SLVWD Board Meeting Summary
May 15, 2025
Prepared by Mark Dolson for FSLVW
NOTE: Provided purely as a public service — NOT the official SLVWD Meeting Minutes.
Highlights:
Board Vacancy
Public Hearing on Staffing
Acting General Manager Appointment
Highway 9 Paving Collar Replacement
Reserve Policy
Proposed Budget and Capital Improvement Plan
Next Board meeting will be at 6:30 PM on June 5, 2025
Preliminaries
All four directors attended in person.
No reportable actions were taken during the preceding Closed Session.
Acting General Manager Jen Torres said Staff wanted to remove item 10e (“Reserve Policy”) from the agenda in order to defer the presentation for a future meeting. However, Director Fultz said he still wanted an opportunity to comment on this item; hence, it remained on the agenda.
There were two public comments on non-agendized topics.
Bruce Holloway of Boulder Creek observed that the District has more than $6 million that is currently in an account that is earning no interest. He suggested that investing $5 million of this in an account earning 4% would generate $4000 a week, which would be enough to cover the contract of Finance Consultant Heather Ippoliti and the salary increase awarded to Acting GM Jen Torres. He urged immediate action.
An unidentified speaker from Scotts Valley said he wanted to understand the Board’s criteria for adding a new area to the District’s designated service region. President Smolley said the Board was unable to discuss a non-agendized item, but he urged the speaker to direct his question to Acting GM Jen Torres via email.
Unfinished Business
None.
New Business
Notice of Board Vacancy
Acting General Manager Jen Torres introduced this agenda item. She noted that the Board seat formerly occupied by Jeff Hill became vacant May 12th. The Board can either: (a) fill the vacancy (through November 2026) by appointment, or (b) call a special election to be held November 4, 2025. The estimated cost of an election is between $89,000 and $107,000 (based on $5 to $6 per voter for 17,856 registered voters). Waiting for an election would also leave the Board with only four members for the next six months, increasing the potential for tie votes and for problems obtaining a quorum.
Directors Largay, Layng, and Smolley all viewed an appointment as the obviously preferable solution. Director Fultz took exception to Director Layng’s suggestion that an election would be a poor use of the District’s money; he said we should always want to spend money on elections.
Directors Fultz and Smolley each questioned the Staff recommendation to have applications due June 2nd so that the appointment could be made at the Board’s meeting on June 19th. The County only requires that the appointment be completed within 60 days of the vacancy, so it would be feasible for the Board to make the appointment at its July 3rd meeting, and this would give the District more time to attract applicants. Also, Director Layng said she would be completely unavailable for the June 19th Board meeting.
President Smolley moved to fill the vacancy by appointment, to make the applications due June 19th, and to interview applicants and finalize the appointment on July 3rd. This motion was promptly seconded.
There was no public comment. The motion passed 4-0.
Public Hearing re: Public Agency Vacancies, Recruitment, and Retention.
Finance Consultant Heather Ippoliti introduced this agenda item. She reminded the Board that AB 2561 was introduced to address the issue of job vacancies in local government, which adversely affects the delivery of public services and employee workload. Among other requirements, the bill mandates that public agencies present the status of vacancies and recruitment and retention efforts during a public hearing before the agency’s governing body at least once per fiscal year.
President Smolley formally opened a public hearing so that Human Resources Specialist Lisa Young could make the following presentation:
The data for calendar year 2024 activity as of December 31, 2024, is:
Organizational Efforts:
• Budgeted Positions – 37
• Hires – 3
• Open Positions – 6
• Retention – 83.8%
• Time to Hire – 120 days
• Vacancy Rate – 14.9%
Management/Supervisor/Confidential Unit Efforts:
• Budgeted FTE Positions – 10
• Hires – 2
• Open Positions - 3
• Total number of applications – 115
• Time to Hire
• Vacancy Rate – 30%
Classified Unit Efforts:
• Budgeted FTE Positions – 27
• Hires – 1
• Open Positions - 2
• Total number of applications – 7
• Time to Hire – 240 days
• Vacancy Rate – 3.7%
The District is currently facing three notable challenges in this regard: (1) the entire public sector is being impacted by a shortage of talent in higher level/technical roles, (2) the remoteness of the District poses a potential drawback for talent as they consider employers, and (3) the District competes directly with other employers in Silicon Valley who often offer higher pay for similar roles.
Director Layng asked what vacancies are currently open. Lisa said the District had contracted with RGS to help in recruiting a General Manager, and she suggested that RGS would also help in recruiting a Finance Manager. She said the Field Services Coordinator position on the current organization chart had been open for two years and had been deemed no longer necessary. She said the Environmental Planner position on the current org chart (reporting to Environmental Programs Manager Chris Klier) had been posted on the District’s website, and three promising applications had been received. Lisa said, in her seven months with the District, she had found that posting on Indeed (a popular online job-sharing site) and spreading the word via current employees was often sufficient.
Director Fultz had no questions, but he expressed some skepticism about the value of this exercise.
Director Largay said his perception was that the District's ability to operate at full effectiveness is limited in part by vacancies. He asked Lisa to elaborate on the impact of not having a Finance Manager. He also expressed concern about the District’s ability to pursue grants, and he asked what positions were implicated in the District’s lack of progress in this area.
Lisa said she didn’t know about grants. Environmental Program Manager Chris Klier said the vacant Environmental Planner position that the District is now recruiting for would free up more of his time for grants. With regard to the Finance Manager, Lisa said the new General Manager would drive the hiring for this.
President Smolley said RGS was making progress on recruiting a General Manager, and he asked if the District should get a proposal from RGS to assist with recruiting a Finance Manager. Director Largay supported this, as did others. President Smolley characterized the District’s approach to date as “post and pray.” Director Layng said she had never been okay with pausing hiring. President Smolley directed Jen to solicit assistance from RGS for the Finance Manager.
Director Largay asked what other urgent positions should be filled. Jen said the District needed to hire or contract for a Construction Inspector. She added that there was a new state requirement for a Cross-Connection Specialist. She suggested that a current staff member might get certified for this. Director Largay said he would like to see an in-house Construction Inspector, as this person could also support operations and engineering when they had additional availability.
Director Fultz suggested that a new General Manager would have their own view on who to hire, so interim arrangements should not be cast in stone.
President Smolley said union representatives have opportunities to comment. Engineering Manager Garrett Roffe said he would like to fill open roles. He said there were upcoming tank replacements that need to be completed by December 2026 to conform to grant requirements. Jen agreed. She said the staff needed a full-time Finance Manager in the office, and both Garrett and Chris needed help.
There was one public comment. Mark Dolson of Ben Lomond asked about the status of the Operations Director position which is currently being filled only on an acting basis but which nobody has mentioned conducting a search for. Jen said there would be a search at some point in the future.
President Smolley closed the special hearing.
Acting General Manager Appointment and Agreement
Legal Counsel Barbara Brenner introduced this agenda item. She reminded the Board that District Secretary Jen Torres had been serving as Acting General Manager since May 1st, following the departure of Interim General Manager John Kunkel. The Board agreed in Closed Session to formalize Jen’s status as Acting General Manager at a new annual salary of $165,000, retroactive to May 1, 2025. However, a formal Board motion in Open Session was necessary as well.
Under state law, the General Manager is responsible for (a) implementing policies established by the Board for the operation of the District; (b) appointing, supervising, and disciplining District employees, consistent with the employee relations system established by the Board; (c) supervising District facilities and services; and (d) supervising District finances. As Acting General Manager, Jen will be required to carry out these directives under the direction of the Board. All four directors agreed that Jen’s willingness to shoulder this additional responsibility was greatly appreciated.
President Smolley moved to ratify the appointment and approve the agreement. The motion was seconded, and there was no public comment. The motion passed 4-0.
Caltrans Highway 9 Paving Collar Replacement
District Engineer Garrett Roffe introduced this agenda item, which involved a Caltrans repaving project on Highway 9 between Lazy Woods Drive in Felton and California Drive in Ben Lomond. The District was required to lower and then raise its existing water valve boxes in the roadway, and it contracted with Granite Construction to perform this task according to established District standards. Granite completed this work in January 2025.
Caltrans contacted the District on April 9, 2025, indicating damage to 27 of the 36 new concrete collars and requesting corrective action. Granite completed an independent review of the damaged water valve concrete collars and proposed to fill the concrete cracks with a low-viscosity structural injection epoxy for six valve collars and to completely replace 21 others. They added that, “the 6” concrete collar design may not be sufficient to support the traffic load through this corridor on Hwy 9. Majority of the concrete collars on the shoulder / ETW have held up with no issues, however areas within the traveled way are showing signs of cracking and will likely crack again once replaced. Many cities have a depth of 12” for their concrete collars and/or include rebar in their designs.”
Caltrans informed Granite that crack repair would not be acceptable. District staff coordinated with Granite Construction and Caltrans to repair the damaged concrete collars in accordance with the County standard which includes steel rebar reinforcement, twelve-inch thickness and 5,000 psi concrete collar.
In response to Board questions, Garrett said the District had directed Granite to use the District standard, but the District might want to update its standard to match the County. Director Fultz recommended that the District standard should be immediately be updated, at least for high-traffic areas. He noted that this correction had increased the cost of a $180,000 contract by $77,000. President Smolley asked about other aspects of the contract, and Garrett explained the reasons for these.
There was one public comment. Bruce Holloway of Boulder Creek asked why the District wouldn’t naturally use the County standard on county roads. Garrett said only that Caltrans didn’t have its own standard, and it deferred to the District.
President Smolley noted that this project was subject to sole-source provisions, and he moved to execute the new contract with Granite. The motion was seconded. It passed 4-0.
Reserve Policy
This agenda item was not formally presented, but the memo in the Board packet listed the current policy as:
1. Operating Reserve (37.5% of Operating Expenses – 4.5 months)
2. Capital Reserve (2.5% of Capital Replacement Value)
3. Compensated Absence Reserve (1/3 of audited balance)
4. Fire Surcharge Restricted Balance
5. Debt Service Restricted Balance
6. Assessment Districts Balance
Staff recommended that working capital be the basis for the calculated reserve, in which case the fire surcharge and debt service balances would be eliminated as they are restricted funds, and the current portion of the compensated absence balance would already be included in the current liabilities balance. A proposed new policy was presented to the Budget and Finance Committee but was essentially rejected (which is why this item was removed from the Board agenda).
Staff also reported that Engineering estimated the cost to replace the pipe of all sizes in the District at $453 million. In addition, the Budget and Finance Committee recommended adding an annual inflator to the figure for the biennial budget; Staff is proposing to use 3%
Director Fultz had an extended comment. He said he was open to updating the policy, particularly since the Compensated Absence Reserve was based on a very large potential expense at the time it was implemented. He was concerned, though, about removing the restricted status for the Fire Surcharge and Debt Service. Also, he suggested that the estimated replacement cost translated to an estimated $6 to $7 million per year of planned infrastructure spending, not counting what is needed to catch up. He said he viewed the real reserve as cash for recovering from disasters. Given that the CZU Fire cost about $4 million, he thought $7 to $8 million felt like the responsible minimum. Lastly, he suggested that 3% per year for inflation was too low; he thought 5% to 7% was more realistic, given skyrocketing construction costs. President Smolley said Bay Area construction projects had experienced cost increase of 5.1% in 2024. He didn’t think the District could rely purely on the Consumer Price Index (CPI).
Director Largay said the Budget and Finance Committee had discussed this at length and requested further assessment before Board review.
There was one public comment. Bruce Holloway of Boulder Creek said he questioned Garrett’s estimate of $2 million per mile for replacing the pipelines. He preferred $1 million per mile. Garrett said his estimate was based on pipeline diameters and lengths. He noted that he did not include the cost of tanks, pumps, valves, and treatment plants. Director Fultz commented that this suggested a total replacement cost closer to $600 million.
Bruce added that he thought the annual spending target for infrastructure should be 2.5% of replacement cost (based on an assumed 40-year lifetime). He thought the reserve policy should allow for this.
Proposed Budget and Capital Improvement Program
Finance Consultant Heather Ippotliti introduced this agenda item. She said, following the Board response to her Budget presentation at the May 1st Board meeting, she had pushed Staff to identify opportunities to reduce increases in operating expenses. She said these increases were mostly out of Staff control (because they were due to salaries and wages, along with other fixed expenses such as interest on debt and payments to the Santa Margarita Groundwater Agency). She said some minor savings had been identified: the annual COLA increase takes effect in January, not July, and the Water Quality department reduced its cost estimate. She said she could also eliminate the vacant Field Services Director position at the Board’s direction.
With regard to Capital Program Funding, Heather presented a lengthy spreadsheet which the Board did not attempt to review. She said the proposed budget assumes zero debt financing, but some projects could be debt financed, and this may be required. She added that the Budget and Finance Committee had concerns about what is realistically feasible, so Staff moved two projects to 2028.
Director Largay said he greatly appreciated the work done to right-size the Capital Improvement Plan (CIP). He said the Budget and Finance Committee wanted to adopt a more phased approach to avoid borrowing for projects that Staff wouldn’t be able to execute. Following up on the previous agenda item discussion, he said that a 2.5% annual replacement rate for $600 million in aging fixed assets would imply $15 million in infrastructure spending per year, which is what is planned for the next two years. He said he was unhappy to see so much being spent to address the Lyon Tank slide, but he deferred to Staff expertise. Garrett said Staff was working with the Engineering Committee and would be discussing the Lyon slide on May 21st. Director Largay urged that, if a more economical solution is found for the slide, the funds should be applied to the next projects on the CIP list.
Directory Layng asked why the budget included $17,000 in lease revenue that depended on access to the Lyon site while this remains an open issue. Garrett said Staff was hoping the Engineering Committee would make a recommendation to the Board.
Director Layng also confirmed that salary estimates do not reflect pending labor negotiations. Heather said the estimates assume only a 5% COLA in the first year and a 3% COLA in the second year.
Lastly, Director Layng asked if the Felton Heights tank project could be accelerated. Director Fultz agreed. He said he would comment on the Lyon Slide at the Engineering Committee meeting. He felt that this committee had so far had insufficient involvement in the CIP.
Director Fultz had a lengthy series of comments. He praised the CIP spreadsheet, but he suggested distinguishing between design and construction phases. He also sought distinctions between reserves for projects and reserves for unexpected expenses.
Director Fultz once again complained that far less revenue would be going to capital projects than assumed in the 2024 Rate Study (20% vs. 50%). His estimate was that, to fully fund routine ongoing infrastructure improvement, the District needed to be able to continually pay the interest on perhaps $80 million worth of overlapping loans and that this would require an annual operating margin of perhaps $7 million as opposed to the current $4 million. (He estimated the District’s current debt service at $2 million per year for about $30 million in loans.) Director Fultz argued that if the District wasn’t able to better control its operating expenses, then it needed to “get real” and recognize that it actually needed substantial additional rate increases. His logic was that: (a) the Board was just told that operating expenses could not be significantly reduced, (b) the amount of water that this District is selling cannot be significantly increased, (c) the amount of additional grant funding that the District can obtain is likely to diminish, and (d) therefore, rates actually need to be substantially higher than they are today in order to meet his targeted annual spending on infrastructure. He said he would probably vote against the budget because he viewed the current expectations for the CIP as unrealistic given the District’s revenue stream and operating expenses.
President Smolley said he didn’t see a way to avoid looking at future changes in the rate structure, but this wasn’t a relevant concern for the current budget. He asked Heather if she was recommending that the District seek a loan, and she said she had assembled a team to assess the District’s options. Heather said the team is looking at a bond, and she would arrange for the Board to hear from this team at a future meeting.
Director Fultz said the District couldn’t have a 5-year CIP plan without a 5-year budget. However, he recognized that borrowing is essential. President Smolley looked forward to hearing a concrete proposal so the Board could ask questions. He said the District had been overly optimistic in the past about what it could accomplish in a 3-year time frame. Heather said the Engineering team was almost put on hold this year, but previous years can be reviewed.
President Smolley advised Heather not to include the projected revenue from the cell tower lease at the Lyon site. Heather said she was proposing to include debt financing in the budget, and to remove the Field Services Coordinator and the cell tower revenue. She said she would contact the debt financing team to assess their availability for an upcoming meeting.
Director Layng asked if it would be feasible to vote on the outcome of labor negotiations at the Board’s first meeting in June, but Heather recommended simply passing a budget amendment in July.
Director Fultz said it would be instructive for the Board to understand what the rates would have to be. He thought they might have to increase by maybe 40%, but he suggested that Raftelis could pretty easily produce a better estimate.
Jen asked the Board if they had any questions specifically about the CIP. Director Fultz suggested that detailed discussions should take place at Committee meetings as it wasn’t practical for the Board to go through 78 projects. President Smolley said it was still important for Staff to see what the Board is struggling with.
Director Largay said he wanted to reiterate his enthusiasm for the deep dive into understanding the 5-year picture in a comprehensive way.
There was one public comment. Bruce Holloway of Boulder Creek said it was hard for him to understand how much will happen in the first half of the fiscal year vs. the second half. He said he was skeptical that the Peavine Pipeline replacement would be completed by June 30, 2026. He also observed that there was a current liability pending on unspent loan funds.
Consent Agenda
There was one item on the Consent Agenda:
a. Board Minutes from 5.1.25
The Minutes for 5.1.25 were deemed to be adopted by unanimous vote.
District Reports
Two reports were submitted: a Quarterly Finance Report and a Quarterly Report from Miller-Maxfield. Director Fultz said he would like to see great clarity in a table in the Finance Report. He said he would follow up with Jen.
Written Communications
Director Layng commented on a letter from Catherine Brothers, President of the River Grove Mutual Water Association. Cathy wrote to inquire about the possibility of initiating a discussion with SLVWD about a future consolidation. Director Layng said she thought the District needed to work more with the County both with regard to consolidations and packaged grants.
Director Fultz agreed and said he thought the District needed guidelines or even policy around how to do consolidations. He said the Bracken Brae process has been too informal.
President Smolley agreed as well. He said he intended to come back to the Board with a status update on Bracken Brae and Forest Springs, perhaps in June. He said he had talked with Cathy Brothers of River Grove for an hour, and she was going back to her Board.
There was no public comment.
Board Comment
This agenda item is reserved for general comments from the Board and/or for requesting future agenda items.
Director Largay said the Budget and Finance Committee is talking about investing excess funds.
The meeting was adjourned at 8:45 PM.