,970 --> 01:22:39,250
series of other sources, five other sources. You can see the doheny, diesel, energy consumption,

903
01:22:39,570 --> 01:22:46,450
per acre foot of water production. It's right in the middle of the road, so this is a GHD, CalAM

904
01:22:47,330 --> 01:22:54,270
result, and we just benchmarked. Again, this is illustrative of the due diligence that our firm did

905
01:22:54,270 --> 01:22:56,510
in reviewing these numbers.

906
01:22:58,570 --> 01:23:01,430
The second element is how much does that electricity cost?

907
01:23:01,430 --> 01:23:11,490
And our firm has developed a model of SDG&E's ALTOU-slash EECC tariff.

908
01:23:11,670 --> 01:23:14,210
That's the large industrial tariff.

909
01:23:14,630 --> 01:23:21,530
It's not the only electricity option, but it is the common option.

910
01:23:22,010 --> 01:23:28,430
This SDG&E ALTOU EECC tariff, this is what Carlsbad decalination runs.

911
01:23:28,430 --> 01:23:33,630
This is where we're working for East County Advanced Water Purification.

912
01:23:33,830 --> 01:23:37,950
They're doing an indirect potable reuse project in East County San Diego.

913
01:23:38,190 --> 01:23:40,830
This is their tariff for that.

914
01:23:41,710 --> 01:23:51,070
And we have an Excel model that models all the complexity of the tariff in order to calculate the sense per kilowatt hour.

915
01:23:51,530 --> 01:23:55,570
The results from time of use and holidays and summer months and winter months.

916
01:23:55,570 --> 01:23:59,170
That's shown in this in this table here. So the winter rate is

917
01:23:59,890 --> 01:24:09,570
15.45 cents the summer is 1875 and for a project that's operating throughout the year the the the weighted average of those is 16.83

918
01:24:10,130 --> 01:24:10,690
cents

919
01:24:10,690 --> 01:24:17,710
That's that the 2021 if this project were online now that would be the electricity bill and

920
01:24:18,510 --> 01:24:23,270
Then in terms of escalation we we did a a study of studies

921
01:24:23,270 --> 01:24:32,130
So, we found credible 10-year studies, incredible 40-year studies, and we just, we took the average

922
01:24:32,610 --> 01:24:39,050
of their escalation rates, this would be from 2021 going forward, and that was a higher

923
01:24:39,050 --> 01:24:46,510
escalation rate, 3.0, 2% for 10 years, and then a lower escalation rate for 40 years, 2.0

924
01:24:46,510 --> 01:24:47,690
for 4%.

925
01:24:47,690 --> 01:24:51,870
That 2% is also really over a historic 40 years.

926
01:24:52,890 --> 01:24:57,690
That's the number and so you guys know the electricity actually.

927
01:24:58,210 --> 01:25:00,930
There's no rate increase and then a rate increase than none.

928
01:25:01,270 --> 01:25:12,410
It's a choppy and difficult project but we found the average of the expert projections.

929
01:25:12,410 --> 01:25:18,170
And so those are the three pieces that will go into our electricity cost projection on the project.

930
01:25:19,150 --> 01:25:19,970
Next slide, please.

931
01:25:20,550 --> 01:25:22,630
David, before we leave that, I have a question.

932
01:25:22,930 --> 01:25:23,090
Sure.

933
01:25:23,670 --> 01:25:41,670
Just to confirm, at a previous, well, a number of meetings, we, you know, we were confirmed that SDG&E said that they could supply the energy without any new infrastructure or, you know, anything further.

934
01:25:41,670 --> 01:25:43,690
further than what's already online.

935
01:25:43,810 --> 01:25:44,690
Is that still the case?

936
01:25:45,470 --> 01:25:46,750
And if you don't know that answer,

937
01:25:46,890 --> 01:25:50,730
maybe somebody on staff could answer it for me, please.

938
01:25:52,250 --> 01:25:53,970
Yeah, let me do that.

939
01:25:54,110 --> 01:25:55,790
And then I want it also to make another comment.

940
01:25:56,010 --> 01:25:56,490
But why don't I,

941
01:25:58,530 --> 01:26:00,610
Rick, I think the questions,

942
01:26:00,690 --> 01:26:03,390
whether a sub-dation is needed.

943
01:26:04,730 --> 01:26:05,390
Okay, thank you.

944
01:26:05,590 --> 01:26:06,770
Yes, thank you, Mr. President.

945
01:26:07,050 --> 01:26:07,550
It is.

946
01:26:08,190 --> 01:26:09,210
So we do have the,

947
01:26:09,210 --> 01:26:12,550
that we did confirm with SDG&E,

948
01:26:12,550 --> 01:26:15,130
that we have the electric infrastructure in place

949
01:26:15,830 --> 01:26:19,530
to serve the first phase, the five up to five MGD,

950
01:26:19,830 --> 01:26:23,070
which we're talking about today, a project over.

951
01:26:27,030 --> 01:26:27,350
Thank you.

952
01:26:28,470 --> 01:26:32,750
The other point I wanted to make on SDG&E,

953
01:26:32,830 --> 01:26:36,750
just before I leave the slide is that the SDG&E

954
01:26:36,750 --> 01:26:41,770
has a renewable energy content that is lower than the content

955
01:26:41,770 --> 01:26:46,950
that's targeted for the plants, and so we've added it as a non-electricity,

956
01:26:47,050 --> 01:26:56,390
O&M expense, purchasing renewable energy credits to bring the energy supply up to 100 percent

957
01:26:56,390 --> 01:27:02,570
green. So as an example, in the first year, that 60 percent of the electricity supply,

958
01:27:02,870 --> 01:27:09,430
the district would purchase renewable energy credits or RECS for, and then as SDG&E's energy content

959
01:27:09,430 --> 01:27:19,030
becomes more green as they green up their supply portfolio that rent cost falls away. So that's

960
01:27:19,030 --> 01:27:26,610
the, obviously, you think about the reliability of supply, but also the green content, the renewable

961
01:27:26,610 --> 01:27:27,330
energy content.

962
01:27:30,470 --> 01:27:38,710
During our final EIR, we committed this project, if and when it goes to be a carbon neutral

963
01:27:38,710 --> 01:27:43,070
project, so I believe that's that cost that's baked in there.

964
01:27:43,850 --> 01:27:44,610
Right, right.

965
01:27:44,950 --> 01:27:45,510
Thank you.

966
01:27:48,780 --> 01:27:49,820
Next slide, please.

967
01:27:57,460 --> 01:27:57,640
All right.

968
01:27:57,880 --> 01:28:02,740
So this slide shows the O&M cost and the R&R cost.

969
01:28:03,020 --> 01:28:09,260
And so we had a capital budget for chemicals, membrane

970
01:28:09,260 --> 01:28:09,900
replacements.

971
01:28:10,060 --> 01:28:14,980
So the membrane replacement is an operations and maintenance expense.

972
01:28:14,980 --> 01:28:24,420
It's not R&R. R&R is things like replacing pumps and replacing relining pipes and the membrane

973
01:28:24,420 --> 01:28:34,620
replacement assumes a continual expense to replace the membranes which have a shorter

974
01:28:34,620 --> 01:28:37,200
life than the other major capital equipment.

975
01:28:37,200 --> 01:28:44,180
And then the biggest non-electricity item is labor and miscellaneous.

976
01:28:45,720 --> 01:28:52,880
We took these numbers and the total for the non-electricity portion of O&M is 2.1 million

977
01:28:52,880 --> 01:29:01,640
for the 5MGD plants, 1.4 million for the 2MGD and then again we put those on a unit basis.

978
01:29:01,640 --> 01:29:07,300
So, per MGD, the larger plant is cheaper than the smaller plant.

979
01:29:07,460 --> 01:29:10,340
You can see that in the 421,000 per year.

980
01:29:10,680 --> 01:29:19,920
These are annual O&M expense versus 726 for the smaller plant with its dissociative

981
01:29:20,480 --> 01:29:21,740
dis-economies of scale.

982
01:29:23,200 --> 01:29:30,500
We took these numbers from 2017 and escalated them at 2.93%, and again, we used an average

983
01:29:30,500 --> 01:29:39,080
of statistical forecasts for CPI, CPI's consumer price index, which we use to measure these

984
01:29:39,080 --> 01:29:46,180
non-electricity costs. And then as I put in in the last little sub bullet that we included

985
01:29:46,180 --> 01:29:50,100
the cost of purchasing RACs into the ONM budget.

986
01:29:52,860 --> 01:29:59,760
In terms of renewal and replacement, as I mentioned before, the budget provides

987
01:30:00,000 --> 01:30:29,880
For complete replacement of the slant wells, over the 30-year projection, and then on top of that and a cruel of 1% of construction costs and so that 1% would be for a renewal and replacement of other items besides the slant wells. We've taken that R&R cost and we've deferred it for the first five years of operations. This is, we find typical for a large new project.

988
01:30:29,880 --> 01:30:38,040
We phased it in in year six through 10, so it's the same dollars, but it's incurred.

989
01:30:38,400 --> 01:30:43,780
It's backended somewhat over the operating period of the project.

990
01:30:44,500 --> 01:30:49,980
And the reason for that is that in the first five years that's really a break-in period for the project

991
01:30:49,980 --> 01:30:58,720
where R&R expenses would typically be warranty coverage or the brand new equipment that does not require

992
01:30:58,720 --> 01:31:06,340
R&R and as I mentioned, membranes are not in the R&R line item, they're up in the O&M line item,

993
01:31:06,480 --> 01:31:14,340
so membrane replacement starts in year one, but these kind of bigger replacement of the capital

994
01:31:14,340 --> 01:31:16,320
assets starts in year five.

995
01:31:18,960 --> 01:31:19,960
Next slide, please.

996
01:31:23,290 --> 01:31:28,670
So the project is modeled as receiving the LRP subsidy,

997
01:31:28,670 --> 01:31:36,830
and as the board knows, this is subsidy from metropolitan for districts that develop

998
01:31:39,290 --> 01:31:48,790
local water projects. We have modeled this, assuming the $475 per acre foot, 15-year program,

999
01:31:48,930 --> 01:31:56,530
they have different prices in terms. This is the one that has the highest value and present value

1000
01:31:56,530 --> 01:31:59,710
to the district. So we've we've modeled the the it's

1001
01:42:24,320 --> 01:42:30,140
1013. Let folks get back tuned into the

1002
01:42:30,140 --> 01:42:36,260
medium. We'll start in just about a minute. Yeah, it looks like actually 713. Pardon?

1003
01:42:36,760 --> 01:42:46,820
Actually 713. Oh, 713. Yeah, sorry, I'm stuck on this East Coast time zone. And we do have a

1004
01:42:46,820 --> 01:42:55,060
director that's in Hawaii so yeah we're we're spanning the globe here will partially part of the

1005
01:42:55,060 --> 01:43:06,490
globe but all loud and clear here it looks good yeah and I'm you can still hear me and I'm clear

1006
01:43:07,350 --> 01:43:15,090
yes sir yes I'll I'll take it away at your invitation all right uh

1007
01:43:16,970 --> 01:43:22,030
Well, T minus 15 seconds will stick right on schedule now.

1008
01:43:22,270 --> 01:43:27,270
We took our 15-minute break and let David get back at it.

1009
01:43:31,170 --> 01:43:34,190
And David, the the floor is yours once again.

1010
01:43:34,950 --> 01:43:39,850
Mr. Chair, I have a question related to the last slide or two before we move on.

1011
01:43:39,850 --> 01:43:41,970
Go ahead, Mr. Green.

1012
01:43:42,230 --> 01:43:42,270
Thank you.

1013
01:43:42,730 --> 01:43:43,050
Thank you.

1014
01:43:43,610 --> 01:43:43,970
Yeah.

1015
01:43:44,510 --> 01:43:48,590
If we were to go back to the slide 35,

1016
01:43:48,590 --> 01:43:51,430
is the Lithia loan and the SRF and the bonds.

1017
01:43:52,230 --> 01:43:52,930
Thank you.

1018
01:43:53,070 --> 01:43:56,450
You had 49, 25 and 25%.

1019
01:43:57,530 --> 01:44:03,670
If we were able to get 50, 50 on the two loans,

1020
01:44:04,230 --> 01:44:06,790
would we not need the bonds any longer?

1021
01:44:07,250 --> 01:44:08,210
That's a question.

1022
01:44:08,210 --> 01:44:15,070
than if the debt would be more like 2.2 would be the effective rate. Is that true? I was

1023
01:44:15,070 --> 01:44:18,910
understanding we might be getting more on the SRF.

1024
01:44:22,070 --> 01:44:31,510
Yeah. Your math serves you well. The average weighted cost of capital would decline.

1025
01:44:31,850 --> 01:44:36,890
It also would decline if we were to close exactly this capital financing in the near future.

1026
01:44:36,890 --> 01:44:43,010
interest rates are currently lower for each of the pieces and the municipal revenue bonds being

1027
01:44:43,010 --> 01:44:51,110
the most expensive component. If that were eliminated with the SRF loan, that would be favourable.

1028
01:44:51,830 --> 01:44:59,950
And the availability of SRF loan depends a little bit on the scenario too. So with the two MGD project

1029
01:45:00,000 --> 01:45:29,920
Well, that's just 55 million. That's 55 million split, basically 50% between the EPA and SRF. If it's the 5MGD project, it's a little bit more SRF. The EPA has capacity for either project. SRF is, there's scarcity in that program relative to demand. But I consider this a conservative interest rate assumption.

1030
01:45:30,760 --> 01:45:36,080
given the possibility of crowding out the municipal revenue bonds with SRF.

1031
01:45:36,840 --> 01:45:40,280
That answers that question fair enough. I get it. Thank you very much.

1032
01:45:40,660 --> 01:45:42,560
Next question is, next slide.

1033
01:45:43,780 --> 01:45:46,160
I believe is our power numbers.

1034
01:45:47,440 --> 01:45:56,580
And we're showing roughly, I'm going to say all these are number 17 census of 2021 average for bugging SDG&E.

1035
01:45:56,580 --> 01:46:03,100
and I know that I may be a bit of a broken record, but I know in the solar

1036
01:46:03,100 --> 01:46:10,420
world there's an ability to reduce that and you know I don't know the exact

1037
01:46:10,420 --> 01:46:16,760
numbers. I think we should check with our neighbors. Sam Arterita is using some

1038
01:46:16,760 --> 01:46:25,340
solar on their at a much reduced cost. I don't know the exact number. I also heard

1039
01:46:25,340 --> 01:46:29,540
from, as we were on our break, I called one of the directors of Eastern

1040
01:46:29,540 --> 01:46:34,780
Minister of Water District, and on their last night agenda, they had on

1041
01:46:34,780 --> 01:46:43,420
agreement with a PPA Power Purchase Agreement, and over a seven year program, they'll

1042
01:46:43,420 --> 01:46:48,420
be able to save millions of dollars. I don't know to the extent of the agreement. I

1043
01:46:48,420 --> 01:46:53,760
don't know how much power they're taking. Apparently, they did their first

1044
01:46:53,760 --> 01:47:00,800
three ms first make first three megawatts they purchased outright and I think

1045
01:47:00,800 --> 01:47:05,160
they've they're still paying that off obviously but he didn't have the

1046
01:47:05,160 --> 01:47:09,260
numbers on that anyway I think that's just something our staff that we look at

1047
01:47:09,260 --> 01:47:16,280
at least look at the eastern staff report from last night hearing they're they're

1048
01:47:16,280 --> 01:47:20,700
hearing they're going to save a lot of money over the first seven years he didn't

1049
01:47:20,700 --> 01:47:25,460
and now the exact number of what it would be on the kilowatt hour, so in the top of this

1050
01:47:25,460 --> 01:47:27,860
hill. But those are my plummets, thank you.

1051
01:47:29,080 --> 01:47:39,600
Hey guys, this is Wayne and I want to chime in with two quickies. First of all, I think

1052
01:47:39,600 --> 01:47:51,180
to Bill's point, the SDG and E numbers are worst case, the way that's the way I read.

1053
01:47:52,000 --> 01:48:03,280
And second, Jody Horrickson-Taku, I heard from a couple of our customers,

1054
01:48:03,280 --> 01:48:16,020
and could you repeat now how they might ask a question as a member of the

1055
01:48:16,020 --> 01:48:22,860
public or make a comment and thank you all. That's all I have over.

1056
01:48:24,320 --> 01:48:29,840
Sure, let me address that real quick. Director Rapeel, they can email me a

1057
01:48:29,840 --> 01:48:41,200
public comment to my email address, J. Brennan, B-R-E-N-N-A-N, at scwd.org. I

1058
01:48:41,200 --> 01:48:43,320
will also put it in the chat right now.

1059
01:48:46,950 --> 01:48:49,070
Thank you, Jordy. Sure.

1060
01:48:53,860 --> 01:48:54,760
Great. Let's

1061
01:48:55,500 --> 01:48:57,340
let's go to the next slide, please.

1062
01:49:00,960 --> 01:49:04,620
All right. So this slide and

1063
01:49:05,600 --> 01:49:12,140
sets forth our, how we've thought about matte water, and we've done this, these cost

1064
01:49:12,140 --> 01:49:19,160
projections together with, with some of the folks from Modoc to get their expertise and

1065
01:49:19,160 --> 01:49:25,340
perspective, and so on the right-hand side, we have three projection curves, a matte high,

1066
01:49:25,500 --> 01:49:32,620
matte medium, and a matte low, and these are all projections of matte tier one rate plus

1067
01:49:32,620 --> 01:49:40,660
RTS and capacity charges, the low case takes Matt's published a 10-year-rate projection

1068
01:49:40,660 --> 01:49:42,900
and then just extrapolates it at 3%.

1069
01:49:44,080 --> 01:49:49,500
So there's no new Matt projects included in that, and those projects aren't included

1070
01:49:49,500 --> 01:49:53,360
because the Metropolitan Board hasn't approved the project.

1071
01:49:53,560 --> 01:49:57,460
They're just outside of the rate case as if they will not happen.

1072
01:49:59,540 --> 01:50:06,460
We consider and we meaning district staff, my firm, Modoc, the low case to be an unlikely

1073
01:50:06,460 --> 01:50:16,440
case. Instead, one or both of these major new supply projects will be, we'll move forward

1074
01:50:16,440 --> 01:50:26,140
and be included in that's rates. Also, the low case has, in our view, less than reliability

1075
01:50:26,140 --> 01:50:30,940
So it's less of a comparable for a desalination project with its high reliability.

1076
01:50:31,860 --> 01:50:36,140
So we've used the low case, but really, you see in our comparator,

1077
01:50:36,860 --> 01:50:42,320
we're using the medium and the high projections as the avoided cost projections in the kind of our summary.

1078
01:50:43,400 --> 01:50:48,100
The high case has escalation at 5% annually beginning in 2025.

1079
01:50:48,700 --> 01:50:53,300
So starting in 2025, we depart from Matt's published 10-year rate projection

1080
01:50:53,300 --> 01:51:02,800
and begin escalating it at 5% and that 5% creates additional cost recovery for the Delta

1081
01:51:02,800 --> 01:51:10,100
conveyance project where a met water would be a significant payer participant in that

1082
01:51:10,100 --> 01:51:13,540
project and then also the Carson Water Reuse project.

1083
01:51:13,740 --> 01:51:20,400
So both of those are in the met high projection and that's a high projection at 5% and then

1084
01:51:20,400 --> 01:51:26,340
And the medium case, which is really an average of the two, is escalates at 4.2 percent.

1085
01:51:26,960 --> 01:51:33,140
And that assumes that one but not both of the Metwater projects proceed.

1086
01:51:34,060 --> 01:51:42,940
And as Rick Shantaku said in his opening comments, all of these forecasts are lower than

1087
01:51:42,940 --> 01:51:45,960
and Matt's historic five-year escalation rate,

1088
01:51:46,100 --> 01:51:52,960
which was 566 as recorded and reported to us by Modoc.

1089
01:51:54,280 --> 01:51:59,320
So these are the projections you see in the avoided cost

1090
01:51:59,320 --> 01:52:02,320
and the thinking behind them.

1091
01:52:03,400 --> 01:52:04,080
Next slide, please.

1092
01:52:08,910 --> 01:52:13,110
So a couple of considerations for the Regional 5MGD project

1093
01:52:13,110 --> 01:52:16,210
and the first is I think really interesting

1094
01:52:16,210 --> 01:52:22,570
and, uh, well, uh, I think they're both interesting, but I like this kind of stuff.

1095
01:52:22,910 --> 01:52:26,470
The first one is that the district has been shouldering this project alone.

1096
01:52:26,690 --> 01:52:31,650
So you have spent and expense significant development costs.

1097
01:52:31,990 --> 01:52:37,050
They've been born by your ratepayers, and that's part of the district dispatching its obligation

1098
01:52:37,050 --> 01:52:41,350
to your ratepayers to bring reliable supply and plan for the future.

1099
01:52:42,110 --> 01:52:48,890
The district also would contribute land to this project, the site is district land.

1100
01:52:50,710 --> 01:52:58,190
If you were to find one or more partners to take 60% of the project benefits, it would

1101
01:52:58,190 --> 01:53:03,810
be equitable and customary for that regional partner or partners to pay 60% of these costs.

1102
01:53:03,910 --> 01:53:09,610
This would be reimbursement to the district of a portion of the development costs and a

1103
01:53:09,610 --> 01:53:16,350
large portion, a 60% portion in respect of the volume of project benefits that would

1104
01:53:16,350 --> 01:53:25,170
flow to new partners. Our estimate of that 60% is between 8 and 10 million and that's

1105
01:53:25,170 --> 01:53:32,210
60% of the value of the land and 60% of the development expenses of the district has

1106
01:53:32,210 --> 01:53:32,990
has incurred to date.

1107
01:53:34,150 --> 01:53:37,230
We haven't put those into the rate forecast.

1108
01:53:38,050 --> 01:53:41,550
We, in our simplified pro-former model,

1109
01:53:41,650 --> 01:53:44,110
that would be kind of an up front buy-in

1110
01:53:44,710 --> 01:53:47,110
from the JPA or from a regional partner.

1111
01:53:47,110 --> 01:53:51,970
So that would be cash paid over to the district.

1112
01:53:52,130 --> 01:53:53,230
And it's significant benefit.

1113
01:53:53,490 --> 01:53:56,110
And obviously there's other ways to kind of monetize that

1114
01:53:56,110 --> 01:53:56,990
or think about that.

1115
01:53:57,090 --> 01:54:02,150
But we wanted to put forward that in the regional

1116
01:54:02,150 --> 01:54:06,490
project there would be a sharing of these contributed costs of the district.

1117
01:54:08,270 --> 01:54:13,290
The second point I touched on this, I don't want to dwell on this, this would be an important

1118
01:54:13,290 --> 01:54:18,510
decision for the district and for your partners in the regional project, would be the use of

1119
01:54:18,510 --> 01:54:19,870
a joint powers authority.

1120
01:54:20,670 --> 01:54:26,570
We've done significant work on recent regional projects setting up joint powers authorities.

1121
01:54:26,870 --> 01:54:30,690
They're set up by an agreement among the municipal participants.

1122
01:54:31,590 --> 01:54:37,530
We imagine that the JPA, if you went this way, it would have a board and that board would

1123
01:54:37,530 --> 01:54:40,390
take key decisions on the project such as issuance of debt.

1124
01:54:41,770 --> 01:54:49,450
We imagine that the JPA would engage South Coast Water District as its manager so that

1125
01:54:49,450 --> 01:54:54,410
you're a kind of practical role in managing continued development, construction, operations

1126
01:54:54,410 --> 01:54:59,230
would stay with the district, but again, that would be a decision by the JPA board.

1127
01:55:00,530 --> 01:55:07,790
There's very significant benefits to a JPA from the district's perspective and those

1128
01:55:09,490 --> 01:55:16,590
really arise from the the finance and this JPA would be primarily a financing entity

1129
01:55:16,590 --> 01:55:23,570
and as the JPA issuing that with the district really being just a 40% customer, that would

1130
01:55:23,570 --> 01:55:31,010
be off your balance sheet. It would be the JPA's death. You would record it as an operating expense

1131
01:55:31,010 --> 01:55:37,590
and it would not create the sort of debt service coverage. It would be different than if you

1132
01:55:37,590 --> 01:55:46,570
wish you your own bonds and beneficial. So that's a topic to explore as a regional partnership emerges

1133
01:55:46,570 --> 01:55:52,650
obviously in the joint powers authority. You're doing something in partnership with your regional

1134
01:55:52,650 --> 01:55:58,790
partners and so their preference as well would matter, but we really, in our

1135
01:55:58,790 --> 01:56:04,830
pro forma model, we model a JPA because that's the way we typically see these

1136
01:56:04,830 --> 01:56:10,750
multi-agency projects occurring or unfolding.

1137
01:56:12,250 --> 01:56:13,030
Next slide, please.

1138
01:56:16,810 --> 01:56:24,330
So this is my second to last slide and I think Rick already covered this so I can be

1139
01:56:24,330 --> 01:56:30,130
pretty pretty brief. We're measuring first year cost of water, first full year of operations,

1140
01:56:30,150 --> 01:56:35,770
and then we're present valuing that back to today's dollars. And we're comparing that to

1141
01:56:35,770 --> 01:56:44,330
MetWater avoided cost again in 2021 dollars today's dollars. So we see the 5MGD project is 181

1142
01:56:44,330 --> 01:56:48,390
to $214 per acre foot, higher than matte water,

1143
01:56:49,010 --> 01:56:55,090
that's 385,000 to $460,000 higher annual first year cost.

1144
01:56:55,710 --> 01:56:56,350
You saw the graph.

1145
01:56:56,470 --> 01:56:58,370
There are different costs in different years,

1146
01:56:58,550 --> 01:57:00,990
but we see quite typically these projects

1147
01:57:00,990 --> 01:57:04,090
kind of boiled down to that first full year of operations.

1148
01:57:04,590 --> 01:57:07,890
It's kind of the sticker price, if you will.

1149
01:57:09,260 --> 01:57:12,290
The 2MGD project is more expensive for the regions,

1150
01:57:12,290 --> 01:57:21,030
reasons that I've discussed. That would be $630 to $664 per foot higher than the

1151
01:57:21,030 --> 01:57:24,710
MET water of what it costs. Again, depending on whether you're comparing it to

1152
01:57:24,710 --> 01:57:30,910
the EDM or the high projection. And that's 1.3 to 1.4 million of additional

1153
01:57:30,910 --> 01:57:39,250
annual expenses by the district to bring in the Doheny diesel versus our projections

1154
01:57:39,250 --> 01:57:46,470
of map water rates. And again, the cost of differentials change over time. You've seen that in the line,

1155
01:57:46,850 --> 01:57:49,850
those line graphs. Next slide, please.

1156
01:57:51,990 --> 01:57:57,130
Rick, so I'll ask a quick question back on the previous slide.

1157
01:58:00,490 --> 01:58:02,450
And I don't know if it's a question or

1158
01:58:02,450 --> 01:58:09,750
comment. I guess these avoided costs, I understand how you've developed them based on projected rate

1159
01:58:09,750 --> 01:58:15,470
increases, but they also assume that the rate structure it met doesn't change in the future.

1160
01:58:16,550 --> 01:58:21,490
And as more and more agencies are rolling off met and developing more local projects,

1161
01:58:23,710 --> 01:58:30,170
I heard that some time over the next, and it may take them 10 years to do, but that they're

1162
01:58:30,170 --> 01:58:38,810
contemplating putting more on a fixed charge, and not as much on the commodity rate, which could

1163
01:58:38,810 --> 01:58:46,050
impact to this and so I didn't know if you had considered that or heard much about that or any comments.

1164
01:58:47,490 --> 01:58:48,010
Or

1165
01:58:51,370 --> 01:58:54,650
Rick do you want to answer that or July?

1166
01:58:56,950 --> 01:58:59,210
Well actually I was going to see if there's

1167
01:58:59,210 --> 01:59:07,830
anybody on MODOC staff or board you know they would be the best prepared to answer a question like

1168
01:59:07,830 --> 01:59:14,050
that, and then we could provide a response on based on what we think over.

1169
01:59:17,390 --> 01:59:20,390
I know I did see Megan

1170
01:59:20,390 --> 01:59:31,370
and I also saw Carl Seckel and there are a number of other, so any of our Modoc directors would

1171
01:59:31,370 --> 01:59:39,150
like to respond to that, start to put you on the hot seat, but feel free to speak up at this moment.

1172
01:59:39,650 --> 01:59:41,830
And if not, we can circle back around.

1173
01:59:41,950 --> 01:59:44,010
I'm sure we can get a detailed answer.

1174
01:59:45,670 --> 01:59:46,690
Yeah, I don't know.

1175
01:59:46,890 --> 01:59:47,630
Did I get unmuted?

1176
01:59:48,350 --> 01:59:50,410
Yeah, Carl, we could hear you loud, Claire.

1177
01:59:50,790 --> 01:59:53,870
So there's a couple of folks that can respond to that

1178
01:59:53,870 --> 01:59:56,330
on the call and what else I'll say is this.

1179
01:59:56,790 --> 01:59:58,530
I think that's always a possibility.

1180
01:59:58,530 --> 01:59:59,570
It's uncertain what.

1181
02:00:00,000 --> 02:00:29,680
Met's rate structure format will be in the future, so it is something to be aware of and then also how those charges would be passed on from Metropolitan Nemodoc and then how Modoc passes that on to its retail agencies. So the combination of all that would have to be sorted out to determine which costs would be avoidable or not. Right now there's, we don't know enough to

1182
02:00:29,680 --> 02:00:37,580
make any assumptions on that, but it is something that I think to pay attention to, and we'll just have to keep track of that as we move forward.

1183
02:00:37,820 --> 02:00:42,140
So that's probably about the best we can do for right now would be my guess.

1184
02:00:43,040 --> 02:00:45,460
If anybody else from Otock wants to chime in, feel free.

1185
02:00:49,340 --> 02:00:50,560
Thank you for that, Carl.

1186
02:00:51,920 --> 02:00:57,560
Can I, Rick, should I talk to our general manager, maybe wants to make a comment regarding

1187
02:00:57,560 --> 02:00:57,840
that?

1188
02:00:58,820 --> 02:00:59,380
Thanks, Mr. President.

1189
02:00:59,560 --> 02:01:05,620
Since we're lucky enough to have Director Seco online, would it be fair to say that

1190
02:01:06,240 --> 02:01:09,340
so MET has two components of its fixed charge right now?

1191
02:01:10,080 --> 02:01:14,760
It one is a readiness to serve charge, and that's based on a rolling average of what you're

1192
02:01:14,760 --> 02:01:21,580
actually taking from metropolitan, the second one being the capacity charge which is based

1193
02:01:21,580 --> 02:01:29,660
on your highest day CFS use and that's charged to you over a period of three years.

1194
02:01:30,580 --> 02:01:36,360
So both of them are dependent on what you actually use or on an annual basis or on a daily

1195
02:01:36,360 --> 02:01:36,780
peak.

1196
02:01:37,820 --> 02:01:43,540
Are they talking about a structure that's similar to that because if it was, there would

1197
02:01:43,540 --> 02:01:49,240
be a benefit to this project, or any local water supply project that offsets your metwater

1198
02:01:49,240 --> 02:01:53,300
use since your overall rolling average with theoretically go down.

1199
02:01:53,480 --> 02:02:00,700
Not sure about the daily peak that depends on your system, but at least your annual use

1200
02:02:00,700 --> 02:02:03,560
would go down in theory over.

1201
02:02:03,820 --> 02:02:06,920
Right, so Rick, everything you said is correct.

1202
02:02:06,920 --> 02:02:17,880
So the current, the way the RTS and the capacity charge are charged by Met to Modoc and Modoc to you, it is on an average basis.

1203
02:02:18,100 --> 02:02:19,200
So you can roll off of those.

1204
02:02:19,980 --> 02:02:25,740
What we're talking about is a speculation of some change Met might make in the future.

1205
02:02:26,800 --> 02:02:33,760
And the theory brought up by Director Goldman and it's a good one with everybody looking at rolling off a Met.

1206
02:02:33,760 --> 02:02:41,660
the question is, how does MET maintain its financial integrity? And there is some talk about

1207
02:02:42,800 --> 02:02:50,920
them going to more of a fixed charge or the other option is a contract basis. But there's no

1208
02:02:50,920 --> 02:02:56,560
work that's really been done on that. It's a work that I don't think will roll out until

1209
02:02:56,560 --> 02:03:03,740
So sometime in 2022, possibly even later, if I had to guess it's going to depend on

1210
02:03:03,740 --> 02:03:14,440
what the IRP says and how metropolitan judges, what its future market will be for water

1211
02:03:14,440 --> 02:03:14,860
sales.

1212
02:03:15,180 --> 02:03:18,120
But I think Met is concerned about its financial integrity.

1213
02:03:18,260 --> 02:03:20,800
I think we're all concerned about their financial integrity.

1214
02:03:21,120 --> 02:03:25,400
So something needs to be done to bolster that.

1215
02:03:25,400 --> 02:03:28,620
and it's just uncertain right now how that will happen.

1216
02:03:29,640 --> 02:03:34,580
I appreciate that, Carl, and yeah, I want to ask the question.

1217
02:03:34,580 --> 02:03:36,540
I wasn't sure how we could respond.

1218
02:03:36,740 --> 02:03:41,040
I don't know if maybe there's some sensitivity analysis

1219
02:03:41,040 --> 02:03:46,620
that could be done on, again, you know, I know it's very

1220
02:03:46,620 --> 02:03:50,540
premature, but if it takes, I mean, we're talking about a project

1221
02:03:50,540 --> 02:03:52,480
that wouldn't even come online for six years.

1222
02:03:53,380 --> 02:03:58,920
and I would expect that if that makes that kind of a change, they're going to have to place it in

1223
02:04:00,000 --> 02:04:10,200
lowly so it doesn't have a dramatic impact on its agencies but cost of water is getting

1224
02:04:10,200 --> 02:04:16,980
such that everybody is projects are more cost effective locally because that water's going up so

1225
02:04:16,980 --> 02:04:20,900
So they still have to get the revenue to pay for everything.

1226
02:04:21,200 --> 02:04:23,140
So anyway, I just wanted to ask the question.

1227
02:04:23,400 --> 02:04:27,440
So we at least aren't blinded to these numbers

1228
02:04:27,440 --> 02:04:29,780
that they're locked in for next 30 or 40 years.

1229
02:04:30,320 --> 02:04:32,700
Yeah, I think it's a good note.

1230
02:04:33,280 --> 02:04:35,600
And let's toss it back to the Met staff.

1231
02:04:35,860 --> 02:04:38,920
I'm a Monoc staff to see where Met is in that.

1232
02:04:39,540 --> 02:04:42,080
I'm not been in any of those discussions recently.

1233
02:04:42,500 --> 02:04:46,180
So but I think it's good to circle back with them

1234
02:04:46,180 --> 02:04:53,140
and get some comments, we did make an assumption in the 2018 reliability study because that was

1235
02:04:53,140 --> 02:04:59,560
something that was brought up then and we did make an assumption in that and I don't

1236
02:04:59,560 --> 02:05:05,680
offhand recall what it was but we did test sensitivity so there is a way of doing that but it's

1237
02:05:05,680 --> 02:05:07,940
pretty speculative but it can be done.

1238
02:05:12,640 --> 02:05:16,620
Great thank you for that Carl off the cuff and a great question

1239
02:05:17,240 --> 02:05:23,940
Director Bowman. All right, we'll continue on. We're almost to the end of this portion.

1240
02:05:24,840 --> 02:05:29,340
I do have a question that's a couple slides back, but I'll wait until we get to the end here.

1241
02:05:30,420 --> 02:05:32,520
So, carry on, Mr. Moore.

1242
02:05:33,680 --> 02:05:43,380
Great. Yes. Thank you. So, Rick already put these forth as the key considerations. I think we have

1243
02:05:43,380 --> 02:05:50,400
a pretty good idea of what don't need costs and how that costs compares to to met water

1244
02:05:50,400 --> 02:06:00,300
and so obviously this isn't it's cheaper. It's a diversification play. It spreads your

1245
02:06:00,300 --> 02:06:06,380
risk. A question over how Matt rates will unfold over the next five years and ten years and

1246
02:06:06,380 --> 02:06:12,320
in 20 years, well, you're one step more detached from that

1247
02:06:12,800 --> 02:06:14,800
through a diversified supply.

1248
02:06:15,960 --> 02:06:18,440
It's a finding and strength professional.

1249
02:06:19,100 --> 02:06:21,860
I like the benefits of diversification typically.

1250
02:06:23,280 --> 02:06:26,900
The second question is, is the rate impact acceptable

1251
02:06:26,900 --> 02:06:28,420
to district ratepayers?

1252
02:06:28,760 --> 02:06:32,000
And as part of the team, we've been working

1253
02:06:32,000 --> 02:06:35,620
with John Farncoff and his firm on a rate forecast

1254
02:06:35,620 --> 02:06:42,580
and I'll pause here maybe before I pass the baton over to John and see if there's more

1255
02:06:42,580 --> 02:06:51,580
questions on this portion, but John I think has got a great answer to question 2 and Rick

1256
02:06:51,580 --> 02:06:58,140
obviously has covered the survey results, but from my perspective these are the two big decision points

1257
02:06:58,140 --> 02:07:03,420
for the board that I have the pleasure of addressing.

1258
02:07:04,420 --> 02:07:12,420
Let me that kind of wraps up my section and maybe I'll just pause for questions before passing the microphone.

1259
02:07:13,120 --> 02:07:24,660
Great. Thank you for that. We'll go around the horn. Scott just asked a question. Do you have any other questions you'd like to direct towards Dave and Mark this time?

1260
02:07:24,660 --> 02:07:32,440
Yeah, one more question. The graphs that Rick showed them with the

1261
02:07:32,440 --> 02:07:37,420
projected cost of the water was that based on the assumption of the deferred

1262
02:07:37,420 --> 02:07:43,520
loan repayment approach. Yes, that was the deferred loan repayment approach.

1263
02:07:44,320 --> 02:07:50,140
Okay, because I guess as a comment I would like to see what you know the even

1264
02:07:50,140 --> 02:07:54,500
approach would look like in comparison. I don't know if you've done that or not

1265
02:07:54,500 --> 02:07:57,300
And it doesn't need to be tonight, but something eventually.

1266
02:07:57,520 --> 02:08:03,300
Well, we've, we've, we've tried to prepare for this.

1267
02:08:03,600 --> 02:08:04,480
Director Goldman.

1268
02:08:05,420 --> 02:08:06,920
And so the.

1269
02:08:08,000 --> 02:08:10,320
A level debt service.

1270
02:08:12,020 --> 02:08:17,200
As opposed to that upward sloping debt service, I think you were asking for the impact of that.

1271
02:08:17,560 --> 02:08:19,560
The impact in the first year.

1272
02:08:20,740 --> 02:08:21,940
Water cost.

1273
02:08:22,720 --> 02:08:31,040
would be to increase it by $240 to $300 per acre foot, $240 to $300. Depending on the

1274
02:08:31,040 --> 02:08:35,780
2MGD or the 5MGD scenario, but that's kind of the order of magnitude. So it's a significant

1275
02:08:35,780 --> 02:08:43,040
increase. That would be something like $2.40 more in monthly rates. So if you look at

1276
02:08:43,040 --> 02:08:51,040
an average residential customer bill, it would be something like $2.40 to $3 in additional

1277
02:08:51,040 --> 02:08:58,440
rates. If that was done in conjunction with all SRF loan as an example and you know interest rates

1278
02:08:58,440 --> 02:09:05,660
move down and then it would be less but just if I take that upward curve and make it flat it's

1279
02:09:05,660 --> 02:09:13,400
something like $2.40 a month higher cost to $3 per month higher cost on your average residential bill.

1280
02:09:14,540 --> 02:09:19,000
Okay, and then I assume it would be lower as you move out in time.

1281
02:09:19,800 --> 02:09:28,920
Absolutely, in the later years, cheaper and in cumulative less interest, but we calculated,

1282
02:09:29,240 --> 02:09:30,880
we looked at those two different curves.

1283
02:09:31,240 --> 02:09:36,000
It's only three or four million, and when I say that only, I mean, over 30 years on a project

1284
02:09:36,000 --> 02:09:42,180
of the size, the interest cost differential over 30 years is really quite negligible, and

1285
02:09:42,180 --> 02:09:45,180
The reason for that is the interest rates are so low.

1286
02:09:45,740 --> 02:09:51,580
The low level of interest rates is a good market if the districts were interested in

1287
02:09:51,580 --> 02:09:54,900
doing this upward slope and that's kind of a deferral of paying back.

1288
02:09:55,420 --> 02:09:58,640
The debt interest rates are really low now.

1289
02:09:59,760 --> 02:10:07,960
With the EPA program especially is completely agnostic on how quickly you advertise the loan

1290
02:10:07,960 --> 02:10:12,100
provided it's amortized within the useful life of the project, but that kind

1291
02:10:12,100 --> 02:10:19,280
of deferral doesn't have much interest cost and it does have this front end

1292
02:10:19,280 --> 02:10:23,960
benefit and taking away would increase the front end cost. And the one other

1293
02:10:23,960 --> 02:10:30,040
comment I'd make, I know that level debt services is familiar, but if you look

1294
02:10:30,040 --> 02:10:35,680
at real dollars with inflation, level debt services actually front-end it,

1295
02:10:35,680 --> 02:10:40,000
meaning that if you pay the same amount every year for 30 years, you feel that the most

1296
02:10:40,000 --> 02:10:49,040
in the first year, in 30 years, kind of money is cheaper. So there's that shaping upwards

1297
02:10:49,040 --> 02:10:54,260
and the reason that at least the San Diego County Water Authority did that on their diesel

1298
02:10:54,260 --> 02:11:01,160
project was just that they wanted to kind of spread the cost over time a little bit more

1299
02:11:01,160 --> 02:11:03,140
or thoughtfully than a level debt service.

1300
02:11:04,360 --> 02:11:05,760
Okay, thank you, you know that?

1301
02:11:05,920 --> 02:11:09,660
That answered my question and it was a good explanation.

1302
02:11:09,660 --> 02:11:11,560
Probably as much as I can handle at the moment.

1303
02:11:11,880 --> 02:11:14,640
So, no, thanks for it.

1304
02:11:14,800 --> 02:11:17,060
I'll stop my mouth on that.

1305
02:11:17,220 --> 02:11:18,020
Thank you for your patience.

1306
02:11:19,400 --> 02:11:21,680
All right, we'll move to Director Rayfield.

1307
02:11:22,480 --> 02:11:24,640
Wayne, any questions or comments at this time?

1308
02:11:25,460 --> 02:11:27,680
Or I do have a comment.

1309
02:11:28,020 --> 02:11:28,680
Thank you, Rick.

1310
02:11:28,680 --> 02:11:43,380
And I want to reinforce something that David said, that there is a value in diversification.

1311
02:11:45,640 --> 02:11:53,920
And he was talking, I think, in that context about diversifying our water supply portfolio.

1312
02:11:53,920 --> 02:12:13,160
and I totally agree with that comment and I wanted to point out that actually it may be easier to

1313
02:12:13,160 --> 02:12:26,560
forecast that do any decal costs that met costs 10 years out, because we don't have

1314
02:12:26,560 --> 02:12:35,640
any idea or control for that matter over what met might do. How much they'll

1315
02:12:35,640 --> 02:12:40,000
invest in the Bay Delta, for example, the tunnel.

1316
02:12:42,090 --> 02:12:45,550
And I do agree with something else, David said,

1317
02:12:46,170 --> 02:12:52,490
that money is really cheaper over time. And in fact, in 20 years,

1318
02:12:54,270 --> 02:13:02,410
we have that debt. We will be paying far less than that debt is worth today.

1319
02:13:02,410 --> 02:13:12,690
And we look at the cost of money, so I have no questions, but I'm glad you made that point, David, about

1320
02:13:14,410 --> 02:13:21,950
diversification, because that is a point that I hadn't thought about before, certainly.

1321
02:13:22,850 --> 02:13:24,850
So thank you for that. Over.

1322
02:13:25,650 --> 02:13:30,590
All right, thank you for that, Director Rayfield. We'll move on to Director Green, Bill.

1323
02:13:30,590 --> 02:13:32,830
Well, any comments or questions at this time?

1324
02:13:33,810 --> 02:13:34,770
Thank you, Mr. Director.

1325
02:13:36,070 --> 02:13:41,030
I also heard a comment that people were basically trying

1326
02:13:41,030 --> 02:13:42,610
to get off of that.

1327
02:13:43,150 --> 02:13:45,530
I don't think that's our intention.

1328
02:13:46,350 --> 02:13:50,250
Our intention is to reduce our reliability on that,

1329
02:13:51,070 --> 02:13:54,550
especially in the event of disaster or emergency.

1330
02:13:54,550 --> 02:14:03,670
In fact, I think as our general manager pointed out, our water portfolio, even as we're

1331
02:14:03,670 --> 02:14:12,670
fully subscribed to Doheny, we're still 36 percent met, plus our groundwater.

1332
02:14:13,470 --> 02:14:18,870
So that gives us roughly almost half of our supply between our groundwater and met.

1333
02:14:19,650 --> 02:14:24,070
In the event that's something that ever happened, there was a power failure or something

1334
02:14:24,070 --> 02:14:29,110
that the south didn't work. So we are covered and then also we also talked about

1335
02:14:30,450 --> 02:14:35,890
an event that something didn't go quite right and that could be a lever of water and we did

1336
02:14:35,890 --> 02:14:43,490
cover down water facility. We wouldn't be losing out of, well we could we could consider

1337
02:14:43,490 --> 02:14:49,590
my turning off our landscaping and things of that nature. So I just don't want to give everybody

1338
02:14:49,590 --> 02:14:53,490
any impression that we're off of Matt and that's not the case over.

1339
02:14:55,210 --> 02:14:59,290
Right, thank you for that. We'll move to Director Erdman Doug.

1340
02:15:00,000 --> 02:15:29,100
Any comments or questions for David Moore? Is David done with this presentation? Is this the final slide or? Yeah, and then we're going to move into the other portion of the tonight's agenda, the item C, which is the doheny decal rate impacts. Okay, I have no questions this time. Okay. Thank you. Whoever's controlling the screen, could we move back to page 40? I think it's too bad.

1341
02:15:29,100 --> 02:15:40,920
All right. And then the second bullet point, we talk about potential implementation through a joint powers authority.

1342
02:15:41,700 --> 02:15:55,000
I'm going to give this question to our general manager. I think a lot of folks already know the answer to this, but I just want you to really illuminate the fact that one, our agency already produces water.

1343
02:15:55,000 --> 02:16:01,580
but that we effectively run the joint regional water supply system, the JRWSS,

1344
02:16:02,520 --> 02:16:07,480
and kind of illuminate how, you know, folks in the public's talk about us being

1345
02:16:07,480 --> 02:16:12,440
this little water district and doing our own thing, but, you know, just give a 30,000

1346
02:16:12,440 --> 02:16:22,080
foot view of what the JRWSS is and how beneficial it is that effectively our crews are

1347
02:16:22,080 --> 02:16:25,700
are running that system and that that's adjacent to our property.

1348
02:16:26,340 --> 02:16:26,480
Sure.

1349
02:16:27,460 --> 02:16:28,220
Thank you, Mr. President.

1350
02:16:29,360 --> 02:16:35,360
Quickly, the joint regional water supply system extends 35 miles from the Irvine area,

1351
02:16:35,860 --> 02:16:43,080
all the way down to Camp Pendleton and State Parks in the San Diego County Northern section there.

1352
02:16:43,720 --> 02:16:45,880
We do have two large reservoirs and

1353
02:16:45,880 --> 02:16:51,900
And South Coast Water District was a selected operator back in about 20 years.

1354
02:16:55,000 --> 02:16:55,740
Let's see.

1355
02:16:57,340 --> 02:17:00,660
Well, we're the selected operator, somebody could correct me on that time frame there.

1356
02:17:02,280 --> 02:17:07,660
And what that means is we put our best and brightest out there to operate the system.

1357
02:17:08,040 --> 02:17:13,740
So doing the repairs, replacements, and the capital projects.

1358
02:17:13,740 --> 02:17:18,000
So, we have an engineering staff that does that, and the board approves all of these expenses

1359
02:17:18,000 --> 02:17:18,560
our board.

1360
02:17:19,020 --> 02:17:26,240
So, we have a lot of experience in a joint powers authority arrangement, and it's been

1361
02:17:26,240 --> 02:17:35,840
very successful, and it's, we have a number of member agencies as part of that JPA, and

1362
02:17:36,840 --> 02:17:42,400
these agencies have all contributed, we have quarterly meetings, and it really does work

1363
02:17:42,400 --> 02:17:49,740
out nicely to keep that system running in the best possible format through the joint

1364
02:17:49,740 --> 02:17:52,380
arrangement there. So I'm not sure if that answers the question.

1365
02:17:54,220 --> 02:18:00,320
I just want to get on the record that folks can understand that effectively our board

1366
02:18:00,320 --> 02:18:06,980
and our crews operate this crucial system that supplies water to South Orange County including

1367
02:18:06,980 --> 02:18:14,060
doing, you know, other agencies and other cities and that, you know, we're fully capable

1368
02:18:14,060 --> 02:18:21,680
of being in this type of an arrangement. This isn't some outline or kind of exotic type

1369
02:18:21,680 --> 02:18:30,000
of implementation, but that our agency has been working for decades and supplying, you know,

1370
02:18:30,140 --> 02:18:35,380
the vast majority of the water to South Orange County. But I just think that that's a really

1371
02:18:35,380 --> 02:18:41,580
important part of this that, again, folks in the public and otherwise would kind of say

1372
02:18:41,580 --> 02:18:46,880
we're this small agency and we're going in it alone when the reality is we're working

1373
02:18:47,500 --> 02:18:54,760
diligently and very hard. And like you said, we have some of our brightest and best employees working

1374
02:18:54,760 --> 02:19:02,100
on supply and water to South Orange County. Again, thank you very much, David. Obviously,

1375
02:19:02,100 --> 02:19:07,700
You're an expert in this and we're glad to have you on board as part of our team.

1376
02:19:09,120 --> 02:19:13,700
And I know we'll see much more of you in the future here.

1377
02:19:14,280 --> 02:19:17,800
It looks like Rick, you want to make a comment, or Mr. President, sorry about that lapse.

1378
02:19:18,280 --> 02:19:24,520
I just verified it is 20 years since 2000, so basically 20, 21 years.

1379
02:19:24,780 --> 02:19:29,980
And the member agencies, the water purveyors, I'll just name the City of San Clemente, San

1380
02:19:29,980 --> 02:19:33,340
San Juan Capastrano, El Toro, and Santa Margarita

1381
02:19:34,230 --> 02:19:36,300
through this transition with San Juan Capastrano.

1382
02:19:36,960 --> 02:19:39,400
Irvine Ranch Water, Moltenegel, us,

1383
02:19:39,760 --> 02:19:42,860
and we have three San Diego customers.

1384
02:19:43,160 --> 02:19:45,380
They're Southern County Edison through the songs,

1385
02:19:46,020 --> 02:19:48,220
State Parks, and Camp Pendleton.

1386
02:19:48,940 --> 02:19:52,160
And that's been operating since 2021 years,

1387
02:19:52,620 --> 02:19:53,700
successfully over.

1388
02:19:55,610 --> 02:19:57,300
Good, thank you for that.

1389
02:19:57,860 --> 02:19:59,420
Again, I know that's pretty repetitive

1390
02:19:59,420 --> 02:20:02,440
for most folks, but just want to get that on to the record.

1391
02:20:02,760 --> 02:20:04,120
Looks like, Joe, do you want to make a comment?

1392
02:20:05,060 --> 02:20:08,180
I received a public comment that I was going to read.

1393
02:20:09,540 --> 02:20:13,600
It's from El Netterhood who says, and this is quoting Al,

1394
02:20:13,980 --> 02:20:17,760
speaking only as an individual, not as a Modac Board member.

1395
02:20:18,240 --> 02:20:21,160
Clearly, this project will be significantly enhanced

1396
02:20:21,160 --> 02:20:24,100
by having more partners beyond SCWD.

1397
02:20:24,640 --> 02:20:27,280
What will it take to get other local water districts

1398
02:20:27,280 --> 02:20:30,160
to actively participate in this project.

1399
02:20:30,960 --> 02:20:32,580
And that was the end of his comment.

1400
02:20:34,300 --> 02:20:35,500
Great, thank you for that.

1401
02:20:35,680 --> 02:20:35,960
Thank you.

1402
02:20:36,100 --> 02:20:37,560
I saw your name on the list

1403
02:20:37,560 --> 02:20:40,380
and I would like to be able to go through all the names,

1404
02:20:40,580 --> 02:20:43,160
but that would have probably been about a 15 minute exercise.

1405
02:20:43,640 --> 02:20:44,600
Well, maybe out that long,

1406
02:20:44,600 --> 02:20:47,520
but we do appreciate everybody

1407
02:20:47,520 --> 02:20:50,000
that's attending this meeting

1408
02:20:50,000 --> 02:20:54,300
and feel free to communicate with our click

1409
02:20:54,300 --> 02:21:01,420
of the board, Jody, Brennan, with a message and she'll get any of your comments or questions

1410
02:21:01,420 --> 02:21:01,780
read.

1411
02:21:03,900 --> 02:21:12,660
Alright, so I believe we got to the point of that was attachment B and now we're

1412
02:21:12,660 --> 02:21:23,840
going to move to attachment C if I'm on the same page. And there we go. Okay, I've got

1413
02:21:23,840 --> 02:21:27,980
My iPad and it is matching what's on our screen.

1414
02:21:29,520 --> 02:21:33,500
So Rick, our general manager, do you want to tee this up at all?

1415
02:21:33,640 --> 02:21:36,300
Or do you want to just kind of move directly in with our console?

1416
02:21:36,760 --> 02:21:40,860
I'm just going to quickly hand it off to John Farnkoff, John, your floor.

1417
02:21:42,930 --> 02:21:43,450
All right, Rick.

1418
02:21:44,170 --> 02:21:46,070
President Erkinhof, members of the board,

1419
02:21:46,410 --> 02:21:49,150
it's a pleasure to be here with you again.

1420
02:21:49,690 --> 02:21:53,810
It was only two months ago that we finished the rate hearings.

1421
02:21:53,810 --> 02:21:57,850
And we'll back here again with some heavy lifting for you.

1422
02:21:58,490 --> 02:22:04,330
I'd like to echo David Moore's compliments about your staff.

1423
02:22:04,710 --> 02:22:09,590
They make our work a lot easier. They're really great to work with and we appreciate it very much.

1424
02:22:11,230 --> 02:22:16,370
This is the outline I have here. It's a presentation that's a little bit shorter than David Moore's.

1425
02:22:16,390 --> 02:22:22,250
And I realize that we're coming up on three hours now for this session.

1426
02:22:22,250 --> 02:22:27,870
and I'll try to move pretty quickly. Our results have already been previewed, but I'd like to

1427
02:22:27,870 --> 02:22:33,310
provide some details that will help people appreciate the significance of those results.

1428
02:22:34,410 --> 02:22:39,710
Brief introduction. And then we're going to talk about these cost impacts. And we're going to start

1429
02:22:39,710 --> 02:22:47,270
by looking at the first full year of operations in fiscal year 2627. And I'd like to clarify that

1430
02:22:47,270 --> 02:22:51,610
when I talk about the first full year of operations it's different from the first year

1431
02:22:51,610 --> 02:22:58,910
that David Moore was talking about was he used fiscal year 2021 for preparing his cost

1432
02:22:58,910 --> 02:23:02,810
estimates and casting his forecast in the future.

1433
02:23:03,790 --> 02:23:12,170
We're using his work and picking up along the way to come up first with the impacts in

1434
02:23:12,170 --> 02:23:17,810
the first four year of operations and then we're broadening it to the near term ten years

1435
02:23:17,810 --> 02:23:26,330
So you can see how we get to the rates and revenue increases that are needed to fund the

1436
02:23:26,330 --> 02:23:34,330
project at that point. And then we'll broaden it even more out past the year 2040, which

1437
02:23:34,330 --> 02:23:44,150
is when the local resources program credits will have been completed from that. I also want to

1438
02:23:44,150 --> 02:23:49,790
provide a little sensitivity analysis that focuses on electricity costs and then we'll present

1439
02:23:50,230 --> 02:23:55,670
some of the rate-payer cost impacts for fiscal year 2627. Next slide please.

1440
02:23:57,030 --> 02:24:00,530
This is just a brief description of the firm on the left side there you'll see

1441
02:24:00,530 --> 02:24:04,570
you know the work that we do for publications these provide water waste water,

1442
02:24:04,850 --> 02:24:09,690
storm water, and solid waste services. I focus on the water waste water, storm water,

1443
02:24:09,690 --> 02:24:17,150
recycled water, just all the water services, and primarily in making, and primarily in California,

1444
02:24:17,170 --> 02:24:22,950
although, you know, I've worked throughout the country and Canada. These analyses that we prepare

1445
02:24:22,950 --> 02:24:29,970
for governments, cities, districts are all to help them figure out how to fund their enterprise

1446
02:24:29,970 --> 02:24:39,630
and governmental activities. We have two offices. I'm in northern California office, we have a

1447
02:24:40,690 --> 02:24:47,330
He has been assisting the district's CFO and the district for the last three years

1448
02:24:47,330 --> 02:24:52,230
on assisting with updating the budget and also on the rate analysis.

1449
02:24:53,090 --> 02:24:58,630
My background is in water resources engineering and Jeff is his background is in economics

1450
02:24:58,630 --> 02:24:59,270
and finance.

1451
02:25:00,070 --> 02:25:05,850
On the right there, you'll see just kind of a various Southern California clients we've

1452
02:25:05,850 --> 02:25:11,190
done a variety of studies for to just give you a feel for the diversity of our financial

1453
02:25:11,190 --> 02:25:11,730
analysis.

1454
02:25:12,450 --> 02:25:12,750
Excellent.

1455
02:25:14,710 --> 02:25:20,610
Just quickly, on our analytical approach here, we think it's significant, people keep

1456
02:25:20,610 --> 02:25:31,990
in mind that these two projects both provide 2MGD for South Coast, a 5MGD project has 3MGD

1457
02:25:31,990 --> 02:25:39,190
for other partners. In this water, it's when we do its reliance on that, it's going to

1458
02:25:40,370 --> 02:25:45,330
replace 43% of that water. Almost half, it's a very significant amount. So when it comes

1459
02:25:45,330 --> 02:25:53,330
to supply diversification, broadening the portfolio, this is not a drop in the bucket, so to

1460
02:25:56,650 --> 02:26:01,910
Another part of our approach is that we're working off of the recently updated budget

1461
02:26:01,910 --> 02:26:10,590
that we prepared for the district to have a, what we call, the no-desal baseline of

1462
02:26:10,590 --> 02:26:18,190
revenue requirements to compare the incremental costs associated with the desalte projects.

1463
02:26:19,050 --> 02:26:20,910
Next slide, please.

1464
02:26:21,810 --> 02:26:30,470
So key assumptions, what we're going to be talking to you about tonight are the impacts

1465
02:26:30,880 --> 02:26:36,510
that look at the, as you remember in David Moore's graphs of the cost of water, David had

1466
02:26:36,510 --> 02:26:39,270
the medium and the high met projections.

1467
02:26:39,270 --> 02:26:46,350
We're using the medium cost projections, which is a little more adverse economically that

1468
02:26:46,350 --> 02:26:53,290
that lower cost has a bigger spread between the DFL cost estimates and the MET cost.

1469
02:26:56,270 --> 02:27:05,920
The revenue increases that we'll be looking at are our estimates, our firms estimates.

1470
02:27:06,400 --> 02:27:12,280
We've done our best to come up with a reasonable extrapolation of what we think the revenue requirements

1471
02:27:12,280 --> 02:27:16,480
are going to be in the future based on this recently updated budget.

1472
02:27:16,480 --> 02:27:21,280
But everybody should understand that these are our projections.

1473
02:27:21,940 --> 02:27:26,160
There are some very significant factors that are unrelated to diesel

1474
02:27:26,160 --> 02:27:28,080
that could affect these projections.

1475
02:27:28,620 --> 02:27:32,140
That the district will be looking at closely in the next couple of years

1476
02:27:32,140 --> 02:27:35,000
a possible revision of its reserves policy.

1477
02:27:36,560 --> 02:27:40,800
Renewable replacement projects, other capital improvements that will come along.

1478
02:27:41,320 --> 02:27:43,860
Additional costs related to water conservation recycling.

1479
02:27:44,060 --> 02:27:45,020
Those are some examples.

1480
02:27:45,020 --> 02:27:51,300
Those do not affect the incremental costs of desal that we'll be talking about, and we

1481
02:27:51,300 --> 02:27:56,040
just want to make it clear that this, we're not trying to set rates right now, we're

1482
02:27:56,040 --> 02:28:03,380
trying to look at what the incremental costs desal does, how it affects them, customers,

1483
02:28:04,080 --> 02:28:09,220
and certainly all of this is subject to further extensive review by the board.

1484
02:28:10,260 --> 02:28:11,520
I'm sorry to interrupt.

1485
02:28:13,840 --> 02:28:18,380
Director Naderhood had a really good question that I was going to wait to the end to discuss,

1486
02:28:18,640 --> 02:28:23,380
but I want to be respectful of times I'm going to interject and try to answer the question.

1487
02:28:23,500 --> 02:28:27,780
His question was related to, you know, what do we do to get more partners?

1488
02:28:31,100 --> 02:28:35,020
You know, I guess what are some of the mechanisms I'm assuming he's talking about?

1489
02:28:35,020 --> 02:28:41,280
So that are actually our staff recommended board actions, you'll see, we have four of them.

1490
02:28:42,540 --> 02:28:49,720
And number two is to initiate a public outreach program to our public and to the nearby agencies

1491
02:28:50,740 --> 02:28:56,580
supporting the implementation of the project. And number four is to authorize the GM to develop a

1492
02:28:56,580 --> 02:29:03,080
partnership marketing plan to pursue and secure delineating ocean diesel project partnerships by May

1493
02:29:03,080 --> 02:29:09,540
of 2022 and we'll explain more why that's a magic date that's coming up fairly soon

1494
02:29:10,170 --> 02:29:16,640
with local agencies and other potential water purveyors. So from the district standpoint that's

1495
02:29:16,640 --> 02:29:21,400
where we'd like to broaden that outreach if the board does give us permission but I wanted to

1496
02:29:21,400 --> 02:29:27,400
interject with that so that Mr. Naderhood wouldn't feel forced to stay throughout the entire meeting here.

1497
02:29:28,020 --> 02:29:29,900
I'll stop there over.

1498
02:29:32,680 --> 02:29:38,600
Okay, yes. Next slide here. All right, so now we're going to talk about the cost impact in fiscal year

1499
02:29:40,600 --> 02:29:45,820
2627. So we've moved up now from David Moore's first year in 2021.

1500
02:29:48,940 --> 02:29:53,990
The projects are going to provide both the five in the game two and DG projects are going to

1501
02:29:53,990 --> 02:29:59,830
provide 2,128 acre sheet water per year and now we're looking at a cost

1502
02:30:00,000 --> 02:30:29,980
I would like to submit from David's projection that in 2627, it will be $1,561. And when you do the multiplication here, that much water would cost $3,321,000. If it's replaced, that's the avoided cost that we're looking at. And, you know, it's a significant amount. And it will largely offset the cost of this out of nation as we'll see. Next slide, please.

1503
02:30:31,990 --> 02:30:37,090
And this is kind of a cramped slide, but what we have here are two boxes.

1504
02:30:37,350 --> 02:30:42,490
The upper box is the 5-MGD diesel project and the lower box is the 2-MGD project.

1505
02:30:43,330 --> 02:30:48,590
Starting first with the 5-MGD project, these are the costs that are associated with just

1506
02:30:48,590 --> 02:30:51,510
the district's 40% share of those costs.

1507
02:30:52,370 --> 02:30:54,990
And I wish we'd share on a little bit more of the math here.

1508
02:30:54,990 --> 02:31:18,290
The cost that we're showing here for the 5-MGD project is that 2128 acre feet of water multiplied times the David's projected cost of diesel for the 5-MGD project, which is $1838, which is $277 higher than the Met cost 18% higher.

1509
02:31:19,190 --> 02:31:26,290
When you met out, the MetaVoidy cost, the net cost of the 5-MGD project to see here

1510
02:31:26,290 --> 02:31:30,970
in the first four-year operations is $590,000.

1511
02:31:32,450 --> 02:31:42,950
When you compare that amount with the projected revenue requirement that we have for the no-d sell scenario,

1512
02:31:42,950 --> 02:31:52,650
We have $30,723 and as I said, that amount is certainly going to change by the time we get to it.

1513
02:31:53,230 --> 02:32:03,130
It's our best estimate right now, but that almost $600,000 net cost there roughly represents about 2% of that.

1514
02:32:03,530 --> 02:32:10,110
That $30 million could go up substantially and the percent would still run, the 2%.

1515
02:32:10,110 --> 02:32:11,990
It doesn't change very much.

1516
02:32:12,910 --> 02:32:22,310
In the lower box for the 2MGD project, here we have a $5 million annual cost for water,

1517
02:32:23,350 --> 02:32:36,810
and there the math is 2128 acre feet times $2,394 for the cost of diesel in the 2MGD project,

1518
02:32:36,810 --> 02:32:46,510
which is $833 higher than the METS cost of water when you net out the MET avoided cost.

1519
02:32:47,010 --> 02:32:54,510
Being will cost for the 2MGD project is $1733,000 per year.

1520
02:32:55,310 --> 02:33:00,030
And that's about 6% on top of this projection we have of the revenue requirement.

1521
02:33:00,830 --> 02:33:05,870
So this is some additional detail from where that 2% and 6% impact come from.

1522
02:33:05,870 --> 02:33:11,170
And, and that percent is roughly going to remain constant until we get out to the point

1523
02:33:11,170 --> 02:33:19,050
around 2040, where the, when the LRP ends, next slide, please.

1524
02:33:22,130 --> 02:33:28,890
What I wanted to do with this table is give people an appreciation for the fact that D cell

1525
02:33:30,710 --> 02:33:34,350
is, is not a major part of your cost.

1526
02:33:34,350 --> 02:33:40,650
You have what we call here this base revenue requirement, which also includes the cost, producing, groundwater.

1527
02:33:41,290 --> 02:33:46,530
That's about three quarters of the revenue requirement that rates have to cover.

1528
02:33:47,170 --> 02:33:51,610
Water supply is about a quarter of it, and there are no diesel alternative.

1529
02:33:51,990 --> 02:33:54,410
You see there what the net purchases would be.

1530
02:33:54,890 --> 02:33:58,190
Again, this is a projection into the first year of operations.

1531
02:33:59,410 --> 02:34:01,590
When you get to the 5MGD project,

1532
02:34:01,590 --> 02:34:15,370
what we see here is the cost of diesel, that $3,911,000 cost, that's about 13% of the revenue

1533
02:34:15,370 --> 02:34:22,890
requirements. So we've reduced the purchases of met, water down to 14% from 25%, and we're

1534
02:34:22,890 --> 02:34:30,830
getting 13% now of the revenue requirement devoted to the cost of diesel. And looking

1535
02:34:30,830 --> 02:34:35,090
a little bit more closely at this. If you look at the cost of electricity on Route 12,

1536
02:34:35,750 --> 02:34:42,290
that's the single largest cost of the three debt service and other O&M in diesel.

1537
02:34:43,250 --> 02:34:49,270
And for the five MGD project, that 2.1 million is about 55 percent of the total cost of

1538
02:34:49,270 --> 02:34:51,950
diesel. It's 42 percent in the two MGD project.

1539
02:34:54,830 --> 02:34:57,450
I know people are very sensitive to the cost of

1540
02:34:57,450 --> 02:35:02,370
electricity and I'm just trying to help you get an idea for you know how it fits into the whole

1541
02:35:02,370 --> 02:35:09,770
picture here because although it might be you know close to half of the cost of the cost of

1542
02:35:09,770 --> 02:35:14,670
diesel it's about seven percent of the total revenue requirement that we project.

1543
02:35:17,530 --> 02:35:25,090
We can have the next slide please. We prepared this slide again to focus on electricity and

1544
02:35:25,090 --> 02:35:30,850
And creating an example here where we said, you know, what if there were a 10% increase

1545
02:35:30,850 --> 02:35:36,410
in all of these costs, which is what we're showing here, what would that amount to as

1546
02:35:36,410 --> 02:35:41,710
an ineffective dollar amount that you would have to increase rates to cover?

1547
02:35:42,510 --> 02:35:48,910
And focusing on row 11 there, the electricity, if it should suddenly go up 10% overnight,

1548
02:35:49,510 --> 02:35:59,610
It would be a $214,000 additional cost, 0.7% additional impact on the revenue requirement.

1549
02:36:02,300 --> 02:36:03,660
We could have the next slide, please.

1550
02:36:05,720 --> 02:36:05,880
All right.

1551
02:36:06,020 --> 02:36:13,200
So now I've talked to you about the fiscal year 2026, 27 first full year of operations.

1552
02:36:13,200 --> 02:36:23,680
which you can see here is the six bar set of three bars there from the left.

1553
02:36:24,240 --> 02:36:27,220
It's inside that dashed black box.

1554
02:36:27,940 --> 02:36:32,960
What we're trying to show you here is the period of time over which the revenue requirements

1555
02:36:32,960 --> 02:36:38,420
will be increasing to the first full year of operations where we see that additional

1556
02:36:38,420 --> 02:36:47,400
$580,000 cost for the 5-MGD project and the $1.77 million for the 2-MGD project.

1557
02:36:49,040 --> 02:36:55,320
Working out from left to right, this is the current year, fiscal year 2122 is in the

1558
02:36:55,320 --> 02:36:56,140
far left there.

1559
02:36:57,160 --> 02:37:03,200
The rates for this year and next year were recently adopted back in July.

1560
02:37:03,200 --> 02:37:10,880
Those have been set, there are no costs for diesel in them, so you'll see the tips of the

1561
02:37:10,880 --> 02:37:13,300
three bars are all the same height.

1562
02:37:14,080 --> 02:37:21,260
As we move into the dashed black box, we start to introduce increases in the revenue

1563
02:37:21,260 --> 02:37:27,320
requirement first to cover the 2MGD project, and it's very hard to see, but if you look at

1564
02:37:27,320 --> 02:37:32,080
that blue bar, the right most horizontally hatched bar,

1565
02:37:32,460 --> 02:37:33,900
it's just tiny bit higher.

1566
02:37:34,260 --> 02:37:35,480
That's a 1% increase.

1567
02:37:36,480 --> 02:37:39,600
And then the next year in fiscal 2425,

1568
02:37:40,220 --> 02:37:41,680
now it's 2% higher.

1569
02:37:42,720 --> 02:37:45,600
And then in fiscal 2526,

1570
02:37:46,280 --> 02:37:49,920
starts to see a 1% increase in the middle cross hatched,

1571
02:37:50,040 --> 02:37:53,100
green bar, that's a 1% increase.

1572
02:37:54,020 --> 02:38:00,180
Meanwhile, the blue bar has gone up another 2%, so you see, getting a little bit higher.

1573
02:38:00,360 --> 02:38:06,580
And then when you finally get to the first full year of operations, the cream bar is up 2%,

1574
02:38:10,880 --> 02:38:14,100
the blue bar now is up another 2%.

1575
02:38:15,440 --> 02:38:19,960
After that, those increments will proportionately stay the same

1576
02:38:19,960 --> 02:38:25,160
until we get to win the LRP payments and down in 2040,

1577
02:38:26,260 --> 02:38:28,040
if we can have the next slide, please.

1578
02:38:29,860 --> 02:38:33,860
This is a slide that really looks at the full span

1579
02:38:33,860 --> 02:38:35,980
of time here from the current fiscal year,

1580
02:38:37,280 --> 02:38:40,840
where you see those hyphens or those dashes,

1581
02:38:41,000 --> 02:38:43,920
but that indicates that there has been no additional

1582
02:38:44,440 --> 02:38:46,420
revenue increase to fund diesel.

1583
02:38:46,420 --> 02:38:55,280
So in the first two years, the current year fiscal 21-22 and then 22-23, those rates that

1584
02:38:55,280 --> 02:38:59,420
were recently adopted have no funding and then for the do-sound projects.

1585
02:39:00,240 --> 02:39:05,580
And then you'll start to see the percentage increases that get us to the first full year

1586
02:39:05,580 --> 02:39:12,640
of operations in fiscal year 26-27 and then there's the number of years there where there are

1587
02:39:12,640 --> 02:39:17,760
no additional increments, incrementally rate increases for D-SAL.

1588
02:39:18,900 --> 02:39:24,340
No doubt will be rate increases just because other costs will be going up.

1589
02:39:24,840 --> 02:39:29,740
We don't know what those are going to be right now, but those dollar amounts

1590
02:39:29,740 --> 02:39:35,540
for the cost of D-SAL we've converted into these percentages based on the best

1591
02:39:35,540 --> 02:39:38,600
estimate that we can make right now for the no D-SAL alternative.

1592
02:39:39,180 --> 02:39:45,000
When you finally get out of fiscal year 3940, you'll see there are a couple of years

1593
02:39:45,000 --> 02:39:52,080
there of additional increases that will make up for the loss of the LRP payments.

1594
02:39:52,840 --> 02:39:58,560
And then again, you will get back to where the revenue increases would be the same no

1595
02:39:58,560 --> 02:39:59,000
matter what.

1596
02:39:59,260 --> 02:40:02,800
There would be no additional incremental increases for diesel.

1597
02:40:04,260 --> 02:40:05,420
Next slide, please.

1598
02:40:05,420 --> 02:40:14,220
This is a table that gives you an idea of what these customer builds with how they would

1599
02:40:14,220 --> 02:40:14,920
be impacted.

1600
02:40:15,540 --> 02:40:18,960
You've already seen this for a single family customer here.

1601
02:40:19,100 --> 02:40:26,400
We're seeing that $2.38 amount per month, just 2% over what we estimate the bill would

1602
02:40:26,400 --> 02:40:27,820
be without DSL.

1603
02:40:28,680 --> 02:40:34,620
And for the $2.2 project, it's that $7.20 amount, which is 6% more.

1604
02:40:35,260 --> 02:40:42,300
And you can see it for the small commercial, you see the assumptions we've made there about the size of the meter and the amount of water used.

1605
02:40:43,220 --> 02:40:48,200
You know, when I look at this, try to put myself in the shoes of a rate payer.

1606
02:40:48,640 --> 02:40:58,480
And you know, I guess one way to look at this is that this is the cost of reliability, reliability from diesel.

1607
02:40:59,140 --> 02:41:16,320
And it's a form of insurance and I think you can look at this and you can think if you're a residential customer that this is insurance maybe against the loss of landscape if there would be an interruption and irrigation water.

1608
02:41:16,900 --> 02:41:25,420
And if you're a commercial customer, the interruption in your business for water uses that it might be affected by.

1609
02:41:25,420 --> 02:41:33,980
Um, um, uh, rationing or, or, uh, curtailment of water, use, do we have the next slide, please?

1610
02:41:35,300 --> 02:41:40,980
Uh, getting into the summary here, uh, you know, I talked about, you know, they, uh, we really

1611
02:41:40,980 --> 02:41:46,780
have two periods of revenue increases. There's the first one that initially gets you up, uh, to the

1612
02:41:46,780 --> 02:41:54,120
first full year of operation in fiscal 2617. And then there are a few more increases, uh, 15 years later

1613
02:41:54,120 --> 02:41:55,380
out in 2040.

1614
02:41:57,620 --> 02:42:03,080
By the first full year of operations we've seen here it's it's about 580 you know

1615
02:42:03,080 --> 02:42:09,860
$600,000 dollars call it or 2% more than it would be without the decal. For the 2-inch

1616
02:42:09,860 --> 02:42:18,420
UD project this 1.77 million 6% more and then there'll be those additional increases 15 years later.

1617
02:42:18,800 --> 02:42:22,920
Just really hard to talk about frankly that's a long way to forecast projections.

1618
02:42:23,580 --> 02:42:24,680
Next slide please.

1619
02:42:26,120 --> 02:42:32,400
When we talk about the impact on customers, I'd like to make it clear that it's hard to

1620
02:42:32,400 --> 02:42:38,820
talk about a customer build because customers receive two bills, they build monthly for

1621
02:42:38,820 --> 02:42:43,820
the water use and they build annually for their service charge and their peak demand charge

1622
02:42:43,820 --> 02:42:48,480
and what we've done is we've taken those annual charges and convert them into monthly amounts.

1623
02:42:48,480 --> 02:42:54,860
customers don't actually get one bill for all of that spoken out. But again, you know,

1624
02:42:54,920 --> 02:43:01,960
this gets back to that monthly cost impact for an average resident's $2.38. For commercial,

1625
02:43:02,280 --> 02:43:08,720
for the five NGD project, it's 2 percent more. The dollar amount varies because commercial

1626
02:43:08,720 --> 02:43:17,040
classes customers are a very heterogeneous group of customers. So the size of the meter and the water

1627
02:43:17,040 --> 02:43:21,240
use can very considerably. It's hard to come up with a dollar amount for an average commercial

1628
02:43:21,240 --> 02:43:29,080
customer. To MGD project, again, for average residential $7.20 cents, 6% more. Commercial

1629
02:43:29,080 --> 02:43:31,500
will be 6% more whatever their cost is.

1630
02:43:34,180 --> 02:43:35,060
I think that's it.

1631
02:43:36,700 --> 02:43:41,420
All right. Thanks, John. I'm going to take the next several slides. But first of all, I wanted

1632
02:43:41,420 --> 02:43:47,300
to thank David Moore, clean energy capital and John Farnclaw at HFNH and their staff for

1633
02:43:47,300 --> 02:43:49,200
for the wonderful work, it was a lot,

1634
02:43:49,480 --> 02:43:50,760
so I appreciate that effort.

1635
02:43:51,380 --> 02:43:52,120
Next slide, please.

1636
02:43:54,760 --> 02:43:55,860
So I'm just gonna close up and get

1637
02:43:55,860 --> 02:43:56,900
towards our recommendation.

1638
02:43:57,760 --> 02:43:59,580
So this is, as many of you know,

1639
02:43:59,720 --> 02:44:02,320
we have broad-based support of this project

1640
02:44:02,320 --> 02:44:04,980
from the elected officials, regulatory support,

1641
02:44:05,220 --> 02:44:06,960
community support, stakeholder support,

1642
02:44:08,200 --> 02:44:10,600
bipartisan from the elected officials include

1643
02:44:11,680 --> 02:44:13,560
OC Supervisor Lisa Bartlett,

1644
02:44:13,900 --> 02:44:14,800
Congressman Mike Levin,

1645
02:44:14,800 --> 02:44:18,720
a state assembly person, Codipet, Petri Norris,

1646
02:44:18,940 --> 02:44:23,720
it's instrumental in our legislative fix, regulatory support,

1647
02:44:24,140 --> 02:44:27,140
including the slant wells and co-mingled discharge that I talked about earlier,

1648
02:44:27,160 --> 02:44:32,240
community support through the public survey, water reliability, working group,

1649
02:44:32,440 --> 02:44:36,800
that was assembled to help us road map what direction we go here,

1650
02:44:37,300 --> 02:44:39,900
and the resorts have been supportive, including Monarch Beach,

1651
02:44:39,900 --> 02:44:42,980
each speaking at one of our prior board meetings.

1652
02:44:43,760 --> 02:44:48,620
Staycoater supports from the and the environmental community included Heal the Bay and OC and

1653
02:44:48,620 --> 02:44:49,020
Coastkeeper.

1654
02:44:49,260 --> 02:44:52,220
Just an example of some of the support next slide.

1655
02:44:54,620 --> 02:44:58,500
I already talked about these beneficial project components and the interest of time I will

1656
02:44:58,500 --> 02:44:59,700
not talk about it again but

1657
02:45:00,000 --> 02:45:08,060
As you saw in the area of photo, our project is uniquely positioned there with a number of positive aspects to that site. Next slide, please.

1658
02:45:10,800 --> 02:45:27,540
And I will also talk about the due diligence study. So, this is, this is one of the key milestones here, the financial study. We're also in parallel working on our hydrogeologic study, putting the final touches on our alternative power study.

1659
02:45:27,540 --> 02:45:30,560
and also the blended direct potable reuse

1660
02:45:30,560 --> 02:45:33,040
and ocean water diesel concept study

1661
02:45:33,040 --> 02:45:35,760
that I spoke of earlier for future phases

1662
02:45:35,760 --> 02:45:36,680
of this project.

1663
02:45:37,500 --> 02:45:38,520
Next slide please.

1664
02:45:40,360 --> 02:45:40,560
Excuse me.

1665
02:45:42,460 --> 02:45:44,540
This is feasibility slide, but I'm just going

1666
02:45:44,540 --> 02:45:45,660
to highlight permits.

1667
02:45:46,000 --> 02:45:47,840
So we're in the midst of permits as many of you know.

1668
02:45:48,980 --> 02:45:51,960
Our submittals, we provided submittals

1669
02:45:51,960 --> 02:45:54,140
to the regional state water board.

1670
02:45:54,700 --> 02:45:57,160
We were working with the state lands commission

1671
02:45:57,160 --> 02:46:07,580
on a permit, actually at least, and the Coastal Commission as you're very aware, and that application has been the drafts have been submitted.

1672
02:46:07,820 --> 02:46:22,700
So we're hoping that the permits will be completed by early summer of 2022, and hence that's why you see the May 22 milestone in the last slide on recommendations.

1673
02:46:23,960 --> 02:46:24,860
Next slide, please.

1674
02:46:24,860 --> 02:46:29,800
So, this is what we're asking the board for tonight, and I'll go on order.

1675
02:46:30,080 --> 02:46:34,280
Number one is to accept the Doheny Ocean Decell Project Water Cost Analysis.

1676
02:46:34,640 --> 02:46:40,700
So, that's this overarching analysis that you salt tonight, and it primarily consists

1677
02:46:40,700 --> 02:46:47,580
of David Moore's study along with John Farncoff's rate-impact analysis.

1678
02:46:48,240 --> 02:47:15,080
Number two, this goes to Director Nader-Hood's question and other questions that came up to initiate a public outreach program, and that would be focused on our public within our service boundary but also the public outside of our service boundary, the adjacent agencies that might want to know more and partner on the project and the general public who wants to know more about this project as well.

1679
02:47:15,080 --> 02:47:17,660
and it extends well past our borders.

1680
02:47:17,920 --> 02:47:19,520
We've had interest from in-line agencies.

1681
02:47:19,760 --> 02:47:21,080
Of course, they'd have to go through

1682
02:47:21,600 --> 02:47:25,160
some met act revisions to provide paper transfer water,

1683
02:47:25,180 --> 02:47:29,180
but there has been interest from some in-line agencies as well.

1684
02:47:29,800 --> 02:47:31,900
So number three would be to reengage Hawkins,

1685
02:47:32,100 --> 02:47:36,700
Delafield and Wood, and that's attorney led by

1686
02:47:36,700 --> 02:47:40,880
attorney Eric Peterson to develop the design

1687
02:47:40,880 --> 02:47:42,560
build operate contract.

1688
02:47:42,560 --> 02:47:52,320
We started on that, COVID hit, we wanted to be cognizant of the cost moving forward, so we put that on pause, so this is an ask to re-engage that contract.

1689
02:47:52,960 --> 02:48:05,120
We have budgeted for it this year, and we would, with Hawkins and other task related consultants that would assist directly in that design bill operate contract development only.

1690
02:48:06,640 --> 02:48:15,360
and this would be for the options of both a 2-MGD or a 5-MGD so that we can start getting

1691
02:48:15,360 --> 02:48:22,580
out there in the market to really get to the RFQ process because the more qualified teams

1692
02:48:22,580 --> 02:48:26,900
earlier we get out there theoretically the better project we're going to get to minimize

1693
02:48:26,900 --> 02:48:29,220
risk and cost to our ratepayers.

1694
02:48:29,220 --> 02:48:41,040
Number four is to authorize the general manager to develop a partnership marketing plan to pursue and secure the Delimini Ocean DSL project partnerships.

1695
02:48:41,780 --> 02:48:49,600
So pursue and secure partnerships by May 2022 and with local agencies and or other water purveyors.

1696
02:48:49,600 --> 02:48:57,720
and the key, or the reason why we put in that date, May 2022, is hopefully we're finishing

1697
02:48:57,720 --> 02:49:05,100
up our permits at that point. But also, this is tied to WIFIA. As many of you know, we

1698
02:49:05,100 --> 02:49:13,140
were invited back for WIFIA funding, and we have to provide them extensions, or request

1699
02:49:13,140 --> 02:49:20,200
for extensions. And this is another milestone date and we really would like to get more secure

1700
02:49:20,200 --> 02:49:25,860
on what path we're going to go toward so that we can keep these agencies, especially the funding

1701
02:49:25,860 --> 02:49:31,780
agencies informed in all fairness to them. So those are the recommended actions from staff.

1702
02:49:32,240 --> 02:49:37,600
And I, that concludes our collective presentation. Thank you for all of your patients, especially

1703
02:49:37,600 --> 02:49:43,360
All of the folks who called in from the public and other agencies that really really appreciate

1704
02:49:43,360 --> 02:49:48,480
you spending that time with us and I apologize for the technical glitch and for the time that

1705
02:49:48,480 --> 02:49:51,700
this took, but thank you very much. I'll stop there over.

1706
02:49:53,960 --> 02:49:55,880
Great. Thank you for that, Rick.

1707
02:49:57,800 --> 02:50:06,300
So let me touch base with Jody. Do we have any additional comments or questions from the public

1708
02:50:06,300 --> 02:50:12,920
or anybody on the? No, hold on here. We have a hand up. Yes.

1709
02:50:13,440 --> 02:50:15,020
Huyin, if we'd like to speak.

1710
02:50:17,430 --> 02:50:23,170
Okay. Hello, Huyin. We'll give you three minutes as all

1711
02:50:23,170 --> 02:50:30,450
speakers get. So if you weren't on the column or on the meeting when we started, Jody will

1712
02:50:30,450 --> 02:50:38,370
give you a cue when you have 30 seconds left and then when you get your three-minute

1713
02:50:38,370 --> 02:50:44,470
mark and I've heard Hoian speak many times before and so I know she's got this down to

1714
02:50:44,470 --> 02:50:47,390
science. So Hoian the floor is yours for three minutes.

1715
02:50:48,030 --> 02:50:55,910
Thank you so much. This has been a pretty long evening. I'm always appreciative how diligent

1716
02:50:55,910 --> 02:51:04,970
you guys are. And unfortunately, I'm such an expert. I really don't know what I'm not like the

1717
02:51:04,970 --> 02:51:12,810
previous public commenters. So everything I'm saying is only my two cents. I'm not speaking on

1718
02:51:12,810 --> 02:51:20,850
and on behalf of any organization or anybody else. I am just hoing it. The most important thing I want

1719
02:51:20,850 --> 02:51:30,330
you say is that folks need to remember the cost of climate change. Over here, we're lucky that

1720
02:51:30,330 --> 02:51:34,370
the weather is always good. We don't get a fire or the wildfire.

1721
02:51:35,370 --> 02:51:39,190
Sea level rise while if you don't leave on beach roads, they're probably fine.

1722
02:51:40,790 --> 02:51:49,270
But, you know, we are paying climate change, the fixes of climate change one way or another.

1723
02:51:51,010 --> 02:51:58,090
Another thing is that many of you know that I have been working on single use

1724
02:51:58,090 --> 02:52:03,910
plastic band for years. Everybody agrees. This is such a good idea. We need to

1725
02:52:03,910 --> 02:52:12,190
do it. But why? I've been so alone. Year after year, week after week, maybe day

1726
02:52:12,190 --> 02:52:19,890
after day. I am alone. So, you know, actually I often think about you guys that this

1727
02:52:19,890 --> 02:52:26,450
This, though, hinted this out, sounds like a really good project, but why other districts have not you want you?

1728
02:52:27,290 --> 02:52:32,910
So, you know, the guy doesn't pay you in the road in the dark, you just have to tough it up, you know.

1729
02:52:33,770 --> 02:52:37,950
You just have to have to have face, you have to be strong, you just have to do it.

1730
02:52:39,490 --> 02:52:43,810
And the other thing I have been saying is that water is too cheap.

1731
02:52:44,630 --> 02:53:01,310
It's not like electricity. It's not like gasoline. So while as long as it's cheap, people think they can afford it. They tend to waste. They tend to use more than necessary. That really bothers me.

1732
02:53:03,210 --> 02:53:13,070
Bottom line. I don't know much about this. I just want to say thank you guys so much for what you have been doing for years.

1733
02:53:13,710 --> 02:53:16,490
You are an inspiration to me. Thank you. Bye.

1734
02:53:19,100 --> 02:53:21,180
All right. Thank you for that.

1735
02:53:22,240 --> 02:53:25,980
Yeah, I think we all share a lot of your same views.

1736
02:53:26,260 --> 02:53:27,740
So maybe you're not alone.

1737
02:53:29,820 --> 02:53:31,500
But thank you for that.

1738
02:53:33,120 --> 02:53:36,440
Seeing nothing further will move to the board for

1739
02:53:38,160 --> 02:53:44,100
any final comments or questions for perhaps a motion on this.

1740
02:53:44,100 --> 02:53:47,360
and we'll start with the Director Golden Scott.

1741
02:53:48,760 --> 02:53:54,600
Yeah, no, just thank everybody, it was a very thoughtful and detailed presentation and I'm very

1742
02:53:54,600 --> 02:54:00,120
impressed with all the public that joined us and staff that joined the call and they're sticking

1743
02:54:00,120 --> 02:54:07,620
with us at 8.30 after 3.5 hours. So it's very impressive for everybody that's still hanging in there.

1744
02:54:07,620 --> 02:54:17,460
I don't really have any questions and I would make a motion to the board to adopt the staff recommendation.

1745
02:54:19,200 --> 02:54:23,280
All right. Thank you for that. I'll assume that that's all four items.

1746
02:54:24,140 --> 02:54:30,200
And I'll ask Jody, would you like us to vote on these individually or can we vote as a block on all four?

1747
02:54:30,820 --> 02:54:31,740
You can vote as a block.

1748
02:54:32,620 --> 02:54:34,080
Okay. Great. Thank you for that.

1749
02:54:34,080 --> 02:54:38,820
All right, Scott. We'll move on to Wayne Rayfield.

1750
02:54:41,100 --> 02:54:46,560
Wayne, we have a motion on the floor and we have the floor open to you for questions and comments.

1751
02:54:46,560 --> 02:54:59,120
Okay. Thank you, President Erkinath. I have no additional questions, comments. I will

1752
02:54:59,120 --> 02:55:07,280
a second Director Goldman's motion for the recommended action over.

1753
02:55:08,540 --> 02:55:13,180
Great. Thank you for that. We'll move to Director Green, Bill, Floresier.

1754
02:55:13,180 --> 02:55:17,040
of Aloha. Thank you very much, Mr. Chairman.

1755
02:55:18,240 --> 02:55:21,840
You know, I do, I support the recommendation,

1756
02:55:22,280 --> 02:55:26,840
but maybe with some consideration by the motionmaker

1757
02:55:26,840 --> 02:55:30,800
as well as the seconder, that maybe item one

1758
02:55:31,480 --> 02:55:35,660
also would include a little further investigation

1759
02:55:36,140 --> 02:55:37,960
with other districts regarding,

1760
02:55:38,360 --> 02:55:41,760
I know that we're coming up with a conservative approach

1761
02:55:41,760 --> 02:55:56,900
But to really dig into the solar perspective, I remember GHG is told us every one penny we save on energy, we save $50 an acre foot.

1762
02:55:57,180 --> 02:56:02,680
So I kept that and back went mine for the last five years. And so that is huge.

1763
02:56:02,680 --> 02:56:10,600
but I'm good with item two. I would like to see item three, repriared toys. In other

1764
02:56:10,600 --> 02:56:20,800
words, I'll be fine with getting on board with the RFP SOQ process, but I would like

1765
02:56:20,800 --> 02:56:27,310
to kind of see a two number four first to make sure that everything is kind of

1766
02:56:27,310 --> 02:56:34,270
up there. So those are my comments for further discussion and consideration over.

1767
02:56:35,810 --> 02:56:42,210
Okay, thank you for that. Maybe I'll ask a question a little bit out of order because I was

1768
02:56:42,210 --> 02:56:48,050
going to go last but to our general manager, I made the assumption that these are all happening

1769
02:56:48,050 --> 02:56:54,610
kind of simultaneously and pretty much hitting the ground in a full sprint at this point in time.

1770
02:56:54,610 --> 02:57:00,710
That's correct, that was the intention of this recommendation but that's a good point

1771
02:57:00,710 --> 02:57:01,910
on number four.

1772
02:57:02,390 --> 02:57:07,870
So I did want to comment about number one to Director Green.

1773
02:57:08,730 --> 02:57:14,770
We could also, we haven't put the final stamp on the alternative energy study so we could

1774
02:57:14,770 --> 02:57:22,370
weave that back in your comment into that study and that would revise accordingly this financial

1775
02:57:22,370 --> 02:57:29,150
study in terms of the cost, if we could get some sort of, I guess, research that's solid

1776
02:57:29,150 --> 02:57:30,290
on that.

1777
02:57:35,630 --> 02:57:45,830
Question would be if item three was contingent on four, does that push us out too far or

1778
02:57:45,830 --> 02:57:52,830
In other words, we don't have a 5MG project unless we have partners.

1779
02:57:54,170 --> 02:57:59,630
And so, for my mind, having the RFP, it's going to be more attractive and get a better

1780
02:57:59,630 --> 02:58:07,310
price if you can get a 5MG project, but I think that's why I'm putting the horse before

1781
02:58:07,310 --> 02:58:08,490
the cart so it's big.

1782
02:58:12,320 --> 02:58:13,160
All right.

1783
02:58:15,360 --> 02:58:21,380
Let's let's move to or do you want to make a comment on that? Yeah, I'm sorry. Mr.

1784
02:58:21,460 --> 02:58:25,940
President, I was thinking about that thought a little too long, but I'd like to ask Mark

1785
02:58:25,940 --> 02:58:31,220
Sierna. I bet he has some words of wisdom here on that over.

1786
02:58:31,220 --> 02:58:31,760
Sure.

1787
02:58:33,020 --> 02:58:33,880
Thanks, Rick.

1788
02:58:34,180 --> 02:58:34,800
Yes, everybody.

1789
02:58:34,900 --> 02:58:35,300
Hear me again?

1790
02:58:35,740 --> 02:58:36,260
Yes.

1791
02:58:36,580 --> 02:58:38,280
I've been spoken very much this evening.

1792
02:58:39,880 --> 02:58:41,000
Real quick.

1793
02:58:41,140 --> 02:58:49,180
You're just, I made a couple of items here regarding the, also with the energy component, maybe

1794
02:58:49,180 --> 02:58:51,660
first, just because I can speak to that.

1795
02:58:51,840 --> 02:58:57,680
One of the next steps that we had envisioned for the electricity and the power cost analysis,

1796
02:58:57,680 --> 02:59:27,620
which was an outcome of the kind of the recommendations or the findings from the alternative power solution study was to pursue further drill down further into the analysis of a power purchase agreement, the power purchase of a agreement opportunities that are out there looking at solar PV, looking at battery storage and microgrid systems that will absolutely directly apply to this project now that we know what that magnitude

1797
02:59:27,620 --> 02:59:33,060
attitude could be and what kind of space we have out there and understanding the environment

1798
02:59:33,060 --> 02:59:40,440
today with SDG and E-Rates and what are the various initiatives that are out there and

1799
02:59:40,440 --> 02:59:45,540
incentives that are out there that are in the market and so we have actually spoken with

1800
02:59:45,540 --> 02:59:50,280
consultants regarding that next stage so that could be one component which would absolutely

1801
02:59:50,280 --> 02:59:56,300
look at refining those numbers and as David Moore said and others said that the cost of energy

1802
02:59:56,300 --> 02:59:59,960
right now is a conservative estimate. We know what it is with SDG&A.

1803
03:00:00,000 --> 03:00:17,920
And we have the numbers we've seen in the power cost solutions that were that there's several options that will lower that cost absolutely. So then it's just a matter of pursuing that and drilling down into the weeds of those numbers and we have consultants available to us who can perform that work. So that's the first comment.

1804
03:00:17,920 --> 03:00:32,860
The other comment regarding the timing of the Delfield contract development is we went into

1805
03:00:32,860 --> 03:00:38,580
discussions with Eric Peterson and others, the approach would be to go out and develop

1806
03:00:38,580 --> 03:00:48,620
help these RFQ documents and ultimately RFP documents with the intent to have an either

1807
03:00:48,620 --> 03:00:53,940
or approach, whether it's a two or a five MDD, and at someone along the line, we would

1808
03:00:53,940 --> 03:01:01,340
be able to make a decision and ultimately direct those teams to which we would ultimately

1809
03:01:01,340 --> 03:01:09,560
end up pursuing. As well, running concurrently will allow us to go out and pursue the contracts

1810
03:01:09,560 --> 03:01:16,000
and the solicitations and reach out to those teams and get them started. In our discussions

1811
03:01:16,000 --> 03:01:21,440
with the various teams that are out there, and there may be more, that would be the preferred

1812
03:01:21,440 --> 03:01:25,780
alternative than they would consider both alternatives as a reasonable approach. And so we could do

1813
03:01:25,780 --> 03:01:31,300
that can currently, while we're doing the partnership marketing plan and our outreach.

1814
03:01:31,940 --> 03:01:35,040
So I can stop there and ask, ask for any questions over.

1815
03:01:36,200 --> 03:01:36,740
Rick, sorry.

1816
03:01:36,900 --> 03:01:39,880
If you don't mind, Rick, I could just add one thing to what works.

1817
03:01:41,740 --> 03:01:47,160
Eric Peterson, as you know, he's he's fantastic and you know, I think he would be really good

1818
03:01:47,160 --> 03:01:52,120
to get him engaged sooner rather than later because as we all know, he's a he's interested

1819
03:01:52,120 --> 03:01:56,120
to advise your strategic counsel, you know, we're just not going to start putting pen to paper and writing

1820
03:01:57,240 --> 03:02:01,380
SFQs and RFPs where he'll give us some really good guidance in this whole area, so

1821
03:02:01,380 --> 03:02:06,520
I feel good about bringing him on, you know, sooner rather than later, over.

1822
03:02:07,760 --> 03:02:13,280
Well, thank you. I appreciate that, Mr. Chairman. These comments that I do support

1823
03:02:14,140 --> 03:02:19,020
the staff recommendation. I too, with Tony Nelson and others,

1824
03:02:19,020 --> 03:02:24,800
So I think everybody on the board is concerned with cost, but I think we've just demonstrated

1825
03:02:24,800 --> 03:02:28,580
this evening we're heading the right direction here.

1826
03:02:30,380 --> 03:02:37,080
You know, it goes back to balancing cost with our reliability for our customers.

1827
03:02:37,960 --> 03:02:45,880
And I know we've all, I know that visionaries like Mulholland with MWD a hundred years ago,

1828
03:02:45,880 --> 03:02:54,800
So he was really criticized for bringing an aqueduct to Los Angeles area to the Southern

1829
03:02:54,800 --> 03:02:55,320
California.

1830
03:02:55,660 --> 03:03:00,620
But we have to be the visionaries here for our district and we have to watch out for

1831
03:03:00,620 --> 03:03:08,540
our region and nothing against metropolitan, however, mother nature may have a different

1832
03:03:08,540 --> 03:03:10,040
idea someday for metropolitan.

1833
03:03:10,740 --> 03:03:11,100
Thank you.

1834
03:03:11,340 --> 03:03:11,960
Those are my economics.

1835
03:03:12,280 --> 03:03:12,480
Over.

1836
03:03:13,700 --> 03:03:17,660
All right. Thank you for that. We'll move to Director Erdman.

1837
03:03:19,180 --> 03:03:25,160
Thank you. This project is an enormous undertaking requiring a huge investment has taken years

1838
03:03:25,160 --> 03:03:29,760
of pre-planning. The time to go looking for alternative water sources isn't when you're absolutely

1839
03:03:29,760 --> 03:03:35,080
needed. It's the pre-planning for when you need it in the future. This process was started over 10

1840
03:03:35,080 --> 03:03:39,960
years ago by a regional group of agencies who slowly dropped out until SCWD was the only one left.

1841
03:03:40,620 --> 03:03:44,900
California and a large part of the Southwest United States is entering into the start of what

1842
03:03:44,900 --> 03:03:49,720
appears to be a historic drought. Local water supply is going to become a necessity at some point

1843
03:03:49,720 --> 03:03:55,360
in the near future. However, my opinion on this project is SCWD cannot shoulder the burden of this

1844
03:03:55,360 --> 03:04:01,940
project alone in order to move forward the project needs partners. A primary goal of SCWD has been to

1845
03:04:01,940 --> 03:04:07,460
meet the emergency 60-day supply recommended by our metropolitan water district.

1846
03:04:08,100 --> 03:04:15,120
IRWD presented an option to SCWD to enter into an agreement with them to supply water

1847
03:04:15,120 --> 03:04:19,160
from the Baker Water Treatment Plant in emergency to meet that 60-day supply.

1848
03:04:19,880 --> 03:04:27,180
The cost we've been shown tonight show that a 2MGD is 50% more expensive than a 5MGD plant

1849
03:04:27,180 --> 03:04:33,680
with partners compared to the 2MGD plant with SCWD funding it alone. I would like to see SCWD

1850
03:04:33,680 --> 03:04:39,220
pursue the 60-day emergency supply agreement with IRWD and get the DSL to a point where we can

1851
03:04:39,220 --> 03:04:43,520
press pause on the DSL project in order to take time to seek partners for that project to make

1852
03:04:43,520 --> 03:04:48,280
it a truly regional project. I think that as California and the Southwest move further into what looks

1853
03:04:48,280 --> 03:04:54,640
like a historic drought, SCWD may find other agencies interested and thankful that SCWD continue to

1854
03:04:54,640 --> 03:04:58,940
lay the groundwork so as to not have to start back at square one to develop a regional

1855
03:04:58,940 --> 03:05:00,020
local water supply.

1856
03:05:00,520 --> 03:05:05,560
I'd also like to make a substitute motion to the recommended actions to recommend actions

1857
03:05:05,560 --> 03:05:11,540
one, two, and four and seek an extension on the with the deadline of May 2022 and hold off

1858
03:05:11,540 --> 03:05:16,340
on recommended action three to allow the power aspect to be further developed before moving

1859
03:05:16,340 --> 03:05:20,600
ahead with developing the contracts and until there are other agencies on boarders partners.

1860
03:05:21,640 --> 03:05:22,160
over.

1861
03:05:24,180 --> 03:05:30,820
Okay, thank you for that. Before we entertain a second to your subsequent motion,

1862
03:05:31,060 --> 03:05:36,080
it looks like Rich and Taco has this hand raised, our general manager. Thank you, Mr. President.

1863
03:05:36,300 --> 03:05:41,540
Thank you, Director Erdman. Really good comments. I do want to respond to make sure that we're clear

1864
03:05:41,540 --> 03:05:48,540
on the staff side. When we adopted the integrated water resources plan, we fully intended to move forward

1865
03:05:48,540 --> 03:06:07,800
with discussions with Irvine Ranch Water District to work on terms and potentially an agreement to take Irvine Ranch Water, Baker Water, I should say, on an insurance plan as we discussed in previous meetings.

1866
03:06:07,800 --> 03:06:14,860
So we we're continued with those meetings. We've had about I think three meetings so far with Irvine ranch staff. And so we are

1867
03:06:15,400 --> 03:06:20,580
moving that process forward in strict accordance with their integrated resources plan. Just wanted to

1868
03:06:21,180 --> 03:06:27,820
state that for clarity. And then the other part that you brought up in regards to the May 2022

1869
03:06:28,820 --> 03:06:36,200
and seeking a WIFIA extension, I had to ask the same question to our consultant. So I'm not sure if our consultant is still on

1870
03:06:36,200 --> 03:06:38,920
from Fieldman Rolab, and they could provide,

1871
03:06:39,940 --> 03:06:42,000
so I guess some of the, not the pros and cons,

1872
03:06:42,000 --> 03:06:45,700
but the concerns of asking for another extension.

1873
03:06:47,640 --> 03:06:49,920
Robert, are you on by any chance?

1874
03:06:50,100 --> 03:06:51,400
Yes, I'm still on.

1875
03:06:52,180 --> 03:06:54,580
This is Robert Pore from Fieldman Rolab.

1876
03:06:56,220 --> 03:06:58,520
Good evening, Mr. President, members of the board.

1877
03:06:59,140 --> 03:07:04,440
We did obtain one extension from EPA,

1878
03:07:04,440 --> 03:07:06,820
EPA who runs the WIFIA program.

1879
03:07:07,440 --> 03:07:10,020
They currently gave us about a year extension

1880
03:07:10,020 --> 03:07:13,480
to the end of this June, June of 22.

1881
03:07:14,180 --> 03:07:17,820
We can go back to them and ask for a subsequent extension.

1882
03:07:18,600 --> 03:07:20,760
I think it's doubtful, we'll be successful,

1883
03:07:20,760 --> 03:07:22,180
but we can certainly ask.

1884
03:07:23,260 --> 03:07:25,320
I apologize for my voice.

1885
03:07:26,140 --> 03:07:27,880
I haven't been talking much tonight.

1886
03:07:29,500 --> 03:07:30,940
All right, thank you for that.

1887
03:07:31,660 --> 03:07:33,400
To follow up on some of that.

1888
03:07:33,400 --> 03:07:39,060
But I think some of the pressure that's coming for moving forward on this is the emergency

1889
03:07:39,060 --> 03:07:43,060
aspect of being able to meet that 60-day supply.

1890
03:07:43,280 --> 03:07:47,840
And I appreciate staff moving forward with the Irvine Ranch Water Districts proposal

1891
03:07:47,840 --> 03:07:48,900
of using Bakerwater.

1892
03:07:49,120 --> 03:07:54,320
I think getting that secured takes a little bit of pressure off on moving as fast forward

1893
03:07:54,320 --> 03:08:00,300
on the DeSAL project without getting partners on board and with this deadline.

1894
03:08:00,300 --> 03:08:06,340
Also, with the federal government's huge push on infrastructure and they're still developing

1895
03:08:06,340 --> 03:08:12,600
those programs, there could be significant grant money or other federal dollars that could

1896
03:08:12,600 --> 03:08:18,840
go toward D-SAL, that if we're rushing into it and commit to a WIFI alone, when there's

1897
03:08:18,840 --> 03:08:22,480
grant funds available from the federal government, we may be better off waiting.

1898
03:08:22,480 --> 03:08:31,600
So I'd like to see us get to a point where we can put pause, not engage on the design build RFPs

1899
03:08:31,600 --> 03:08:35,660
because I have a feeling the partners we bring on board would want to weigh in on those things.

1900
03:08:36,140 --> 03:08:40,980
But I think moving forward on one, two, and four is something I can definitely support.

1901
03:08:41,140 --> 03:08:44,040
But I can't support moving forward on item three right now over.

1902
03:08:46,480 --> 03:08:52,300
So, Rick, I have a question, and I made the motion, but I want to make sure I understand

1903
03:08:52,300 --> 03:08:56,660
what it means to accept the water cost analysis.

1904
03:08:56,780 --> 03:09:02,160
I was looking at it more as a receiving file, and we weren't committing to a methodology

1905
03:09:03,020 --> 03:09:09,560
of back loading or how we were basically approaching it, that we were going to have a lot more

1906
03:09:09,560 --> 03:09:14,460
discussions on how the details of the financing plan, so I just wanted to get a clarification

1907
03:09:14,460 --> 03:09:17,560
on what accepting the analysis means?

1908
03:09:21,840 --> 03:09:23,100
Thank you, Director Goldman.

1909
03:09:23,340 --> 03:09:25,200
Yes, you're clear on that.

1910
03:09:25,500 --> 03:09:32,300
It's, I guess, it's one degree more than receive and file, where the board will definitely

1911
03:09:32,300 --> 03:09:38,640
have the prerogative to go down certain option paths like you're talking about in terms of

1912
03:09:38,640 --> 03:09:42,400
level debt financing, and we can do subsequent work on that.

1913
03:09:42,400 --> 03:09:51,740
But this, the acceptance of the cost analysis allows, you know, items 2 and 4 to move forward.

1914
03:09:52,060 --> 03:09:54,180
Because this is what agencies were looking for.

1915
03:09:54,820 --> 03:10:00,120
You know, something tangible that they can run their own models on in terms of rate impacts.

1916
03:10:00,360 --> 03:10:06,200
And it really takes an acceptance of this project water cost analysis to do so.

1917
03:10:06,200 --> 03:10:24,500
And in their minds, I'm assuming that the board is behind this and has accepted this rather than is in complete disagreement on this and we're talking to them about partnerships. So I would interpret it exactly the way you've interpreted just now director Goldman on this anybody on my team disagrees with me.

1918
03:10:26,510 --> 03:10:36,750
Okay, that helps me with item one, and then in response to Doug's comments, I completely agree with him that this needs to be a regional project.

1919
03:10:37,230 --> 03:10:42,050
I don't see that I could support a project that was us going it alone.

1920
03:10:43,370 --> 03:10:50,790
but I'm torn on item three and I'm also don't like the idea of the wiffy alone

1921
03:10:50,790 --> 03:10:57,630
driving our schedule when we're making such a huge commitment and if we need

1922
03:10:57,630 --> 03:11:01,150
more time to get partners especially if we're going to end up you know with

1923
03:11:01,150 --> 03:11:05,170
the JPA option that David talked about I don't see how that's going to happen

1924
03:11:05,170 --> 03:11:11,790
by May of 2022 to be able to move forward with all these financing agreements

1925
03:11:14,070 --> 03:11:41,770
Thank you, Director Goldman. I did forget to respond on the, so on the WIFIA matter it may 2022 you're bringing up a good point because theoretically by then we'll be completed with permitting and once we finish permitting will be in the line for the drinking water SRF loan and that's going to make a significant difference if we're able to get 100% SRF.

1926
03:11:41,770 --> 03:11:51,570
loan funding or that's just a 50-50 that we talked about earlier, 50 SRF and 50 bond or even

1927
03:11:51,570 --> 03:11:59,390
with you if we're allowed to extend it. But we'll know a lot more by May 2022 on which paths we can

1928
03:11:59,390 --> 03:12:08,050
take. The experts know that there's a risk of us asking for an extension, but they haven't set

1929
03:12:08,050 --> 03:12:12,810
out right now. You know, obviously it's discouraged for us to extension to ask for another extension.

1930
03:12:13,430 --> 03:12:18,330
So that's that issue. The issue in Hawkins, Delphill and Wood, I did not explain that very well,

1931
03:12:18,710 --> 03:12:25,030
and Mark Cernan probably needs to help me out or possibly Pam, but I recall that we have that budgeted

1932
03:12:25,650 --> 03:12:31,010
this year. So this is not an un-budgeted expense that we're asking for. We just put it on pause because

1933
03:12:31,010 --> 03:12:37,210
we wanted to see what COVID had in store for us. And once we knew that we were financially stable,

1934
03:12:37,210 --> 03:12:42,150
we wanted to bring this back on the table. So it is a budgeted cost and it has been incorporated

1935
03:12:42,150 --> 03:12:49,370
into these cost analyses. But not to say I'm discounting the concerns about moving quickly

1936
03:12:49,990 --> 03:12:54,230
on this. But I just wanted the board to have all of the data in front of them. And Mark,

1937
03:12:54,250 --> 03:13:02,790
sir, am I correct on that? It is absolutely budgeted with the intent to begin those initial

1938
03:13:02,790 --> 03:13:09,010
discussions are re-engaged with Hawkinsdale field to start beginning those contract development

1939
03:13:10,010 --> 03:13:11,130
related documents.

1940
03:13:12,910 --> 03:13:20,430
So I guess the question on item three would be how far are we going to say

1941
03:13:21,490 --> 03:13:27,370
we're in discussions on partnerships but it takes a couple of years to develop those.

1942
03:13:27,370 --> 03:13:34,730
Do we have the ability to adjust the timing on development of those contracts are going

1943
03:13:34,730 --> 03:13:40,670
out for peace so we have a better understanding of how things are going to move forward?

1944
03:13:43,500 --> 03:13:47,320
I can tell you my answer and then Mark can correct me and tell you guys the right answer

1945
03:13:47,320 --> 03:13:55,540
here but you know what we're fishing for is what is our board's threshold on are you fully

1946
03:13:55,540 --> 03:14:25,120
Okay, with two MGD or five MGD, so if the five MG doesn't, doesn't pan out with partners then are you okay going back to two MGD, if that was and that, that would be the marching orders we give to Eric Peterson to develop those contracts, knowing that we have a either or and that's a strong proposal to the market, to be honest with you, then at least the market knows that one of two projects are going forward, if we're just going forward with the five MGD, we're in a little bit of a quandary there where,

1947
03:14:26,220 --> 03:14:40,640
We're still working on partnerships there, so to lead into the market with an RFQ and go into the RFP stages, that's a lot risky because the market knows that there's a big question mark whether this project is going to move forward or not.

1948
03:14:41,280 --> 03:14:52,180
So, I see that as a major risk factor, you know, with, I guess I could have more firmly

1949
03:14:52,180 --> 03:14:57,960
worded it to find out if the board is okay with both the two and the five, perhaps in

1950
03:14:57,960 --> 03:14:58,360
the first

1951
03:15:00,000 --> 03:15:29,980
There's an action here that, number one, but we didn't. But that's where it, that's the issue with item number three. So if we did go with just the five MGD, you have the risk with the market and we would probably, in a perfect world, time it, as Director Green said, to make sure we have some secured partnerships before we really go down the RFQ RFP stages. And Mark, Serena, or other team members, please feel free.

1952
03:15:29,980 --> 03:15:30,940
to chime in on that.

1953
03:15:31,520 --> 03:15:32,020
Yeah.

1954
03:15:33,400 --> 03:15:33,720
Thank you.

1955
03:15:33,740 --> 03:15:36,740
I can jump in and look on that related to the contracts.

1956
03:15:37,300 --> 03:15:41,120
And the first step we would be looking at is developing an RFQ request

1957
03:15:41,120 --> 03:15:44,320
for qualifications to pre-qualify some teams.

1958
03:15:44,840 --> 03:15:48,480
So I think that's something that could be held off until we get further along

1959
03:15:48,480 --> 03:15:51,040
in our maybe negotiations with partners.

1960
03:15:51,840 --> 03:15:55,600
We could begin to, again, as we plan to develop those documents

1961
03:15:55,600 --> 03:15:58,800
and have it ready to go and spend that money and invest somebody

1962
03:15:58,800 --> 03:16:04,300
to have the RFQ component, but until we probably have our partners ready, and in place,

1963
03:16:04,940 --> 03:16:10,800
we most likely wouldn't want to put a request for proposals, which is definitely a much

1964
03:16:10,800 --> 03:16:18,720
more larger commitment for a team, a design-build team to come up and design-build, operate team

1965
03:16:18,720 --> 03:16:23,720
to come up and propose unless we had a fairly definitive MGD.

1966
03:16:23,720 --> 03:16:32,160
And we say up to five MGD, if it's possible in theory or theoretically we could get a four MGD

1967
03:16:32,160 --> 03:16:35,520
project because we have two MGD of partners and two MGD for ourselves.

1968
03:16:36,100 --> 03:16:41,260
We wanted to have that latitude there in the size and then of course they caught me a

1969
03:16:41,260 --> 03:16:47,260
scale wouldn't be as good but it would still be very beneficial in terms of compared to

1970
03:16:47,260 --> 03:16:49,420
a two MGD standalone project.

1971
03:16:49,420 --> 03:16:56,260
So I think the concept was to move forward with contract development, get the RFQ at least

1972
03:16:56,260 --> 03:17:02,160
prepared and ready to go and possibly even go on pursue the teams, and then which is

1973
03:17:02,160 --> 03:17:07,900
a much more simpler and less costly process for those teams.

1974
03:17:08,100 --> 03:17:14,480
And then when we're ready, put that RFP out with the specifics and hopefully partners

1975
03:17:14,480 --> 03:17:15,100
in place.

1976
03:17:15,100 --> 03:17:20,880
Mr. Chairman, as this is Wayne, Mr. Chairman.

1977
03:17:21,000 --> 03:17:25,160
Mark Sarna just said what I was thinking.

1978
03:17:25,560 --> 03:17:31,900
I am listening to Scott's comments and others.

1979
03:17:34,350 --> 03:17:42,420
I don't see a need to go with step number three

1980
03:17:42,420 --> 03:17:53,940
in the immediate future. And I was going to ask Rick and Taku, Rick, what is really a reasonable

1981
03:17:54,980 --> 03:18:04,220
time period to do that? Are we looking in a month or first of the year or what over?

1982
03:18:04,220 --> 03:18:12,700
Yeah, a great question, Director Rayfield, and good comments on it to compliment director

1983
03:18:12,700 --> 03:18:15,780
Erdman on those comments too and thinking about this process.

1984
03:18:15,980 --> 03:18:21,500
But if the board had made a solid decision on which way to go in terms of the contract

1985
03:18:21,500 --> 03:18:26,840
development, then Eric Peterson, I believe, could finish up the work in six months.

1986
03:18:28,890 --> 03:18:33,200
But with the either or going on here, that's a little trickier.

1987
03:18:33,200 --> 03:18:44,780
And that, you know, as Mark Serna had talked about, that we'd have to be further along with the partnerships and define the project.

1988
03:18:45,020 --> 03:18:47,040
I mean, it might drop to a 4MGD project.

1989
03:18:47,040 --> 03:18:51,760
We might have two committed partners and then we have to change the scope of the project.

1990
03:18:51,760 --> 03:18:57,420
So that starts to extend time onto Erick Peterson's development there.

1991
03:18:57,960 --> 03:18:58,980
Mark, anything else to add?

1992
03:18:58,980 --> 03:19:04,360
Mr. Chairman, I'd like to address this issue here.

1993
03:19:05,460 --> 03:19:05,760
Absolutely.

1994
03:19:06,480 --> 03:19:11,920
Yeah, let's move to Director Green prior to that.

1995
03:19:12,560 --> 03:19:28,360
I've heard all the comments and where I was going from initially was I'm really comfortable with getting the Hawkins group moving on developing the documents.

1996
03:19:28,360 --> 03:19:37,940
However, not pulling the trigger on the sending the SLQ out because it takes time to develop

1997
03:19:37,940 --> 03:19:38,540
this stuff.

1998
03:19:38,700 --> 03:19:45,820
We can't wait until, and I know that director Urban says we shouldn't have with you run this

1999
03:19:45,820 --> 03:19:53,740
or somebody said that, but we have to get this thing lined up because we do have, hopefully

2000
03:19:53,740 --> 03:19:59,800
there will be lots of grants and so forth, but we can't depend on those. We know as what we have

2001
03:19:59,800 --> 03:20:06,580
today. We can't wait for two years in the future hoping for a grant. So I'm comfortable with getting

2002
03:20:06,580 --> 03:20:13,900
Hawkins going on the docks, but not sending them out to the, we'll call it the concession teams

2003
03:20:13,900 --> 03:20:23,140
or the development teams until we know how our partners are going to be 3, 4, 5 MGD type of situation.

2004
03:20:23,140 --> 03:20:33,740
So, I support the initial motion and the second as is over.

2005
03:20:34,500 --> 03:20:38,240
All right. Thank you for that. Looks like Director Irman has his hand raised.

2006
03:20:39,460 --> 03:20:48,780
Yeah. I could support what Mark Surnit's suggestion was is developing the documents for the RFQ but not sending them out.

2007
03:20:48,780 --> 03:20:57,980
I understand that they do take time. I think we need to wait for partners because I have a feeling they may want to weigh in on some of the comments for the RFP.

2008
03:20:58,100 --> 03:21:04,860
I don't want us to put something completely together and then have partners come on board and have us have to go back three steps.

2009
03:21:05,200 --> 03:21:10,400
But I do understand putting the RFQ together would take some time.

2010
03:21:10,400 --> 03:21:19,360
So I could support item three as far as developing the documents for the RFQ, but not sending them out over.

2011
03:21:21,220 --> 03:21:28,260
Great. Thanks for that. I mean, you know, when you break down item three, I mean effectively were, you know, just read it.

2012
03:21:28,420 --> 03:21:38,740
We're re-engaging the team for tax-related consultants for development and solicitation. I mean, we're not necessarily pulling the trigger on the whole kit and caboodle.

2013
03:21:38,740 --> 03:21:47,100
Well, I think relatively quickly we're going to understand if we're going to have partners

2014
03:21:47,100 --> 03:21:56,540
or not, you know, we've been on this either or which I know we could get really deep into

2015
03:21:56,540 --> 03:22:02,320
the weeds with, you know, blending less than five but more than two with, you know, with

2016
03:22:02,320 --> 03:22:02,680
partners.

2017
03:22:03,920 --> 03:22:05,760
You know, the five is the maximum.

2018
03:22:05,760 --> 03:22:12,560
We already know that, you know, 15 is way over the horizon, but, you know, we know we're

2019
03:22:12,560 --> 03:22:19,140
maxed out at five. So that's basically the full amount that we can, you know, work

2020
03:22:19,140 --> 03:22:24,900
with within our EIR and with, you know, how we're permitting. So if it is less than that,

2021
03:22:25,180 --> 03:22:32,340
you know, the partners will obviously drive this project. You know, I think that's loud

2022
03:22:32,340 --> 03:22:37,680
clear from at least one or two directors, a third one being myself.

2023
03:22:40,200 --> 03:22:42,400
You know, we're going to be

2024
03:22:42,400 --> 03:22:48,760
arm in arm with whoever comes on board with us with this project and we want to have their input

2025
03:22:48,760 --> 03:22:55,060
into, you know, how we put together this whole project. So I think that what's presented to us

2026
03:22:56,900 --> 03:23:02,080
is, you know, it might seem like we're on a fast timeline while we are, but we have

2027
03:23:02,080 --> 03:23:05,660
been working on this for, you know, got a better part of a decade.

2028
03:23:05,960 --> 03:23:14,800
So, to me, I think that what's been presented to the board from the staff is realistic, although

2029
03:23:14,800 --> 03:23:21,760
it is a full sprint, and, you know, I think in six months from now, we're going to know

2030
03:23:21,760 --> 03:23:29,460
So I heck of a lot more about who's on board from other agencies and the volume and the

2031
03:23:29,460 --> 03:23:31,880
quantities that we're going to be designing.

2032
03:23:32,320 --> 03:23:39,560
So I support the original motion for all items 1 through 4.

2033
03:23:40,660 --> 03:23:47,020
And with this expanded dialogue on item 3, I think that's really helped our staff and

2034
03:23:47,020 --> 03:23:53,860
general manager, you know, kind of with the next path forward. Looks like Doug has his hand raised as

2035
03:23:53,860 --> 03:24:02,580
does Wayne. We'll go with Doug. Yeah, I'd like to amend my amended substitute motion. I think

2036
03:24:02,580 --> 03:24:13,600
if you took out solicitation from item three, have reengage Hawkins with for other and other consultants

2037
03:24:13,600 --> 03:24:18,280
for the development of all necessary contract documents to implement but not

2038
03:24:18,280 --> 03:24:21,960
had solicitation. That's something I could support. I still would like to see

2039
03:24:21,960 --> 03:24:28,280
us not have it driven by the WIFI alone and seek to have that May 2022 deadline

2040
03:24:28,280 --> 03:24:31,500
extended but that's my substitute motion over.

2041
03:24:33,830 --> 03:24:36,630
All right, fair enough. I'll move to

2042
03:24:36,630 --> 03:24:41,330
Wayne. Wayne, would you like to comment on that or something? Yes, I was. I actually

2043
03:24:41,330 --> 03:24:52,150
Doug said what I was going to say. I wanted to take out solicitation as well. And then I think I

2044
03:24:52,150 --> 03:25:03,970
would add the word begin development of necessary contract activities. But picking up on the comments

2045
03:25:03,970 --> 03:25:15,630
We're not really ready to solicitate anything because we don't know yet what makes sense.

2046
03:25:17,150 --> 03:25:22,610
And actually in thinking about it, I suggest one other change.

2047
03:25:23,850 --> 03:25:25,810
And that's item four.

2048
03:25:26,850 --> 03:25:36,710
I don't think we're developing a marketing plan, colleagues, what we are developing is an

2049
03:25:36,710 --> 03:25:45,170
educational plan, and we said all along we weren't going to be in the business of marketing this.

2050
03:25:45,850 --> 03:25:53,770
We're trying to get partners on board and the way to do that I think is through education.

2051
03:25:53,770 --> 03:26:00,630
but not through what's implied by number 4 assails effort.

2052
03:26:01,810 --> 03:26:08,970
And having said that, I will second Doug's substitute motion over.

2053
03:26:09,750 --> 03:26:12,650
All right. Thank you for that.

2054
03:26:13,410 --> 03:26:15,770
Any other directors would like to weigh in on this?

2055
03:26:16,430 --> 03:26:17,810
Yes, Mr. Chair.

2056
03:26:19,810 --> 03:26:29,710
Yeah, maybe it's a partnership solicitation plan, but I'm still I would still leave the date in there I wouldn't change the date over.

2057
03:26:31,820 --> 03:26:38,900
Fair enough, you know, I think that staff and we all know that that that's a hard date.

2058
03:26:39,340 --> 03:26:47,480
It's not a do or die date. It's not going to, you know, and as our general manager mentioned, you know, it's.

2059
03:26:47,480 --> 03:26:54,020
And you know, when we start to get pushed up against that date, if and when we do, you

2060
03:26:54,020 --> 03:27:03,060
know, hopefully they'll understand, you know, the situation that we're all in due to, you

2061
03:27:03,060 --> 03:27:07,420
know, external forces and extend that extension.

2062
03:27:07,840 --> 03:27:15,120
You know, again, I think that the current administration in Washington DC and, you know, it's bipartisan

2063
03:27:15,120 --> 03:27:18,060
is really, you know, pro infrastructure.

2064
03:27:18,900 --> 03:27:22,240
You know, let's hope that more money can come our way.

2065
03:27:22,960 --> 03:27:27,600
You know, there's other things that can help extend that debt out.

2066
03:27:27,780 --> 03:27:33,160
No guarantees been working on that, you know, within the state of California.

2067
03:27:33,160 --> 03:27:37,780
So, you know, there's, again, a lot of flux, a lot of variables.

2068
03:27:38,280 --> 03:27:39,400
We all know that.

2069
03:27:40,180 --> 03:27:44,420
I don't think, you know, any director is going to.

2070
03:27:44,420 --> 03:27:51,100
be hard and fast and come back to this, you know, item, you know, in six months from now and said,

2071
03:27:51,100 --> 03:27:56,860
no, you know, we, we, we meant to say this or we meant to say that, you know, this is,

2072
03:27:57,060 --> 03:28:04,540
this is kind of a broad, broad strokes, although, you know, we have to get moving in certain areas.

2073
03:28:04,680 --> 03:28:11,740
So I do support, you know, removing that word solicitation on there. I do support keeping that date in

2074
03:28:11,740 --> 03:28:16,280
there because that's something that we know is hard and fast and if we can get an extension,

2075
03:28:16,880 --> 03:28:17,840
that'll be beneficial.

2076
03:28:19,160 --> 03:28:24,080
So those are my thoughts and comments on the dialogue that's going forward.

2077
03:28:25,560 --> 03:28:30,640
I saw Art, you popped your screen up.

2078
03:28:30,720 --> 03:28:34,080
Did you have a comment to make for us, our esteemed?

2079
03:28:34,080 --> 03:28:42,880
And I think I was just going to comment that in under Robert's rules of orders, the substitute

2080
03:28:42,880 --> 03:28:48,520
motion to take precedence, and it needs to be what we're done first.

2081
03:28:50,260 --> 03:28:50,460
Sure.

2082
03:28:51,060 --> 03:28:51,200
Okay.

2083
03:28:51,620 --> 03:28:55,160
That was going to be my plan of action.

2084
03:28:55,820 --> 03:29:00,940
I'm going to call on the clerk of the board to make sure she's – I know she's been

2085
03:29:00,940 --> 03:29:03,340
scribbling notes down and crossing things out.

2086
03:29:03,340 --> 03:29:09,180
So, Jody, could you read what the substitute motion is, and I believe it's been seconded?

2087
03:29:10,200 --> 03:29:14,960
It has been seconded, and the way I read it is the Board of Directors won, except the

2088
03:29:14,960 --> 03:29:21,980
Doheny Ocean Desealination Project Water Cost Analysis to initiate a public outreach program

2089
03:29:21,980 --> 03:29:28,100
supporting the implementation of the Doheny Ocean Desealination Project, three re-engage

2090
03:29:28,100 --> 03:29:53,020
Hockins, Taylor Field and Wood and other task-related consultants for the development of necessary contract activities to implement a two-MGD or up to five-MGD Dohini Ocean D-Sownason project and for authorize the general manager to develop a and the maker of the motion didn't change it.

2091
03:29:53,020 --> 03:29:56,900
It's so fun with it changing to a partnership solicitation.

2092
03:29:56,900 --> 03:29:59,700
and partnership education.

2093
03:30:01,860 --> 03:30:29,920
I think the term was education or solicitation. So whichever one is the purview of the board, but taking out the marketing, making it more of a education type thing. Okay. A partnership solicitation plan to pursue and secure dohenny, ocean desalination project partnerships by May 2022 with local agencies and or other water purveyors.

2094
03:30:29,920 --> 03:30:43,460
I think my original motion had the date coming out of it over your substitute motion had the date coming out of it. Yeah, taking out just soliciting decolonization partners.

2095
03:30:43,460 --> 03:30:44,160
particular partners.

2096
03:30:45,400 --> 03:30:46,400
I'm not having the made up.

2097
03:30:47,320 --> 03:30:51,960
Second Doug did not have the date coming out.

2098
03:30:52,240 --> 03:30:53,460
Okay, that's my misunderstanding.

2099
03:30:54,360 --> 03:30:57,120
Well, I miss not yours only.

2100
03:30:57,540 --> 03:31:02,240
I did not hear that Doug wanted the date on.

2101
03:31:03,160 --> 03:31:07,900
And I want, as the seconder, I want the date in there.

2102
03:31:10,180 --> 03:31:14,620
Okay, so we have a motion but perhaps not a second anymore.

2103
03:31:15,880 --> 03:31:18,260
Oh, can I complicate things a little more?

2104
03:31:19,600 --> 03:31:19,860
Sure.

2105
03:31:21,220 --> 03:31:22,900
Scott, the floor is yours.

2106
03:31:23,420 --> 03:31:23,600
All right.

2107
03:31:23,760 --> 03:31:26,540
Well, I like to substitute motion better than my original.

2108
03:31:26,720 --> 03:31:33,200
So I was going to withdraw my original motion so that we're just working with one motion here.

2109
03:31:33,200 --> 03:31:36,260
and I will second Doug's motion with the date gone.

2110
03:31:38,340 --> 03:31:42,160
I'll make one comment, so perhaps Wayne,

2111
03:31:42,280 --> 03:31:43,220
you'll be okay with it.

2112
03:31:44,820 --> 03:31:49,360
That May 2022 date is, I mean, that's inked.

2113
03:31:49,540 --> 03:31:51,040
I mean, we know that's coming.

2114
03:31:51,800 --> 03:31:55,860
So I think that perhaps staff plugged that in

2115
03:31:55,860 --> 03:31:58,000
so that we're all keenly aware of that

2116
03:31:58,000 --> 03:32:00,560
and we have a timeline on there.

2117
03:32:00,560 --> 03:32:04,960
and regardless, that date's going to come and go.

2118
03:32:06,820 --> 03:32:10,220
And hopefully we will take the necessary steps

2119
03:32:10,220 --> 03:32:11,860
to get an extension if need be.

2120
03:32:13,040 --> 03:32:16,920
But to me, the date ultimately is kind of irrelevant

2121
03:32:16,920 --> 03:32:20,140
because we know that we need to have

2122
03:32:20,820 --> 03:32:23,060
a fair amount of work done by that date.

2123
03:32:23,260 --> 03:32:24,960
Otherwise, we're going to need to get an extension.

2124
03:32:25,620 --> 03:32:27,480
So those are my comments there.

2125
03:32:27,480 --> 03:32:30,480
Rick, are General Manager, do you have any comments on that?

2126
03:32:31,380 --> 03:32:32,980
That's exactly why we put it in.

2127
03:32:33,880 --> 03:32:39,160
And not sure if the board had considered that you could add

2128
03:32:39,160 --> 03:32:42,460
that, a recommendation for us to request an extension.

2129
03:32:43,920 --> 03:32:46,180
I would like to add that if possible.

2130
03:32:49,500 --> 03:32:51,480
What would you like to add, Doug?

2131
03:32:51,700 --> 03:32:52,700
I'm sorry, I didn't.

2132
03:32:52,980 --> 03:32:57,160
Asking Wiffie for an extension on the May 2022 deadline over.

2133
03:32:57,860 --> 03:32:58,360
OK.

2134
03:33:01,130 --> 03:33:10,830
So, just out of curiosity for staff, what is the timeline in which that extension process

2135
03:33:11,670 --> 03:33:13,370
needs to start to happen?

2136
03:33:14,030 --> 03:33:25,130
And what's the nature of, you know, how we go about asking for that and the reasons why one agency might get an extension in this regard?

2137
03:33:25,130 --> 03:33:33,810
Yeah, good question. I actually asked the same line of questions and I'd rather either Robert poor or Brian for Beth answer that question.

2138
03:33:34,350 --> 03:33:37,430
They've been in direct. They have direct experience with this.

2139
03:33:39,170 --> 03:33:39,690
Sure.

2140
03:33:41,510 --> 03:33:43,490
Robert and Brian, you want to go or you want me to go?

2141
03:33:44,430 --> 03:33:45,890
Go ahead, Brian. Thanks.

2142
03:33:47,290 --> 03:33:54,210
Yeah, I just think from from our experience, it's we haven't seen the second extension given.

2143
03:33:54,210 --> 03:33:58,110
and it's uncertain whether or not you'll receive it.

2144
03:33:58,930 --> 03:34:02,210
I mean, Robert, I don't know if you wanna expand upon that.

2145
03:34:02,270 --> 03:34:03,250
You've got more experience directly.

2146
03:34:03,470 --> 03:34:04,990
We're gonna get EPA than maybe I do.

2147
03:34:05,850 --> 03:34:08,330
Yeah, this is the first time we did ask for the extension

2148
03:34:08,890 --> 03:34:12,190
and typically EPA told us when they did grant

2149
03:34:13,230 --> 03:34:15,830
the district a one-year extension almost

2150
03:34:16,430 --> 03:34:18,870
that they typically only give six month extensions.

2151
03:34:19,890 --> 03:34:22,290
So, you know, we're very lucky to get

2152
03:34:22,290 --> 03:34:24,090
and extra six months out of them.

2153
03:34:24,690 --> 03:34:28,290
The deadline's actually June 30th of 22.

2154
03:34:28,990 --> 03:34:32,230
We're using May 22 as a kind of a target date

2155
03:34:32,230 --> 03:34:34,990
to get everything, you know, amassed

2156
03:34:34,990 --> 03:34:36,910
and finalized as best as we can.

2157
03:34:37,530 --> 03:34:39,370
So I just want to clarify that point.

2158
03:34:40,170 --> 03:34:41,610
But with respect to EPA,

2159
03:34:41,850 --> 03:34:44,130
I think it's doubtful to get another extension,

2160
03:34:44,290 --> 03:34:45,330
but we can certainly try.

2161
03:34:45,830 --> 03:34:47,250
We can explain that, you know,

2162
03:34:47,250 --> 03:34:49,570
the project is still being studied.

2163
03:34:49,570 --> 03:34:50,850
We're looking for partners,

2164
03:34:50,850 --> 03:34:58,410
as regional partners to participate in the project and see what they say.

2165
03:34:59,870 --> 03:35:12,620
Hey Rick, President Rick, yes sir, you know what the recommended Moche has drafted

2166
03:35:12,620 --> 03:35:26,460
by staff merely says pursue and secure partnerships by May 22. It's kind of we're setting ourselves

2167
03:35:26,460 --> 03:35:38,460
a deadline and there's nothing in this motion at all that talks about with you even though

2168
03:35:38,460 --> 03:35:46,060
So that might have been what was behind the minds or in the minds of our staff, but

2169
03:35:46,060 --> 03:35:54,400
I think it's entirely reasonable to leave that date in there and set a goal for ourselves.

2170
03:35:54,780 --> 03:35:59,840
That's the way the motion reads, at least to me.

2171
03:35:59,840 --> 03:36:08,880
and I have to summon anyone else read it differently. Am I missing something here?

2172
03:36:10,040 --> 03:36:20,020
I would support would director Rayfield just mention and I would hope the first and second or the motion in the second or would

2173
03:36:20,020 --> 03:36:24,080
And a man there.

2174
03:36:24,860 --> 03:36:26,700
Remember to include the date.

2175
03:36:27,280 --> 03:36:38,000
Oh, my read on it was that the May 2022 date is the choice of are we going at a loan

2176
03:36:38,000 --> 03:36:40,600
to MGD or are we going with partners?

2177
03:36:40,600 --> 03:36:46,260
And if we don't have partners by May 2022, we're moving forward with a to MGD plant.

2178
03:36:46,620 --> 03:36:49,180
And I cannot support that.

2179
03:36:49,180 --> 03:37:02,020
I'm fine leaving the May 2022 deadline in item 4, but I do want to ask EPA for the WIFI extension because you can't get what you don't ask for.

2180
03:37:02,380 --> 03:37:10,620
And this is a very key project in an area that is being impacted significantly by drought.

2181
03:37:11,400 --> 03:37:18,440
the current federal administration is very up on infrastructure projects and I

2182
03:37:18,440 --> 03:37:24,520
am a feeling that there may be some flexibility because if this project just dies

2183
03:37:24,520 --> 03:37:29,900
because we can't get partners or because of Whiffie a deadline for a grant

2184
03:37:29,900 --> 03:37:34,300
that they're giving that oh well we're gonna give the money to somebody else and

2185
03:37:34,300 --> 03:37:40,560
put it somewhere else that's not going to look good for anyone so I think

2186
03:37:40,560 --> 03:37:45,680
we need to have included in on this asking for that WIFI extension so we can get partners over.

2187
03:37:47,320 --> 03:37:58,940
So my concern with the May 22 date is that where I understand we'll reach out to partners and

2188
03:38:00,080 --> 03:38:05,300
they're going to have to go through their due diligence process internally before they're

2189
03:38:05,300 --> 03:38:12,940
going to be willing to sign on or commit to the project and you know it I don't want to put a

2190
03:38:12,940 --> 03:38:20,460
time too much of a time constraint on them to respond. I mean we've gone through a lot and

2191
03:38:20,880 --> 03:38:27,260
you know I would imagine they're going to have to go through their own rating packs and so I

2192
03:38:27,260 --> 03:38:33,120
I understand the WIFIA concern, and I agree with it.

2193
03:38:34,140 --> 03:38:37,160
And I don't know if it really matters that much if it's in here.

2194
03:38:37,500 --> 03:38:43,220
I just don't want to set a deadline on us for securing partnerships of May 2022

2195
03:38:43,220 --> 03:38:49,160
for in the middle of discussions with some willing partners that are considering it.

2196
03:38:51,340 --> 03:38:51,960
Mr. Chair.

2197
03:38:54,200 --> 03:38:57,000
Yeah, it sounds like Director Green, you'd like to make a comment?

2198
03:38:57,000 --> 03:39:09,600
Yeah, thank you. You know, following up on Scott's comment there is a valid point on the partners having time to do the deal. But, you know, when we get to May,

2199
03:39:11,820 --> 03:39:23,240
this board can certainly amend if we've got partners, let's say, pursued and we've got letters of interest by those project partners.

2200
03:39:23,240 --> 03:39:34,940
First, it seems to me we can call that on the line at that time to extend the dates or

2201
03:39:34,940 --> 03:39:36,040
get what feelings.

2202
03:39:36,660 --> 03:39:46,740
I don't think he can go ahead and get an extension of time this early because, well, as Doug

2203
03:39:46,740 --> 03:39:54,560
knows, things like extension times on a subdivision, you do that within a short time before

2204
03:39:54,560 --> 03:40:01,240
or you might do it in April, but not necessarily in September over.

2205
03:40:06,630 --> 03:40:08,490
Well, good comments.

2206
03:40:09,470 --> 03:40:11,910
I see there's a lot of thinking going on.

2207
03:40:12,710 --> 03:40:18,750
Again, I think some of the good news is, there's quite a few of potential partners

2208
03:40:18,750 --> 03:40:20,490
listening in on this.

2209
03:40:20,890 --> 03:40:26,350
In the true sense of transparency, they get to watch us make sausage.

2210
03:40:28,230 --> 03:40:34,590
and again, I can fully appreciate all the conversations and all the comments that have happened so far.

2211
03:40:36,330 --> 03:40:44,510
You know, I personally like an idea of like having a deadline and maybe it's not hard and fast.

2212
03:40:44,510 --> 03:40:46,150
Maybe we can't get an extension.

2213
03:40:47,850 --> 03:40:52,890
But you know, this is going to put the fire to staff. It's going to put the fire to all of us.

2214
03:40:54,990 --> 03:41:02,710
If we want to commit to this and up to five MGD, we're going to need partners.

2215
03:41:03,010 --> 03:41:04,150
We already know that.

2216
03:41:04,370 --> 03:41:06,290
Again, the partners are tuning in right now.

2217
03:41:06,990 --> 03:41:10,910
We're going to do some formal presentations at all levels.

2218
03:41:11,770 --> 03:41:17,310
I think in the next few months, we're going to have a good sense for if this is a partnership

2219
03:41:17,310 --> 03:41:22,010
and a tight project, or if this is a go-to-lone.

2220
03:41:22,010 --> 03:41:30,110
We've already heard from two directors that they don't feel like going it alone is even an option.

2221
03:41:32,250 --> 03:41:40,250
But, you know, that's how boards operate. You know, we've got options and we've got a lot of variables.

2222
03:41:40,790 --> 03:41:43,830
We've got a lot of balls in the air, but we need to move.

2223
03:41:44,250 --> 03:41:48,430
You know, this is a crucial meeting that we've been waiting for.

2224
03:41:48,430 --> 03:41:53,530
that everybody's been waiting for for quite some time and you know now we have a really

2225
03:41:53,530 --> 03:42:00,550
good sense we have kind of a you know foundation or framework built around you know what we think

2226
03:42:00,550 --> 03:42:10,390
this cost is going to be and yeah you know the negotiations and the project partners if they come

2227
03:42:10,390 --> 03:42:15,310
on you know it's going to be a fair bit of work it's going to be potentially our board meeting with

2228
03:42:15,310 --> 03:42:21,290
their boards and just that scheduling alone is going to take time so you know if we didn't

2229
03:42:21,290 --> 03:42:27,470
have a hard and fast deadline with now it didn't sound very positive about getting an extension.

2230
03:42:29,610 --> 03:42:37,130
Then you know yeah we could we could bake some more time into this whole process but you know I'm

2231
03:42:37,130 --> 03:42:44,090
confident staff's ready to go. Our staff really dialogues with the other staff from the other agencies

2232
03:42:44,090 --> 03:42:49,430
You know, again, that's kind of why illuminated the JRWSS, you know, these aren't strangers,

2233
03:42:49,690 --> 03:42:52,690
you know, we're not, we're not talking about agencies we don't know.

2234
03:42:52,970 --> 03:42:54,530
These are all known commodities.

2235
03:42:54,830 --> 03:42:57,830
We know that the populations, we know their population growth.

2236
03:42:58,350 --> 03:43:05,630
We know where the other agencies, you know, what projects they are in some cases were partnered

2237
03:43:05,630 --> 03:43:06,150
with them.

2238
03:43:06,150 --> 03:43:09,230
So, you know, there's not a big mystery here.

2239
03:43:09,230 --> 03:43:15,910
it's just we need to move and we have a deadline and maybe that deadline can

2240
03:43:15,910 --> 03:43:22,770
extend maybe it can. But I'm comfortable with the dialogue that's been, you know,

2241
03:43:23,050 --> 03:43:31,310
batted around here. I will ask art. Now that we've had our original motion removed,

2242
03:43:31,310 --> 03:43:40,010
hopefully that's been adequately done by the letter of Roberts rules. So we're

2243
03:43:40,010 --> 03:43:49,210
just dealing with this motion that's on the table now. And let's check in with

2244
03:43:49,210 --> 03:43:53,930
Jodie to see if she's got the latest iteration and where we're at just to

2245
03:43:53,930 --> 03:44:00,050
double check with Director Erdman and I believe it was Director Rayfield that

2246
03:44:00,050 --> 03:44:09,830
the second at that. No, it's director Erdman and direct a second by Scott Goldman and one was

2247
03:44:09,830 --> 03:44:18,310
the same two was the same three we were taking out the word solicitation and four we were calling

2248
03:44:18,310 --> 03:44:27,730
it a partnership solicitation plan instead of marketing plan and per director Erdman's substitute

2249
03:44:27,730 --> 03:44:36,650
motion. We were removing May 2022. And that was a second that Scott director Goldman offered.

2250
03:44:37,630 --> 03:44:43,510
Okay, so this is no longer a substitute motion. This is the motion that's on the table correct.

2251
03:44:44,970 --> 03:44:50,290
That's correct. Okay. Can I just clarify clarification just because I don't want to miss this one.

2252
03:44:50,290 --> 03:44:59,170
a directorate, director Raidfield, I believe suggested education plan, partnership education plan.

2253
03:45:00,000 --> 03:45:28,120
And I did see, I don't recall the sequence of events, but I believe that was in the motion. So I just want to find with education over. Thank you. Marketing, partnership, changing, marketing, education plan, partnership, education plan over. Yes. And then just another clarification. Did you want to take out May 22 or leave it in?

2254
03:45:29,720 --> 03:45:35,820
I'm in dog substitute motion is not part of the substitute motion.

2255
03:45:36,460 --> 03:45:43,580
Yeah remove removal of May 2022 because I think we need to seek the WIFIA extension and we don't want to.

2256
03:45:44,140 --> 03:45:46,580
Staff knows that we've been trying to get partners.

2257
03:45:46,580 --> 03:45:48,360
We don't need to set a deadline for them.

2258
03:45:48,520 --> 03:45:52,760
They've been diligent about trying to get partners for the last 10 years over.

2259
03:45:54,060 --> 03:46:07,040
Okay, that because that was the motion that I had seconded without May in there. I think it's great to have an understanding with staff that we have that deadline, but I don't think we needed in the action.

2260
03:46:11,340 --> 03:46:14,440
Okay, I think that's all clear.

2261
03:46:15,320 --> 03:46:17,340
Is there any further dialogue?

2262
03:46:21,010 --> 03:46:24,550
All right. Seeing none, we'll call for a roll call.

2263
03:46:25,570 --> 03:46:26,870
Vote on this.

2264
03:46:27,630 --> 03:46:29,810
Hey, President Rickerkin F.

2265
03:46:30,030 --> 03:46:30,510
Aye.

2266
03:46:31,210 --> 03:46:35,870
Vice President Bill Green or Director Doug Erdman.

2267
03:46:36,290 --> 03:46:36,450
Aye.

2268
03:46:37,130 --> 03:46:38,290
Director Scott Goldman.

2269
03:46:39,170 --> 03:46:39,370
Aye.

2270
03:46:39,950 --> 03:46:41,550
And Director Wayne Rayfield.

2271
03:46:42,150 --> 03:46:45,350
Aye. And I just want to clarify something.

2272
03:46:45,350 --> 03:46:52,430
I did not see the May 2020 to date as a deadline.

2273
03:46:53,790 --> 03:47:02,190
I saw it as a goal for all of us, but I don't want to keep arguing

2274
03:47:02,190 --> 03:47:08,210
over how many angels can dance on the head of the pin here over.

2275
03:47:09,810 --> 03:47:11,570
All right, thank you for that, Lane.

2276
03:47:11,570 --> 03:47:17,590
All right. Well, that's how sausage is made.

2277
03:47:19,210 --> 03:47:20,950
Is anybody wanting it?

2278
03:47:21,350 --> 03:47:21,510
Yeah.

2279
03:47:23,070 --> 03:47:26,430
Well, I will have a for sale before May 2022.

2280
03:47:28,150 --> 03:47:29,010
All right.

2281
03:47:29,530 --> 03:47:34,550
Seeing nothing further, I would like to thank all of our consultants.

2282
03:47:34,990 --> 03:47:39,190
Of course, all of our staff and the directors and the public.

2283
03:47:39,190 --> 03:47:47,770
and all the folks that are still tuned in this late hour. Hopefully everybody can

2284
03:47:47,770 --> 03:47:52,010
appreciate what when a board gets together and works and we don't know

2285
03:47:52,010 --> 03:47:59,610
necessarily always agree but I think we get to a good place in time and good on

2286
03:47:59,610 --> 03:48:05,630
the staff. I think they've got their marching orders and yep thumbs up. Thank you

2287
03:48:05,630 --> 03:48:11,190
all and with that we moved to item E and that's the adjournment so everybody

2288
03:48:11,190 --> 03:48:15,950
have a great night and yeah throwing down shock as Fab Bill catch away from

2289
03:48:15,950 --> 03:48:16,810
me over there

2290
03:48:16,810 --> 03:48:23,750
Well, it's 15 15. Oh gosh, I'm at 12