SLVWD Board Meeting Summary

March 5, 2026

Prepared by Mark Dolson for FSLVW

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

Highlights:

  • Debt Financing

  • Conflict of Interest Code

  • Integrated Pest Management Policy (IPMP) Update

  • Resolution Amending the Wastewater Fund Budget

  • Resolution Amending the Wastewater Fund Budget

  • Conversion of Olympia and Estrella Wells to SMGWA Monitoring Wells

  • Donation of Water to Boulder Creek Elementary Fundraiser

  • Next Board meeting will be at 6:30 PM on March 19, 2026

Preliminaries

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

President Russ reported that the Board took two actions in the just-concluded Closed Session: (4a) direction was provided to Staff, and (4b) the Directors voted unanimously to deny the claim by Kim Brown

There was one change to the agenda.  General Manager Jason Lillion announced that item 10c (Remote Work and Flexible Schedule Policy) was being pulled and would be brought back to the Board at a future meeting. 

There were no public comments on non-agendized topics.

 

Unfinished Business

None.

 

New Business

Debt Financing

General Manager Jason Lillion introduced this agenda item.  Per the District’s current Five-Year Capital Improvement Plan (CIP), approximately $55.3 million in capital improvements require funding through FY 2030, with $25.1 million identified for FYs 2026–2027 and $30.2 million for FYs 2028–2030.

For FYs 2026–2027, funding is anticipated to come from a combination of grants, fire surcharges, pay-as-you-go (PAYGO) sources, and approximately $16.5 million in bond proceeds. For FYs 2028–2030, projects are expected to be funded through additional bond issuances and PAYGO sources. Any proposed financing will be issued on parity with the District’s existing obligations, meaning the new debt will share an equal claim on the net revenues of the Water System (gross revenues less operations and maintenance expenses).

On December 4, 2025, the District’s municipal advisor, Ken Dieker of Del Rio Advisors, LLC, presented nine financing scenarios to the Board. At that time, the Public Offering: 25-Year Wrapped Debt Service scenario was identified as the preferred option. This structure provided a stabilized debt service coverage ratio of approximately 1.58x and concluded the projection period with an estimated 83% cash balance. During Board discussion, however, concerns were raised regarding the backloading of principal payments for both the Series 2026 and Series 2028 Certificates of Participation (COPs).

On February 5, 2026, Mr. Dieker returned with a revised recommendation reflecting updated financial projections. Under the revised structure, the Series 2026 COPs would be shortened from 25 years to 24 years, and the Series 2028 COPs from 25 years to 22 years. This modification eliminates the backloading of principal and aligns all outstanding District debt to mature in FY 2050.

Subsequently, the ad hoc committee—consisting of President Russ, Director Fultz, General Manager Jason Lillion, and Finance Manager Cheri Freese—met to develop a comprehensive debt strategy for the District. This strategy is intended not only to guide the issuance of the 2026 COPs but also to establish a clear framework for how future debt will be structured and managed to support the District’s long-term financial stability

President Russ walked the Board through the results of the committee’s detailed analysis.

Financial Background:

  • SLVWD has been hit with 4 disasters (very expensive) over last decade!

  • SLVWD also has deferred maintenance to catch-up

  • Limited FEMA grant dollars are forthcoming and are therefore supplemental

  • Grants are received; they will help offset or accelerate self-funding

  • SLVWD must be pro-active and far-future looking

  • Planning for 25-50 years of Sustainability

Key Objectives:

  • Continue to assure reliable, safe, and cost-effective water delivery

  • SLVWD has a great team! Fully utilize their talent.

  • Replace pipes (many miles) that are likely to fail (end-of-life)

  • Upgrade pipes (many miles) to provide fire-flows and tie-ins

  • Perform deferred maintenance (e.g. tank re-coating)

  • Begin routine maintenance/schedules on all infrastructure

  • Provide financial analysis tools to optimize debt and self-funding

  • Must show bond underwriters that Debt Service Coverage >1.25

  • Must be confident that Operating Cash always >50% (70% better!)

  • Because Debt Service (bonds) is at least 2x more expensive, better to self-fund!

Current Assumptions:

  • Long-term inflation rate of approximately 3%/yr

  • Long-term growth in water revenues (@4.5%/yr)

  • Long-term growth in Operating Expenses and Salaries/Benefits (@4.5%/yr)

  • Cost of Financing 2026-COP = 4.5%

  • Future Cost of Financing COPs = 5.0%

  • Operating Expenses Growth Rate=6%/yr

  • Target of Self-funded/Debt Capital of 2:1 (=55/45 Self-funded/Debt Service)

Conclusions:

  • For long-term sustainability, water revenues & operating/compensation expenses must match!

  • Example: even a difference of ½% results in negative Operating Cash and Debt Service <1.25

  • SLVWD has about $475M in pipes and other infrastructure, to repair/replace/maintain is a Tall Order!

  • Total Capital Raised (debt & self-funded) = $250M over next 25 years (this is still only 50%)

  • Debt Service is expensive ($95M on $105M raised Capital) & ½% change = $9M total additional interest!

  • Going forward, SLVWD will maximize ratio of Self-funded / Debt to keep debt as low as possible

  • However, to achieve maximum self-funding, SLVWD must be fiscally disciplined for many decades!

  • Board will be considering specific COP issuance for 2026 of $16.5M and projected interest rate=4.5%

Director Fultz said he felt very good about this. He now felt OK about doing the wrap because the debts after this one won’t be wrapped.  He noted that the assumed 4.5% annual increase in rates will result in a doubling every 16 years.  However, the key for him was that, in contrast to previous rate increases, most of the rate increase going forward will be for infrastructure.  He saw this as something that could be sold to the community.  He said if inflation drops to 2%, the rate increase can be decreased.  He closed by saying President Russ had put a tremendous amount of work into this, and SLVWD can now become one of the best-managed districts in terms of service and addressing infrastructure. 

Director Largay characterized the work of the committee as remarkable.  He sought a clarification on Operating Expenses (OpEx) in President Russ’s spreadsheet, and President Russ explained that proposed inflation in OpEx is everything else (Professional Services, Operations, Maintenance, Facilities, and General and Administrative) not including compensation and benefits.   The latter are 75% of overall cost.   Salaries and benefits increase at 4.5% and all Operating Expenses at 6%.

Director Largay observed that there was still potential to decrease costs by moving some professional services in house.  Also, he noted that debt service dollars are future dollars, so the actual excess cost might be more like 20% rather than a factor of two (due to inflation).

President Russ described his model as a minor refinement of that presented by Ken Dieker.  Ken proposed a COP every three years and with a 2-to-1 debt to PAYGO ratio, and in the model, it simulates a COP every four years, and this debt to PAYGO ratio has now been flipped, due to the assumption of increased revenue.    Director Largay said he liked the increased reliance on PAYGO if the District could achieve it.  He asked about next steps.

Jason said the presentation this evening was purely informational.  Ken will bring this presentation back to the Board on March 19th.

Director Smolley said he appreciated the work that was done here.  He found the summary financial analysis very insightful, and he said he hadn’t seen this level of analysis in his five years on the Board.  He also appreciated the recognition that rate increases will be essential.  In addition, he said the ability to perform some construction in house was something that Jason had good ideas about, and he hoped to see more of it.

Director Fultz said he had been seeking this conversation for eight years.  He said the District finally had two staff members who understand finances at the required level, and a Board open to this.  He described this as very forward looking.

Director Layng asked how this analysis affects the Rio Del recommendation.  President Russ said it came back full circle to Ken’s original recommendation: a 24-year wrap over all the District’s existing debt.  This allows follow-on public offerings every four years, and he was very relieved by this result.  The levelized 2026 works, but it stresses the District a little more on debt coverage ratio.  He added that for property tax, the 20-year CA average is 5.9% compounded annually, and this will be an increasingly important share of revenue.

Director Layng said Ad Hoc Committees had historically been determined via a Board vote, and she requested that this be done in the future.  She thanked everyone for their great work.

Ken said the rating presentation was held earlier this week with S&P.  Jason and Cheri did a wonderful job representing the District.  There were a lot of detailed questions relating to fire risk.  He said they were hoping to get the rating by the 13th.  They will respond, and the rating will then be published.

There was no public comment.

 

Conflict of Interest Code

General Manager Jason Lillion introduced this agenda item.  The Political Reform Act of 1974 requires every local government agency to adopt and maintain a Conflict of Interest Code and to review this biennially, updating as necessary.

The proposed amendment updates the District’s Conflict of Interest Code to ensure compliance with the Political Reform Act and current FPPC regulations. It reflects the District’s existing organizational structure, confirms designated positions subject to reporting requirements, and clarifies applicable disclosure categories. These updates are administrative in nature and are intended to ensure that the District’s Code remains accurate, legally compliant, and aligned with current operations.

The Directors endorsed this with only very minor comment.  There was no public discussion.  Director Smolley moved to adopt the amended code, and President Russ seconded.  The motion passed 5-0.

 

Integrated Pest Management Policy (IPMP) Update

Environmental Programs Manager Chris Klier introduced this agenda item.  The IPMP has not been updated since its initial adoption in 2020, so Staff began a review process in 2025 and drafted an update to the policy. This proposed IPMP update was brought to the October 2, 2025 Board meeting. At the meeting, Staff were directed to hold a public workshop and revise the policy based on Board and public input. The public workshop was held on December 1, 2025 and the current proposed updates are a result of this process.

Staff are proposing shifting to an Organic IPMP, prohibiting the use of conventional (synthetic) pesticides. Changes to the IPMP have been made to align it with the new approach.  An additional change is the exempting of hardware store / over-the-counter pesticides for office and operational hazards. These are necessary to protect the health and safety of the District’s staff and offices.

In support of the proposed update, staff will implement a Treatment Testing Plan.  This testing will allow us to determine the feasibility, effectiveness, and cost of different available treatment options. Testing results will be reported to the Environmental Committee and Board.

Director Largay applauded Staff for developing this policy which, he said, captures the comfort level of the community.  Director Largay’s view was that this is a complicated issue, and invasive species management is a big challenge.  He said the District has an important obligation to manage vegetation, and this relates directly to the District's mission to steward the watershed.  Director Largay said organic methods aren't always effective, but it's terrific that the District is currently at a place where pesticides are not needed.  He said he thought the greater cost of using only organic methods would be acceptable in return for avoiding synthetic pesticides, particularly since this is only a small part of the overall budget.  Lastly, he noted that the RCD had skipped over a project on District property due to existing SLVWD pesticide restrictions, and he said he hoped the revised IPMP wouldn’t cause the District to miss future partnership opportunities.  In the end, his feeling was that the District can substitute labor for pesticides.

Director Smolley felt that the policy change was being rushed.  He said his impression after the workshop was that the District would keep the pesticide Garlon as part of its current plan until the evaluation of alternatives was complete.  He said it would make more sense to decide to eliminate Garlon only after reviewing the results of the new testing.

Director Layng agreed.   She said she fully supported the testing program, and she thought the District should move toward eliminating pesticides wherever it is safe and effective to do so.  She noted that surrounding districts are still relying on pesticides, and she worried that the District might be putting the cart before the horse in making its decision in advance of measurable outcomes.  She said the District’s current contact herbicides don’t transfer to the roots, and we don’t yet know the real-world cost implications and effectiveness of organic methods.  Adopting a policy before we have this information creates operational challenges for Staff.  Director Layng said fuel management was also important for fire prevention, and eliminating tools risks undermining our ability manage plant growth.  She also noted that fire-fighting foam chemicals can be much worse than pesticides.  She also worried that the District might lose cooperative opportunities with other agencies that use pesticides.  Her view was that Staff has already been using pesticides very sparingly and reasonably.  Hence, while she strongly supported the long-term goal, she was hesitant about implementing a blanket ban before the District understands the additional cost.  Director Layng asked if the testing would performed on mature broom or just young broom.  Chris said there is only a small carpet of baby broom in the test area.  He agreed that the size of the plants makes a difference.  In response to a follow-on question, he said no herbicide use has been built into any of the District’s grants.

Director Fultz had a number of comments.  He began by saying it wasn’t clear to him that land management is a central mission of SLVWD.  His position was that the District’s central mission is delivering water, and other organizations are better equipped for land management.  He suggested that were partnership opportunities such as the Zayante Land Bank.  He also said he thought it was a bit of a fantasy to suggest that the District’s 3000 acres could be cleared of fire fuel.  Rather, the focus should simply be on preserving District infrastructure in a fire scenario.  Director Fultz also questioned an earlier statement about the extent of infrastructure damage in the CZU Fire, and the quoted figure was subsequently revealed to have been taken out of context.  Turning to the IPMP, Director Fultz said the revisions go in the right direction but still allow for wiggle room inconsistent with the public feedback at the workshop.  He suggested that any ambiguities might be subsequently exploited, and he suggested that the revised IPMP should be reviewed by the Environmental Committee. this should go to the Environmental Committee.  In addition, he suggested standardizing on a single term (pesticide vs. herbicide).

In response to a question from Director Fultz, Chris said Board approval would be required for any exemption to the IPMP.  When asked about exemptions for other agencies, Chris explained that this was for mosquito and pest control, though they rarely go on District property.  Director Fultz disapproved of this.  He said Santa Cruz put out a policy that sounded great but allowed them to sneak in herbicide use, and he didn’t want this.  He also asked where required notifications would be posted.  Chris said these need to be within a reasonable distance of a publicly accessible area.  Director Fultz concluded his remarks by saying he felt that more work still needs to be done on this to eliminate loopholes.  He said he didn’t think the revised IPMP was yet fully baked by any means.

President Russ asked about the time frame for assessing the effectiveness of organic methods.  Chris said it might take a year or two to assess the return of treated plants.  In response to a follow-up question, he said he couldn’t yet attempt to estimate the additional cost.  It will definitely involve more labor.  He also noted that the District’s mission statement does include managing and protecting the environmental health of the aquifers and watersheds.  Director Fultz suggested that this could be accomplished via a partnership, and Director Smolley observed that this part of the discussion was off topic.  He suggested that it come back to the Board at a subsequent meeting.

There were two public comments.  Rick Moran from Ben Lomond quoted a reference stating that Garlon has the potential to pollute groundwater.  He said organic methods have been tested successfully all over the world; there is no need for the District to reinvent this.  He added that he appreciated that Staff has listened to community input.  He said Chris had done a great job of getting the public to help remove broom by hand, and he supported the idea of sending the revised IPMP to the Environmental Committee for further review.

Chris Moran from Ben Lomond thanked Chris and Jason for their work on this.  She said she felt heard and heartened, but potential loopholes remained a concern.  Her view was that the District should categorically reject the use of pesticides both because of the optics and the actuality.  She said the whole world was moving toward organic solutions.  She supported the idea of sending the IPMP to the Environmental Committee.

Director Fultz suggested that the IPMP be sent to the Environmental Committee, and President Russ agreed that this should be the next step.

 

Resolution Amending the Wastewater Fund Budget

Operations Manager Jesse Guiver introduced this agenda item.  He recommended that the Board adopt a resolution amending the Wastewater Budget to reflect the $77,260 allocated for the contract with Essential Operations. This project was not included in the original Wastewater Budget approved at the June 5, 2025 biennial budget. While the contract was approved at the February 5 Board meeting, a formal resolution amending the budget was not included at that time.

There was no Board comment and no public comment.  Director Smolley moved to adopt the resolution, and President Russ seconded.  The motion passed 5-0.

 

Resolution Amending the Wastewater Fund Budget

Operations Manager Jesse Guiver introduced this agenda item.  He recommended that the Board adopt a resolution amending the Wastewater Budget to reflect the $38,175 allocated for the “Meter Shop” generator and power service upgrade project. This project was not included in the original Wastewater Budget approved at the June 5, 2025 biennial budget. While the project was approved at the February 19 Board meeting, a formal resolution amending the budget was not included at that time.

There was no Board comment and no public comment.  President Russ moved to adopt the resolution, and Director Smolley seconded.  The motion passed 5-0.

 

Conversion of Olympia and Estrella Wells to SMGWA Monitoring Wells

General Manager Jason Lillion introduced this agenda item.  The Santa Margarita Groundwater Agency (SMGWA) has requested that SLVWD consider committing its Olympia 1 and Estrella wells as long-term groundwater monitoring wells for required groundwater monitoring.

SMGWA has indicated that these wells are well-positioned within the basin to serve as effective long-term monitoring points.   Under the proposed arrangement, the wells would remain the property of SLVWD. While SMGWA’s objective is to utilize the wells as long-term monitoring locations, ultimate authority regarding the future disposition of the wells—including potential destruction—would remain with SLVWD.  Accordingly, SLVWD should consider its long-term operational plans and strategic needs for these facilities as part of its evaluation.

SMGWA has further indicated that, if SLVWD is willing to convert the wells for monitoring purposes and does not intend to destroy them, SMGWA would consider covering the costs associated with the conversion.

Jason said the District has no production plans for these wells and will retain full authority over them.  SMGWA will be subject to all District policies on site.

Director Largay said he had no concerns.  He said SMGWA is moving toward averaging over a larger number of monitoring wells in order to avoid potential violations associated with anomalous deviations in an isolated measurement.

Director Fultz suggested specifying that the agreement applies to "current" policies of SLVWD.  He added that he would like the Board to receive a report from SMGWA at a future meeting.

Director Layng supported this as well.  Her only question was why the wording said SMGWA “will consider.”  Jason explained that SMGWA won’t request funding until SLVWD has endorse their plan.

President Russ also expressed his full support.  He said he had learned a lot since he started participating in SMGWA.

Director Smolley sought clarification on a few details of the transition.  Jason said the actual work of removing the old equipment and inserting the sounding equipment will not be done in house and will be funded by SMGWA.  The District will have access to the data.

There was no public comment.  President Russ moved to authorize the agreement, and Director Fultz seconded.  The motion passed 5-0.

 

Donation of Water to Boulder Creek Elementary Fundraiser

General Manager Jason Lillion introduced this agenda item.  The District has received a written request from representatives of Boulder Creek Elementary (BCE) seeking sponsorship support for an upcoming community fundraising event. Specifically, the organizers have requested that the District consider providing water service for the event.

The event is intended to bring together members of the community to enjoy local food and beverages, live music, artisan vendors, and student art, including a silent auction and a collaborative art auction featuring work from BCE students. The stated fundraising goal is $30,000, with proceeds directly benefiting BCE.

According to the organizers, funds raised will support campus upgrades and student programs, including after-school programs, physical education supplies, library books, classroom materials, technology equipment, and enrichment opportunities such as Science Camp and Science Fair.

The District has historically supported community events by providing water stations or similar in-kind contributions, consistent with its role as a community-based public agency. Participation in such events provides an opportunity to engage with ratepayers, promote water conservation and public service awareness, and reinforce the District’s presence within the community it serves.

Jason said the current plan would be for two staff members to set up and take down the station at a cost of $200 to $300.  All five Directors endorsed this plan.

There was no public discussion.  Director Smolley moved to authorize the in-kind donation of water services for the BCE event.  Director Fultz made a minor amendment and seconded the motion.  The motion passed 5-0.

 

Consent Agenda

There was one item on the Consent Agenda:

a.     Board Meeting Minutes 2.19.26

This item was accepted without discussion.


Written Communications

There was one written communication.  It concerned the IPMP.

 

Board Comment

None.

 

The meeting was adjourned at 8:20 PM.