SLVWD Board Meeting Summary

January 15, 2026

Prepared by Mark Dolson for FSLVW

NOTE: Provided purely as a public service — NOT the official SLVWD Meeting Minutes.

Highlights:

  • Quarterly Reports

  • Pumphouse Hardening Grant Award

  • Annual Audited Financial Statement

  • Board of Directors Committee Appointments

  • Public Committee Appointments

  • Reserve Policy

  • Urban Water Management Plan

  • Next Board meeting will be at 6:30 PM on February 5, 2026

 

Preliminaries

All five directors were present, with Director Layng attending remotely.

President Russ reported that the Board took no actions in the just-concluded Closed Session.

There were no changes to the agenda.

There was one public comment on non-agendized topics.   A neighborhood resident, Bob Elliot, thanked the Board and Staff and requested further updates on the Felton Heights tank project, particularly with regard to the pending property purchase.  General Manager Jason Lillion said it was reported at a Board meeting that the District has a tentative agreement with the property owner.  Engineering Manager Garrett Roffe said engineering plans have been completed to the 60% level, making them ready for the Environmental Consultant to review them.

 

Unfinished Business

Quarterly Reports

Environmental

Environmental Programs Manager Chris Klier highlighted some points from his PowerPoint presentation.  He noted that Janelle Vasquez-Nicholas joined the District in June as an Environmental Planner and has been doing great work.  He called attention to two grants that have been either closed out or are being closed out:

  • CAL FIRE Forest Health Grant for Olympia Invasive Removal closed out in April 2025.  Management plan and follow-up removal are being completed with additional RCD grant funding.

  • CalOES Hazard Mitigation Grant Program for hardening two water supply lines (Bennett Creek and Lompico) is being closed out as the work is infeasible.

Chris also highlighted two other grants:

  • CAL FIRE 2022 Fire Prevention Grant for fuel reduction around critical water infrastructure.  The District has created defensible space around 37 infrastructure sites, and it has only a few sites remaining to complete the project.

  • CAL FIRE 2025 Fire Prevention Grant for $900,000 for tree removal along 5-Mile Pipeline with an associated shaded fuel break and new defensible spaces.  The District was recently notified that it has been awarded this grant.  With the CCC crew, this will enable a $1.5 million project.

With regard to the District’s Conjunctive Use Plan, Chris said that Regulatory Agency permitting and the Loch Lomond Feasibility Study remain on hold, but discussions are in progress with the City of Santa Cruz Water Department.

Chris said the District was expecting to receive $365,000 in a settlement with 3M and DuPont for PFAS (a.k.a. “forever chemicals”) in firefighting foam.  A similar second settlement (with Tyco and BASF) is pending (final appeals are scheduled for April)

The RCD Lockhart Ridge Shaded Fuel Break project was completed last month.  The next step will be treating (via flaming in a critical time window) some of the resprouting broom and other plants.  The District is also holding monthly volunteer events to help remove broom (with 18 people participating this past weekend).

Chris pointed out an upcoming event: the Santa Cruz Mountain Stewardship Network symposium on January 30th at the Boardwalk.

Director Smolley asked for more information about the discussions with the City of Santa Cruz.  Jason said this concerned the 313.4-acre feet of Loch Lomond water and a possible three-way deal with Santa Cruz and Scotts Valley.  Director Fultz asked if the conversations were also addressing the City of Santa Cruz objections to the District’s Conjunctive Use Plan.  Jason said this was being discussed as well and was moving in a positive direction.  Director Fultz asked how much the District had spent to date on the EIR demanded by the City of Santa Cruz.  This led to a discussion about whether this issue could be addressed independently of the Loch Lomond access issue.  Director Smolley wanted to make sure that the institutional knowledge from the previous four years was incorporated into the District’s approach.

Director Fultz requested that the word “consolidation” no longer be used in conjunction with Bracken Brae and Forest Springs.  He also asked what happens to vegetation that is removed.  Chris explained that there were multiple dependencies.  Director Fultz expressed separate concern about funding for ongoing maintenance along the 5-Mile Pipeline.  He also took issue with some of the reporting about progress on the Sandhills Habitat Conservation Plan.  Lastly, Director Fultz asked how the PFAS contamination settlement money would be used.  Operations Manager Jesse Guiver said the PFAS numbers did not indicate any need for treatment.

Director Largay congratulated the District on the PFAS settlement award.  He said PFAS will increase costs for the foreseeable future so it's nice that the District is getting compensated.

Director Layng asked about any news regarding the Bear Creek Wastewater facility.  Chris said the District applied for EPA technical assistance, and a provider was sent out to the site to work with the District.

Finance

Finance Manager Cheri Freese answered Board questions about her PowerPoint presentation.  Director Fultz had a few comments.  He said the District actually had more restricted cash by policy than what was shown in the report.  He suggested that it would beneficial to understand what cash is being set aside when the reserve policy is finalized.  Also, in the statement of revenues, he recommended breaking out revenue from the CZU Fire Surcharge because this is restricted to be used only for CZU Fire recovery.  Lastly, he expressed concern about actual water consumption running below the budget projections.  He suggested thinking about removing the Drought Stage 1 restrictions to encourage more consumption and thus more revenue.

President Russ asked if anyone could explain the apparent 17% increase in water consumption from 2024 to 2025.  It was ultimately determined that this was only an increase in revenue, and it was due to the new rate structure that took effect in April of 2024.

Operations

Operations Manager Jesse Guiver fielded Board questions about the charts in his PowerPoint presentation.  This was his first presentation to the Board, and the Directors appreciated the graphical information display.  Director Fultz suggested making this available on the District website, and Jesse said this was part of his plan.

Jesse said the District began installing cellular meters in 2015 and has been averaging about 400 meter-replacements per year (meaning that about half the meters are now cellular).  The old meters tend to under-register the amount of water delivered, and Jesse estimated that the District loses about $250,000 in revenue each year due to this.  This led Director Smolley to ask whether the District would save money by hiring temporary labor to accelerate the meter replacement.  General Manager Jason Lillion said this was under investigation.  The replacement cost is about $300 per meter, meaning that total remaining cost is over a million dollars.  He also mentioned that the next step beyond the current cellular meters would be ultrasonic meters which utilize sound waves to measure water flow, eliminating moving parts, and thereby improving accuracy and longevity.

President Russ was interested in better understanding the contribution of the District’s pumps to its electric bill.  Jesse said the District pays about $700,000 per year to PG&E, and pumps are by far the highest contributor.  Consequently, making more use of surface water reduces the PG&E bill.  President Russ said he would like to compare the kilowatt-hours-per-acre-foot for surface water (including treatment) vs. groundwater.  Director Largay commented that the Department of Water Resources DWR used to have a grant program for water projects that save energy.  This program ended, but there are two current grant funding programs that support the transition from groundwater to surface water.

There was one minor question from a member of the public which was quickly addressed.

Engineering

This report was reviewed at the previous Board Meeting in December.

 

Pumphouse Hardening Grant Award

Engineering Manager Garrett Roffe introduced this agenda item.  His memo explained that the District was awarded a Department of Water Resources (DWR) grant to be used for fire hardening of critical water infrastructure.  The District has chosen to target pump stations, several of which currently reside in Concrete Masonry Unit block structures with a wooden roof.  Replacing the wooden roofs with fire resistant metal roofs will harden this important infrastructure at a relatively low cost.

This project includes demolishing the existing wooden roof, construction of a new metal roof, and protection in place of pump station equipment at five pump stations:

  • Blackstone Pump Station

  • Echo Pump Station

  • Nina Pump Station

  • Ralston Pump Station

  • Redwood Park Pump Station

The District received three bids:

  • Kavnex Construction & Engineering ($224,250)

  • CWS Construction Group, Inc. ($255,000)

  • Pridex Construction Group, Inc. ($495,000)

Garrett checked two references for Kavnex and found them both to be quite positive.  Staff therefore recommended that the contract be awarded to Kavnex.

Directors Layng, Largay, and Smolley had no substantial comment, but Director Fultz expressed concern about the cost of even the lowest bid.  Given the size of the roof the bid struck him as extraordinarily expensive, as much as $500 per square foot in some cases.  He worried that the availability of grant funding might be leading to less scrupulous cost control.

Garrett basically agreed.  He said Staff originally anticipated a cost of around $150,000.  The higher low bid reflected the Class A license of the contractor.  Garrett said the best deal would be if the District could perform the work itself.  He also suggested that a smaller contractor might have been cheaper.

This led Director Fultz to ask if this was a viable option.  General Manager Jason Lillion said they could investigate this.  The Kavnex bid is valid for 90 days, and the grant timeline extends to late 2027.  The grant is for $610,000 and $300,000 is budgeted for the current fiscal year.

President Russ was curious about the need for insulation (which is flammable).  Staff wasn’t sure whether this was to reduce sound or heat.

There was no public comment.  President Russ said the Board consensus was that this matter should be returned to Staff for further investigation.

 

New Business

Annual Audited Financial Statement

Finance Manager Cheri Freese introduced this agenda item.  The District is required by the State to complete an independent audit of its financial statements at the end of each fiscal year.   As in previous years, the District received an unmodified (unqualified) opinion, meaning the financial statements present fairly, in all material respects, the financial position and results of operation of the District as of and for the year ended June 30, 2025. Jonathan Abedesco of C.J. Brown & Company, CPAs delivered a summary PowerPoint presentation to the Board.

Director Smolley requested a breakdown of the $640,000 increase in expenses from the previous year.  Jonathan said $300,000 was due to personnel costs (including a payout).  Operational costs increased $140,000 due to supplies, utilities, and software upgrades.  Professional services increased by $130,000.

Director Fultz was most interested in what the numbers mean for the District’s future.  He called attention to the $5 million in free cash, $1 million of which is from the CZU Fire Surcharge and therefore restricted.  This leaves $4 million whereas the rate study expectation was that the District would have between $5 million and $6 million.  He said he expected most of the rate increase for the next three years to be consumed by increases in operating expenses, ultimately limiting the District’s ability to borrow for capital improvement projects.  He recommended that Staff compare the rate study projections to the actuals.

Director Fultz also had a comment about pensions.  He said the market this past year was phenomenal, yet the District’s pension obligation only went down by $100,000.  He characterized this as a disaster and said pension debt will increase.  He requested that this issue be added to a future Board agenda.

President Russ appreciated both of Director Fultz’s concerns.  He asked what the District can do to get a handle on its unfunded pension liability.  Jonathan said CalPERS is a year behind in its reporting.  They have actually earned $1.7 billion in investment income.  They are trying to be conservative, so they maintained a 6.9% discount rate.  Another District tried to issue a bond to pay off their net pension liability.  They paid it off and still ended up with the same liability.  He said if the District had extra funds, it might elect to pay off its debt over a number of years.  However, if the District doesn’t have excess funds, this may be moot.

President Russ asked why prepaid expenses changed over half a million dollars.  Jonathan attributed this to timing of property insurance payments and vendor payments.

There was no public comment.  Director Smolley moved to approve the financial statements.  President Russ seconded.

The motion passed 5-0.

 

Board of Directors Committee Appointments

General Manager Jason Lillion introduced this agenda item.  The District annually appoints up to two directors to serve on each of its four standing committees.  (Director Fultz was not eligible to serve as the result of a 2025 Board resolution.)  President Russ recommended the following appointments:

  • Administration: Alina Layng

  • Environmental: Alina Layng and Bryan Largay

  • Engineering: Mark Smolley and Bob Russ

  • Finance: Bryan Largay and Bob Russ

Director Layng said it might be nice to have two directors on the Administration Committee, particularly as she might sometimes need to miss a meeting.  She suggested Director Largay, and he said he was willing to serve if necessary (though he might miss some meetings himself).

There was no public comment.  President Russ moved to make the appointments he initially recommended.  Director Smolley seconded.

The motion passed 3-0-2, with Director Layng and Fultz abstaining.

President Russ than nominated Director Largay and himself to serve on the Santa Margarita Groundwater Agency, with Director Layng as the alternate.  This was seconded by Director Smolley

There was no public comment.  The motion passed 4-0-1, Director Fultz abstaining.

 

Committee Appointments for Public Applicants

General Manager Jason Lillion introduced this agenda item.  The District annually chooses three public members to serve on each of its four standing committees.  The Directors voted offline to choose twelve appointees from among the fourteen applicants.  President Russ announced the results:

  • Admin: Cheryl Adams, Shelley Cantin, and Mark Dolson

  • Engineering:  Frances Cleveland, Bill Grace, and Gregory Rauch

  • Environmental: Michael Duffy, Nicki Franks, and Parvin Zahertar

  • Finance:  Carrie George, Karl Larsen, and Nicky Ramos-Beban

Director Fultz commented that he would prioritize new applicants over those already serving on committees in order to potentially expand the pool of future candidates for the Board.

Director Layng suggested placing Robles on the Environmental Committee in place of Zahertar, as she saw her adding more value.  Director Largay said he held the same view.  President Russ said he wanted to honor the Board vote.

There was no public comment.  President Russ moved to approve his recommended appointments.  Director Smolley seconded.

The motion passed 4-0-1 with Director Layng abstaining.

 

Reserve Policy

Finance Manager Cheri Freese introduced this agenda item.  She reminded the Board that Staff and the Budget and Finance Committee have been working for a number of months to update the District’s reserve policy.  The goal was to improve clarity and consistency in reserve management, strengthen Board oversight of reserve use, and support long-term financial stability through defined replenishment expectations and integration with the District’s budget process.  The result presented to the Board specified:

  • Operating Reserve.  Provides liquidity to manage cash-flow fluctuations, short-term revenue loss, or unanticipated operating costs.  Target: Four months of annual operating expenses.

  • Capital Reserve.  Funds replacement or major rehabilitation of capital assets and provides resources for unplanned infrastructure needs.  Target: $3 million.

  • Emergency Reserve.  Provides immediate resources in the event of a disaster, emergency repair, or other major unanticipated event.  Target: $4 million.

Directors Layng and Largay approved with only minor comments.  Director Smolley noted that this policy was reviewed by committee seven times in 2025, and he saw this as a good use of the committee.  His only question was whether the District could actually spend $6 million per year (as currently anticipated) given that its recent annual average has been $3 million.

Director Fultz described the policy as “borderline irresponsible” and said he wouldn’t be able to support it.   He objected to “weasel words” (promising to “target” rather than to “maintain”), and he argued that the emergency reserve amount was too small.  He observed that the District spent $4 million to recover from the CZU Fire, and he said costs have nearly doubled since then.  He also argued that the District needs to spend a minimum of $6 million per year on infrastructure.  Lastly, he recommended stating explicitly that the District can use a Proposition 218 process to replenish funds.

President Russ commented that this has been a long process.  He said there was a tradeoff between maximizing the safety cushion and freeing up some cash for construction projects.  He said the District didn’t have enough money to have a $7 million emergency reserve.

There was no public comment.  President Russ moved to approve the resolution with the minor revisions recommended by Directors Layng and Fultz.  The motion was seconded.

The motion passed 4-1, with Director Fultz opposed.

Urban Water Management Plan (UWMP)

General Manager Jason Lillion introduced this agenda item.  The District received and rated five qualified proposals for consulting services to help it meet State requirements to submit an updated Urban Water Management Plan (UWMP) this summer.  West & Associates had both the lowest bid ($40,400) and the highest rating, and their references reported high-quality performance.

The UWMP serves as the District’s primary long-range water planning document and provides a comprehensive evaluation of existing and projected water supplies, water demands, and water supply reliability under normal, dry, and multiple dry-year conditions.  Adoption of a compliant UWMP is also a prerequisite for eligibility for certain state-administered water grants and funding programs.  The District last completed a UWMP in 2020.

The Directors all supported the choice of West & Associates.  Director Fultz said, given the Department of Water Resources’ perverted definition of "urban," the lowest cost makes the most sense to him.  He described SLVWD as a very static district with little need for this report.

There was no public comment.  President Russ moved to approve the award of the contract to West & Associates, and Director Smolley seconded.

The motion passed 5-0.

 

Consent Agenda

There was one item on the Consent Agenda:

a.     Board of Directors Meeting Minutes for 12.18.25

This item was approved without Board comment.

 

District Reports

Finance Status Report for November 2025

Director Fultz said the current table was misleading, and he asked Cheri to add a third line to show funds restricted by Board policy.


Written Communications

There were two written communications.  One was another letter opposing the Haven housing development, and the other was a long letter urging the District to institute a total ban on herbicides.

 

Board Comment

None.

 

The meeting was adjourned at 9:00 PM.