SLVWD Board Meeting Summary
April 7, 2022
Mark Dolson
Highlights:
Bracken Brae and Forest Springs Consolidations
California Low Income Household Water Assistance Program
Next Board meeting is at 6:30 PM on April 21st.
Preliminaries
There were no actions to report from Closed Session.
There was one public comment: Larry Ford noted that fire season has begun, and Cal Fire is worried about it, so he hoped that SLVWD and others in the valley were preparing by clearing combustible fuels and being ready to manage pipelines. Director Ackemann said she shared these concerns, and Director Fultz called attention to some of the District’s recent activities. District Manager Rick Rogers said the District was definitely aware of Cal Fire’s recent notices and has been using recent grant funds for clearing around its facilities. He felt that the District was pretty much ready.
President Mahood reported that FEMA will be increasing the CZU Fire reimbursement rate from 75% to 90% and described this as great news for the District. Director Fultz asked whether this rate would apply not only to infrastructure replacement but also to upgrades to current best practices. Rick Rogers said he believed this would be true for the distribution system, but he didn’t yet know whether this would be the case for the seven-mile pipeline.
Unfinished Business
Consolidation of Bracken Brae and Forest Springs
District Manger Rick Rogers introduced this agenda item, and District Counsel Gina Nicholls provided further elaboration. She said two binding Letters of Intent (LOIs) were being prepared, one between the District and Bracken Brae, and the other between the District and Forest Springs. These are preliminary agreements that create the framework for more detailed consolidation agreements six months from now; they are conditional on the results of pending Environmental Review. A redlined version of the Bracken Brae LOI was recently posted to the District’s website following a second round of comments. There is language around District assistance with FEMA that still requires further discussion. The Forest Springs LOI is being similarly reviewed and is perhaps a week further from completion.
Nicole Launder-Berridge provided public comment on behalf of Bracken Brae Mutual Water Company. She said they have been working on this since December and are anxious to move forward. They have made great progress with FEMA, combining two projects and securing $1.2 million. They have a maximum of 40 months from the Declaration of Disaster (19 months ago) to comply with obligations for the FEMA grant. Bracken Brae will use this money to fix damaged infrastructure. Nicole said she appreciated the efforts of Rick and Gina over the past two weeks. The Bracken Brae Board has met twice regarding the LOI, and the most recent version was unanimously approved yesterday evening.
Sean Machado provided public comment on behalf of Forest Springs Mutual Water Company. He said they were consulting with their attorney and should be able to provide a redline draft fairly soon. They have 128 connections (as compared to 25 for Bracken Brae), and they want everyone to be able to review and understand the document.
President Mahood emphasized that the goal of the LOI is to enable the parties to move forward and that things will still change as all three parties work toward the final Consolidation Agreements. She said she was fine with the most recent draft of the LOI with Bracken Brae.
Director Ackemann expressed concern about the logistics of meeting the 40-month FEMA deadline, given that District Staff are spread quite thin. Rick said the District was planning to work with Bracken Brae to meet these deadlines. The Consolidation Agreement will outline what the FEMA projects are and will assign timelines integrated with the District’s current project schedule. Director Fultz asked what would happen if the 40-month deadline wasn’t entirely met, and Rick said he believed there would be flexibility, but he didn’t have this in writing.
Director Fultz said he was happy with the LOI but still had a few questions. He asked if the phrase stating that residents of Bracken Brae "will be expected to fund the difference” constituted a firm commitment. Gina said this was more of a disclaimer than an enforceable provision. It sets forth an intent; more binding verbiage in the Consolidation Agreement can specify Bracken Brae’s post-consolidation funding responsibility.
Nicole Launder-Berridge commented on this as well, saying that Gina has done a good job of representing the Board's concern. Nicole said Bracken Brae will be responsible for its costs, but it doesn’t want to be responsible for costs that are for the benefit of SLVWD customers (e.g., improving undersized pipes). She said it was important to Bracken Brae that the LOI move forward so that the District can move ahead with Sandis Engineering and gain clarity on the projected costs. The potential for a cost overrun is a significant concern.
Director Fultz asked if there would be required minimums for insurance, and Gina said this would be addressed in the Consolidation Agreement. Director Fultz also asked if the District would assume any Bracken Brae liabilities. Gina said the LOI provides for the District to assume itemized liabilities that are disclosed to it. Director Fultz asked if construction would be performed under prevailing wage requirements. Rick said it would be.
Lastly, Director Fultz asked when the Board would vote on the LOI. Rick said this would depend on when Forest Springs agreed to their LOI, but he hoped this would be soon; the LOIs will be brought to the Board at a special meeting or at the next regular Board meeting.
Director Smolley said he found the Bracken Brae redlines to be reasonable. He expected a lot of the Board’s questions to have more definitive answers as the Consolidation Agreement is prepared in the next several months, with a target date of September 30, 2022 for a finalized agreement. The LOI allows everyone to work together in the interim.
There was one public comment. Larry Ford welcomed Bracken Brae and Forest Springs to the SLVWD. He said he knew the consolidation process could be difficult and stressful – it took Felton five years, but the end result was very gratifying. Larry invited Bracken Brae and Forest Springs residents to become involved in SLVWD governance.
California Department of Water Resources Grant for Consolidation of Bracken Brae and Forest Springs
Director Smolley introduced this agenda item, as is customary when an individual Director asks to place an item on the agenda for discussion by the Board. He explained that he has been the Board representative in ongoing discussions with the Department of Water Resources (DWR). He wanted the Board and the public to see the draft agreement from DWR, and also to see the discrepancy between the current level of funding offered by DWR and current estimates of the costs. The District had requested $4.3 million, but the State granted considerably less, $3.2 million. A recent Sandis Engineering analysis suggests that the amount could be $5-6 million. Page 68 of the agenda packet has a table showing a revised cost estimate for the main components of the consolidations. Sandis Engineering was the low bidder (out of five) for consolidation engineering studies. Their proposal included an engineer's estimate of construction cost which was significantly more than the $2.7 million approved by DWR. Also, the schedule that the District submitted in its original grant proposal shows construction beginning in February 2022 and design being completed by May 15, but this is no longer possible because the Board has yet to issue a contract for the engineering studies, pending all parties signing the LOIs (see Page 50 of the agenda packet). Given that the District had not completed the contract for the State grant, Director Smolley was prepared to make a motion directing the District Manager to submit a new proposal with updated costs, but Rick preempted this. He said he had written to DWR outlining Director Smolley’s concerns and requesting additional funds and extended deadlines. The District had an hour discussion this morning with the State, and Rick concluded that it will most likely be able to get additional funds and extend the deadlines. However, he is waiting for this to be confirmed in writing. He therefore asked that the Board take no action at this evening’s meeting.
Director Fultz said he was glad DWR is reconsidering their original low allowance. He suggested that the District might want to request even more funding because each delay is likely to increase the final cost. Rick said DWR wants to see this project succeed, and they are responding as quickly as possible. Director Smolley added that the Sandis contract includes a cost-escalation factor to compensate for delays, but that it might not be high enough.
Director Smolley checked with Rick regarding two additional details. Rick confirmed that the District has the ability to track Staff time allocations to specific projects and that the District has a written policy on competitive bidding (as part of a long-awaited update initiative last year in conjunction with the Administrative Committee). Both of these requirements must be met in order for the District to be reimbursed from the grant.
Nicole Launder-Berridge said that, if DWR is unable to significantly increase the funding, Bracken Brae would like to see language assuring that there will still be some flexibility. Also, if the Board is not comfortable with whatever DWR is willing to formally commit to, Bracken Brae would still like engineering to be able to move forward. Lastly, it would nice if the agreement would allow for some phased progress in the event of a delay.
Director Fultz suggested that DWR might agree not to claw back already-expended engineering costs, even if something went astray with the consolidation, so long as the District is operating in good faith. Rick agreed with this.
President Mahood said Rick will report back on his continuing DWR discussions, and the Board will review the Forest Springs redline as soon as it becomes available.
New Business
Long Service Line Agreement for APN 077-032-25
District Engineer Josh Wolff described this agenda item as fairly straightforward. Staff is asking the Board to authorize the District Manager to approve the agreement. The District has no problem providing service to the applicant, but their location is not contiguous with any of the existing mains, so a long service line agreement is required.
Director Fultz said he was happy to have the District add a new customer, but he was uncomfortable approving this because the contract was not attached to the agenda. He said he had had issues in the past where the agreement restricted the rights of the customer, and he didn’t feel he could adequately fulfill his oversight responsibilities without seeing the agreement.
The Board discussed the inadvertent omission of the contract from the Board packet and concluded that no harm would be done by tabling this item until the contract is made available at the next Board meeting.
California Low Income Household Water Assistance Program (LIHWAP)
Finance Manager Kendra Reed introduced this agenda item. The California Department of Community Services and Development (CSD) is now enrolling water and wastewater systems in LIHWAP. LIHWAP is a customer-based program where qualified, low-income households can apply to their Local Service Provider (LSP) to receive a one-time credit (up to $2,000) on their water or wastewater bill for arrearages on a first-come, first-served basis. This differs from the Water Arrearages Program that the District has already received funding for and acted upon. For LIHWAP, the customer applies directly, and the arrearage can be for any time period. Late fees are covered, but administrative costs are not. To take advantage of this opportunity, the District would enroll in the direct payment program (this is a required step), and customers could then apply in June 2022. LSPs will qualify the customer and handle all of the customer outreach. A third-party payment processor will then send money to the District to be applied to customer accounts.
Director Ackemann said she supported this. She felt it was still critical to help those in need in the SLV
Director Fultz agreed and asked how agencies identify customers who might benefit. Kendra said they reach out to all low-income households (defined as 60% of state median income or as a current recipient of certain aid programs), and they also provide SLVWD with advertising information to post. Director Fultz also asked how much administrative time per customer the District anticipated devoting to this. Kendra said LIHWAP would require a lot less administrative time than the Water Arrearages Program where the District had to identify customers and send information to the State. With LIHWAP, the District receives payment, applies it to the account, and reports back. Lastly, Director Fultz wanted to ensure that customers would be informed if this assistance was considered to be taxable income. Kendra said she would find out.
Director Smolley asked how many SLVWD ratepayers might qualify. Kendra said the District didn’t have customer income information, but rough estimates suggest that about 1500 customers might qualify.
President Mahood moved to authorize and direct District Staff to enter into the Low Income Household Water Assistance Program Agreement. Director Fultz seconded this.
Speaking as a member of the public, Larry Ford voiced his support. Rick added that this doesn’t take the place of the District’s LIRA program; it's just another tool in the toolbox.
The motion passed 4-0.
District Reports
Director Smolley observed that the current rate of installation for the new Badger meters (as detailed in the Operations Report) implies that it will take another 10-12 years to complete the meter replacement process. Operations Director James Furtado explained that the old meters are guaranteed accurate for 15 years and have consistently proven to remain so for far longer (partly because the District’s surface water is not corrosive). However, he said the District was planning to make a push on meter replacement this coming summer. Director Fultz added that a gradual phased replacement process was preferable from a budgeting perspective.
Speaking as a member of the public, Cynthia Dzendzel noted that the Badger meters make it possible for customers to use the Eye on Water feature to minimize their water use. This could provide an incentive to accelerate the installation process. Director Fultz pointed out that the District is well below State and national averages for home water consumption (he estimates that SLVWD households are using around 35-42 gallons per person in the winter).
Director Fultz sought confirmation that the District was responding to an interview request from Christina Wise of the Press Banner. Rick said he had emailed her but hadn’t talked with her yet. President Mahood said she emailed as well, but Christina never responded.
The meeting was adjourned at 8:00 PM.