SLVWD Board Meeting Summary
December 4, 2025
Prepared by Mark Dolson for FSLVW
NOTE: Provided purely as a public service — NOT the official SLVWD Meeting Minutes.
Highlights:
Debt Financing
Next Board meeting will be at 6:30 PM on December 18, 2025
Preliminaries
Director Layng was absent. Director Fultz attended remotely.
There was no Closed Session.
There were no changes to the agenda. An updated document was posted online.
There was no public comment on non-agendized topics.
Unfinished Business
None.
New Business
Debt Financing
General Manager Jason Lillion introduced this agenda item. He said the District had $55.3 million in capital spending planned through 2030. For FYs 26-27, the projects are expected to be funded through grants, fire surcharges, PAYGO sources, and $16.5 million in bond proceeds (where PAYGO refers to “pay as you go” using cash). For FYs 28-30, the projects are expected to be funded through an additional bond issuance and PAYGO sources
Jason said Staff was seeking a Board recommendation for issuance of a 2026 Certificate of Participation (COP) of $16.5 million. This is based on the current approved Capital Improvement Plan (CIP) list of $1.8 million in active projects, $9.1 million in budgeted projects in the current fiscal year, and $5.3 million in the following fiscal year. District Engineer Garrett Roffe provided some further detail by walking the Board through the project Cantt charts.
Ken Diecker of Del Rio Advisors delivered a PowerPoint presentation summarizing the District’s options. He said the overall goal was to maximize use of cash, minimize borrowing, and maintain reserves.
Ken began by explaining the constraints imposed by the Additional Bonds Test (ABT), which is calculated as current net revenue (with allowances for approved rate increases) as compared to the maximum annual debt service on all obligations including the proposed obligation. This calculation must meet the debt service coverage requirement of the ABT (i.e. the ratio must remain above 1.25). He said the lack of an amortization provision in the District’s ABT prohibits it from entering into any short-term obligation (e.g., a line of credit or a short-term note) that would create a spike in its debt service.
Director Largay asked about the possibility of starting with a much smaller short-term loan, and Ken said this was conceivable, but he also said the District would be earning interest on unspent funds (from a large loan) at roughly the same rate as the interest on the loan. Director Fultz commented that initial design work could be performed relatively inexpensively, and he also urged more discriminating use of the term “reserves.” Director Russ suggested that it might be feasible to begin by taking out a $1 million short-term loan. Ken argued that the District could just use its available cash for this. This discussion continued until Jason pointed out that the District has a $10 million project ready to start.
Ken recommended a public offering (i.e., the sale of bonds to primarily retail and institutional investors). This will allow the District to structure the 2026 COPs around existing debt to manage the overall debt service coverage, and it will also allow for a longer financing term (up to 30 years). He recommended one big offering because there is currently very little negative cost of carry (assuming a conservative borrowing rate of 4.50% and reinvestment rate of 4.00%). In contrast, adding a separate bond series would incur an additional cost of approximately $500,000 to pay the costs of issuance.
Director Russ asked if Staff have confirmed the amount of cash that will be available. Finance Manager Cheri Freese said this was awaiting finalization of the reserve policy. Director Largay said he expected the final Capital Reserve Policy to free up some additional funds for PAYGO in the short term. Moving forward, cash availability will be determined by the District’s revenue and budget.
Director Fultz questioned the validity of current revenue and budget assumptions through 2030. He said the 2024 rate study assumed $36 million from FEMA in 2026-2028, and this seemed unlikely to fully materialize. He also called attention to the District’s history of underestimating its operating expenses. He said the District will have, at most, a million dollars per year not applied to debt service (and this number will decrease). Ken said his current focus was just on funding for the next two years. If the District were to violate the 1.25 debt ratio floor, it would be legally bound to raise rates.
Ken said he had examined multiple scenarios. 30 years is the default, but the District might pay more interest than necessary, so Ken also looked at 25 years and 20 years. He ended up recommending a 25-year public offering.
Director Fultz said he thought Del Rio was doing very good work, but he still wanted the District to update its rate-structure model with new information such as new salaries. Also, he opined that the current rate structure could be deemed illegal in light of a San Diego court case requiring that tiered rates be more quantifiably justified. He thought it might be possible to complete an updated analysis in 30-45 days. President Smolley said he would like Jason and Cheri to look at what this would take. Ken said any impact of further analysis would be only on the follow-on loan.
Director Russ said the Del Rio presentation was very informative and much appreciated. He was concerned about the proposal to obtain a loan for which the District would pay only interest for the first fifteen years (leaving the $16.5 million still to be paid in the future). Director Fultz separately expressed concern about the amortization schedule and said he wanted to take a closer look at this.
Director Largay pointed out that the proposed PAYGO transfer from operating cash varies over time. He said his personal preference is to start with PAYGO and only take out debt when needed. Ken said the District might be unable to legally execute a contract if it didn’t have the cash available.
In response to a question from Director Russ, Ken said it would take about 120 days for the District to obtain funding. He said all he was seeking this evening was approval to start the process.
Director Largay worried about the requirement that 85% of funds be spent in three years. He said his experience was that unforeseen delays are routine. He said he appreciated the Gantt charts, but he still didn’t know the accumulated dollar amount of the shovel-ready-for-construction projects. He said he would like greater clarity on this to ensure that the District isn’t taking out a bigger loan than necessary. Lastly, he suggested that Staff provide a table tying together project status and cumulative spending. President Smolley said he had requested something similar. Director Russ suggested augmenting the Gantt chart to show the required funds.
There was one public comment. Bruce Holloway of Boulder Creek noted that Fiscal Year 2027 ends in 18 months. He found it hard to believe that $25 million will be spent that quickly. He found it more plausible that construction might be completed by the end of 2027. He also sought further assurance that the District would have adequate flexibility in how it ends up spending the money. In addition, he questioned the wisdom of an amortization schedule that is heavily back-end-loaded. He wanted to see what a conventional amortization would look like. Lastly, he called attention to the 4.5% interest rate for the new loan as compared to the lower interest rates for current loans.
Director Fultz echoed the concern about amortization. He also suggested that it might be more prudent to borrow $19 million because it wouldn’t surprise him if the $16.5 million cost estimate turned out to be too low. Ken said a $19 million loan would be feasible, but it would lower the District’s debt service coverage. Director Russ suggested that this might be worth considering. President Smolley said he had been under the impression was that $16.5 million was the most the District could afford to borrow, but Jason said it was actually just the total cost of shovel-ready projects.
Director Fultz further requested a better handle on the FEMA payment forecast for the next three years. He doubted that the District would get the $36 million that was assumed in the rate study. Director Russ added that it would be ideal to get an integrated cash-flow projection for the next few years.
In view of the still-open questions, President Smolley asked Jason what he needed from the Board this evening. Jason said an informal consensus would be helpful.
Director Largay said he felt they were heading in the right direction. He said he looked forward to getting finer resolution on the sequence of planned activities. He also wanted to understand more about front-loading payments through PAYGO and about the implications of bearing a higher rate of interest in the early stages.
Director Russ said there was a lot to digest and that more information was still pending. He said he felt like the discussion this evening was a great start, and he looked forward to getting more information. He said he would also like to get some idea about how sensitive the analysis is to the various estimates on which it is based.
Director Fultz agreed. He said they wanted to get a loan, but the devil was in the details. He cited amortization options, validity of cash-flow projections, and FEMA implications as important considerations that had yet to be sufficiently explored.
President Smolley concurred. He said he wanted to see how the District’s cash flow has changed since the 2024 rate study.
Ken asked if he could assume the March-April time-frame for issuance. Both President Smolley and Jason said he could.
Consent Agenda
There was one item on the Consent Agenda:
a. Board Meeting Minutes from 11.20.25
This item was approved without further comment. (No formal motion is necessary to approve the minutes.)
District Reports
None.
Written Communications
There were no written communications.
Board Comment
None.
The meeting was adjourned at 8:25 PM.