SLVWD Board Meeting Summary
February 4, 2021
Mark Dolson
Highlights:
Proposed consolidation with Scotts Valley Water District.
Quail Hollow Pipeline project.
Next Board meeting is at 6:30 PM on February 18.
Preliminaries:
In the closed session preceding the public meeting, the Board unanimously approved the District Manager's goals and objectives for 2021. These will be posted on the District's website.
There were no non-agenda-related public oral communications.
New Business
Exploration of Possible Consolidation of SLVWD with Scotts Valley Water District (SVWD)
Over a hundred members of the public attended the meeting in response to this agenda item. President Mahood began by apologizing for the posted back-up material which, she said, seemed to have given many people the impression that a decision about consolidating the two water districts (SLVWD and SVWD) had already been made. She explained that is not the case and that the presentation this evening would be purely informational. This topic will be agendized for further discussion with ratepayers and the Board at an upcoming meeting.
District Manager Rick Rogers introduced this topic by explaining that the Directors of SLVWD and SVWD meet regularly to explore opportunities for joint efficiencies. SVWD recently suggested that consolidating the two districts might be mutually beneficial, and Rick agreed. The districts already share common interests and have successfully collaborated on recent projects. They could benefit from shared expertise, and the combined entity could be more resilient. He described the current meeting as the first baby step in the direction of exploring this possibility. There can be a lot of benefit, but there is a lot more assessment yet to be undertaken.
The formal process for consolidating two water districts was introduced via a slide presentation by Joe Serrano of the Local Agency Formation Committee (LAFCO). LAFCO is a state agency with local oversight authority for cities and special districts on matters such as consolidation and boundary changes. Joe has over 13 years of LAFCO experience.
Joe described a three-stage process which is designed to weed out ill-conceived consolidations as early as possible. In the first stage, the districts must perform a lot of due diligence before they get to the point of submitting a joint application. They must form a stakeholder group with representatives from each district and hire an outside consultant to conduct a detailed analysis and feasibility study.
In the second stage, LAFCO becomes formally involved, and the districts must submit all required documents, notify affected and interested agencies, and continue outreach to their communities. Also, LAFCO holds a public meeting.
In the third stage, if LAFCO approves the request, there is a 30-day reconsideration period and a 21-60-day protest period. The proposed consolidation will be rejected if over half the registered voters submit written protests. A special election will be held if at least 25% (but less than 50%) of the registered voters submit written protests. Independent of this, a special election will be held if at least 25% of the landowners submit written protests, provided that these landowners also own at least 25% of the assessed value of land.
Joe said that successful mergers focus on collaboration from start to finish. People always want to know whether costs will increase, whether service will deteriorate, and what the motivation is for doing this in the first place.
In response to questions from Director Fultz, Joe shared three additional details: (1) the votes are tallied for the consolidated territory (not for each district separately), (2) the Stage 1 activities are recommended best practices, while the subsequent steps are mandated by state law, and (3) LAFCO was founded in 1963 to encourage smart growth. It encourages development but not consolidation.
Director Henry said SLVWD has grown through the years by consolidating. SLV residents might feel like they are losing something, but this will not be true. Water districts need to grow in order to continue. The state encourages consolidations because having many small districts costs the state more to oversee. She said she understood how difficult this will be for a lot of SLV residents, but the District needs to look at this and get all the facts. She suggested that having all the facts might lead her to have more reservations.
Director To emphasized that this is not a done deal. She said, “we are literally just here to talk about something that we are thinking about.” In particular, she addressed the concern that Scotts Valley will “steal our water,” saying that this is simply incorrect because the two districts already share the same aquifer and are participating in the same groundwater agency. This is the first meeting in a long exploration process, but everyone should understand that “we already share the same water.”
Director Fultz noted that the districts do share the same aquifer, but that SLVWD is unique in getting 50% of its water from surface sources that are not currently available to Scotts Valley in the normal course of business.
Director Smolley asked if there were easy off-ramps along the way. Joe said one or both districts can decide, at any point in the process, not to move forward.
Nearly two dozen members of the public contributed questions and comments (speaking for a maximum of two minutes each). These can be roughly summarized as follows:
This proposal is “the dumbest idea since the pet rock” and should not receive any further consideration.
The SLV and Scotts Valley communities are too different culturally for consolidation to be viable. The Felton and Lompico acquisitions did not present this same challenge. This objection is independent of any financial benefits. Try asking residents in advance for their opinion. They might prefer higher water rates to a merger.
The severe stress of the past year (due to pandemic, fire, and debris flows} makes it overwhelmingly difficult for SLV residents to contemplate this change at this time. It may be more feasible for residents to consider this at some future date.
The consolidation would severely threaten the SLV’s current autonomy. It’s true that SLVWD currently has about 8600 customers to Scotts Valley’s 4400 (and roughly 18,000 voters to Scotts Valley’s 7600), but Scotts Valley is better organized and will continue to grow. Electing Directors by district rather than at-large might help.
The LAFCO process appears biased toward consolidation. Joe Serrano is appearing “pro bono,” but his agency has an agenda, and the anti-consolidation position has no comparable official representation. Forcing residents to explicitly opt out (as opposed to opting in) tilts the scale. The role of assessed land value in the rejection process has yet to be clearly explained. LAFCO also involves significant behind-the-scenes politics, and it has never denied an application for consolidation.
The process by which this matter has come to the public’s attention has generated a lot of potentially avoidable anxiety, fear, and anger on social media. The prevailing community impression is that the District is biased in favor of consolidation and is focusing on positives rather than negatives. People believe that SLV voices will necessarily be diluted.
One commenter noted that the state imposes additional requirements on districts with more than 10,000 connections. Rick Rogers said this was being looked at but shouldn’t involve anything major. One commenter asked if this would force Felton water to be fluoridated, and Rick Rogers said it would not. One commenter expressed concern specifically about Scotts Valley’s interest in building injection wells to solve a Santa Cruz water problem.
Neither the Directors nor Joe Serrano substantially rebutted these arguments, but they did offer a number of clarifications. Rick Rogers argued repeatedly that there will never be a “good” time to consider consolidation because there is “always something.” He recognized concerns about Scotts Valley’s continually growing need for water, but he argued that water districts have no direct authority over land use (although they do determine whether water is available in response to new requests). He said Scotts Valley ‘s water demand has been pretty steady for the past five years. Their pumping has decreased 40% from its high in the 1990s. He also said that Brown Act constraints had made it more challenging to manage public awareness of this proposal.
Rick Rogers further argued that the potential financial benefits of a merger are huge but said he had no estimate as of yet. He added that water and aquifer management would benefit as well. More generally, he agreed that we don't yet know all the pros and cons. We see a lot of potential, but we are far from lifting the hood and assessing in detail. He said he wouldn’t be 100% in favor until he had more information, and he promised a full and transparent review.
Director Henry reminded people that part of SLVWD is in Scotts Valley and that there is also a possibility of another housing project in this part of Scotts Valley. She added that the District doesn’t have all the answers now. Consolidation could be very good, but the District could also conclude that it is not. The only way to decide is to go through the process. She herself had a positive experience with the Lompico merger seven years ago.
Director Smolley said there have been a lot of questions, and the Board now needs to assemble information before it can move any further forward. Director To concurred.
Director Fultz shared a number of further thoughts. He thanked everyone who took the time to participate in this meeting. He noted that the community plays two roles with respect to the District: customer and part-owner of a public agency. Thinking like owners and getting to the heart of the matter is very important. Director Fultz characterized his own general approach to big items like this as “open-minded skepticism.” He agreed with not taking any action at this meeting because there is absolutely no rush. He said the District has an obligation to seriously consider the Scotts Valley proposal because SVWD is a sister agency that the District is already working with. The Santa Margarita Groundwater Agency plan must be submitted by January, 2022 and will thus need to be ready for review in mid-2021. Director Fultz cited his experience with corporate consolidations and said it is important to address the high-level concerns about what some of the advantages might be and what the outcomes might be. He cautioned that it was premature to spend money on this and said he was not yet prepared to move forward pending some additional information about costs, benefits, and mitigating potential drawbacks. He suggested that this information can be gathered over the next few months with much less effort than will be required if the District formally moves forward with LAFCO.
President Mahood concluded the discussion by saying that the Board is open to the idea but has not come to any strong conclusions. The District might discover additional ways to cooperate with Scotts Valley while remaining separate. She cited two main potential benefits: (1) consolidation would provide SLVWD with more control over Scotts Valley wells drawing on the shared aquifer, and (2) consolidation would make SLV much more resilient to fire and drought due to well-water backup. She said the District hasn’t yet had time to investigate the possible negatives, but her thinking had been influenced by public input both at this meeting and via personal communications. The District’s highest priority has to be on its infrastructure projects, and she would worry about sidetracking attention by taking on a large, time-consuming process. Also, there would be challenges in responding to the strongly-held initial sentiment as expressed tonight. She described consolidation as currently “not her first priority.”
Quail Hollow Pipeline Study
Environmental Planner Carly Blanchard introduced the Quail Hollow Pipeline Replacement Project. The District is proposing to install approximately 7,500 feet of a 12-inch water supply transmission main pipeline parallel to an existing 6-inch pipeline entirely within the Quail Hollow Road right-of-way to improve water flow to Lompico. The District prepared a Draft Initial Study & Mitigated Negative Declaration (IS-MND) for the California Environmental Quality Act (CEQA) State Guidelines. The 30- day public review period commenced December 10, 2020 and ended January 11, 2021. No public comments were received.
Director Henry commented in support of the project, saying that it needs to be done. She also asked if this project was part of what the $15 million loan is paying for. Rick Rogers said yes (it may cost $5-6 million). He plans to provide an engineering estimate. Director To described the report as thorough and appreciated.
Director Smolley asked what the Environmental Committee recommendation had been. Director To said this was not brought to the Environmental Committee. Director Smolley also noted a County restriction requiring that construction not take place during the school year. He asked whether the District could start in May. Environmental Planner Carly Blanchard said the District could explore this. Lastly, Director Smolley noted that some documents in the bibliography are listed as being “draft” even though they date back to 2018. Rick Rogers said the final documents were now available.
Director Fultz wondered whether it would be possible for the District to avoid this cumbersome process in a future situation like this one where the construction is remaining entirely within the right of way for the road. Environmental Planner Carly Blanchard described this as a requirement for any sandhills project. Director Fultz asked if some blanket process could be used to speed things up. He stressed the importance of eliminating regulatory barriers.
There was no public comment.
The Board adopted the Initial Study and Mitigated Negative Declaration (IS-MND) for the Quail Hollow Pipeline Project by a vote of 5-0.
Annual Salmonid Restoration Conference
The District routinely participates in the Annual Salmonid Restoration Conference. This is consistent with the directive in the Board Policy Manual encouraging members to attend educational conferences and professional meetings when the purposes of such activities are to improve District operations.
This year, the conference will be virtual and will be held April 21-23, 2021. President Mahood said the District was planning to spend $500 for a Hospitality Sponsorship. This would enable the District to send Environmental Planner Carly Blanchard and one other person. An additional attendee would cost an additional $125.
Director Fultz wondered what extra value the District is getting for being a sponsor. It made sense for the District to pay for this last year when the conference was held in Santa Cruz County. Carly agreed that the value would be reduced for a virtual conference. Director Fultz felt that Carly would still obtain valuable information by attending, but he requested that she report on what she learned there and that the Staff look at the return on expenditure for sponsorship.
There was no public input.
District Reports
With regard to the Engineering Report, Director Fultz sought clarification on the distinction between temporary and permanent facilities: how do these differ, and does FEMA cover 75% of the cost for both? Rick Rogers explained that temporary tanks are scattered and connected by above-ground pipes. FEMA covers both temporary and permanent repairs, and in fact FEMA is also moving ahead on 100% coverage on certain categories in certain time frames. Director Fultz also wanted to better understand the reported water flow through the interties between systems. James Furtado responded.
Director Smolley asked why the Eckley tank booster station and pipeline design is being done in-house. Josh Wolff, the new Engineering Manager, explained that putting out RFPs for small projects doesn't make sense financially. He is teaching his staff how to bring these in-house. Director Smolley also asked about the RFP for constructability analysis of five miles of cross-country raw-water pipeline from the Peavine Intake to the Water Treatment Plant which were destroyed by the CZU fire – he was expecting to first see a draft. James Furtado said the draft RFP will come to the Engineering Committee.
A member of the public (Bruce Holloway) called attention to a potential issue where the District could be in violation of a state water right controlling stream flow in Felton. Rick Rogers said the District is working with the State Water Resources Board to allow the District to use its intertie to address this.
The meeting was adjourned at 9:15 PM.