SLVWD Board Meeting Summary
May 5, 2022
Mark Dolson
Highlights:
Bracken Brae and Forest Springs Letters of Intent
Consolidation Engineering Contract
Addendum to Cross County Pipeline Constructability Study
Next Board meeting is at 6:30 PM on May 19th.
Preliminaries
Director Ackemann was absent due to a family medical issue. The Board vote 4-0 to approve this as an excused absence.
There was no Closed Session.
There was no non-agenda-related public input.
In lieu of her President’s Report, President Mahood asked District Manager Rick Rogers to deliver a brief District Manager’s Report. Rick announced that Nate Gillespie, the District’s Water Treatment and System Supervisor, had accepted a position with the Soquel Creek Water District. Nate was with SLVWD for seven years, and his last day was May 4th. Rick also advised that Finance Manager Kendra Reed will be on leave and will not be available for the month of June. Rick said Staff will cover.
New Business
Bracken Brae and Forest Springs Letters of Intent to Consolidate
District Counsel Gina Nicholls introduced this agenda item. She reminded the Board that Letters of Intent (LOIs) are the first legal step along the road to consolidating Bracken Brae and Forest Springs into SLVWD. The next step will be formal Consolidation Agreements this fall. The Board reviewed and discussed earlier versions of the LOIs in April, and the Board packet contained a redline version showing all changes since that previous review. The Forest Springs LOI largely mirrors that for Bracken Brae since both are expected to follow similar trajectories. Gina advised that conversations two days ago led to two additional edits: (1) the deadline for Bracken Brae to complete its FEMA-funded work was previously calculated as December 22, 2023 but was corrected to August 22, 2024, and (b) a minor typo in the Forest Springs LOI was corrected.
Director Fultz said he wanted to review some aspects of the April discussion for the benefit of members of the public who were new to this issue. He asked how he should understand the statement that “residents of Bracken Brae will be expected to fund [consolidation-specific improvements not fully funded by grants]” (as opposed to “will fund”). Gina said this was a little complicated. Any unfunded difference would need to be covered by either a temporary surcharge or an assessment, but this would be subject to a Proposition 218 public acceptance process. Director Fultz pointed out that there is currently insufficient grant funding, and he asked who would participate in the Prop. 218 process (because a small community can much more easily vote down a Prop. 218 increase than a larger community). Gina said it wasn’t clear. Director Fultz returned to this point about ten minutes later, asking what recourse the District would have if a Prop. 218 surcharge were to be voted down. Gina said the LOI did not provide for any legal recourse. However, she suggested that there was a potential scenario where the District could pursue zoned rates via a District-wide Prop. 218.
Director Fultz similarly sought to review the kinds of liabilities the District might be assuming. Gina said these would typically include loans, outstanding judgments (or litigation), taxes on property, etc. These will be examined and decided upon as part of the diligence process for developing the Consolidation Agreement.
Director Fultz also asked if customers would be able to upgrade their meter size if they wished. Gina said the LOI contemplates that the parties will identify the active connection which will establish the conditions of service. Most likely, customers would apply for larger meters post-consolidation. Rick added that the District has had this discussion with Bracken Brae, and all services will be reviewed at the time of consolidation. Director Fultz encouraged the District to make this available to minimize rework.
With regard to the Forest Springs LOI, Director Fultz asked about additional language specifying that only connections in good standing would become customers. Gina said Forest Springs requested this, and the District will take a closer look as It works on the Consolidation Agreement. Rick elaborated, saying that this needs to be worked out with Forest Springs. There may be some parcels that are not rebuildable due to County regulations. The District has no intent to bypass parcels currently being served. Gina said that putting this verbiage in the LOI sets the stage for figuring out the details. Director Fultz said he just didn’t want Forest Springs customers to think that SLVWD is picking and choosing.
Director Fultz also asked whether Forest Springs would be entirely dependent on their own internal funding for their share of overages above the current grant funding and for funding individual connections. Rick explained that they are in the FEMA appeal process because they missed the FEMA deadline. They will be on their own either way.
Director Smolley returned to the distinction between “will be expected to pay” vs. “will pay.” The ensuing discussion with Rick and Gina established that the District will only have spent around $300,000 on consolidation-related work before the Consolidation Agreement is finalized (in late September or October). Rick said the District would likely not start actual construction until the Department of Water Resources has increased the current (insufficient) grant amount, but DWR won’t consider doing this until the bidding for the construction project is complete. Meanwhile, the District expects to submit expenses for engineering and for environmental work and be reimbursed monthly. It will only start construction when the project is fully funded.
Director Smolley also asked about details of the language in Section 5. Gina explained that this was added because the District realized that it needed a better understanding of what Bracken Brae was asking it to do with Bracken Brae’s FEMA funding. The District decided to focus the LOI on the time frame of the engineering and environmental review. Financing and procurement will have to be worked out as part of the Consolidation Agreement. Bracken Brae will be leaning heavily on the District to use the FEMA funding to rebuild in a way that works for the District. This language was an attempt to further explain that this issue is pending and that the District can't blindly commit to specific oversight.
Lastly, Director Smolley asked if the current Big Basin water service was adequate for Bracken Brae. Rick said it was, but Bracken Brae wanted to be sure that they have a redundant source. Most likely, if Big Basin is unable to supply water, SLVWD will be supplying water to Big Basin.
President Mahood proposed deletion of the sentence, "The parties will conduct monthly meetings to discuss any and all aspects of consolidation ..." She was concerned about the frequency of the meetings, the scope ("any and all"), and the lack of an end date. She argued that Staff is already stretched so thin that the District has contemplated dropping monthly committee meetings. She also argued that this stipulation provided a handful of households a level of oversight that the rest of the District’s customers don't have. She observed that Bracken Brae and Forest Springs are part of the District’s service area, and, as such, currently have the same rights as other ratepayers: to vote on election of Board members, to attend and participate in Board meetings, and to attend Committee meetings. Her position was that Bracken Brae and Forest Springs should and would have the same rights and privileges as other ratepayers. At a minimum, she wanted to see a sunset date for the special meetings.
Gina and Rick agreed that a sunset date made sense (because terms of the LOI will be propagated into the Consolidation Agreement). There was some further discussion between Directors Fultz and Smolley attempting to determine what meeting frequency (e.g., every other month? quarterly?) would be optimal. President Mahood and Rick pointed out that he would likely routinely engage with Bracken Brae on a much shorter time frame as well depending on specific needs.
Speaking as a member of the public, Nicole Launder Berridge (representing Bracken Brae) took issue with President’s Mahood position with regard to monthly meetings. She said Bracken Brae had secured $1.5 million in FEMA funding, and it was important to have access to the District to coordinate. She added that Bracken Brae was currently working to secure more funding for its mainlines, and that Bracken Brae, as a community, would discuss how to cover any funding shortfalls. She stressed, though, that it was important for the Bracken Brae work to stay on schedule, and that the District had been slow in responding since October. She said that striking the sentence in question would be an issue for Bracken Brae. Nicole reiterated and elaborated upon Bracken Brae’s position in a subsequent public comment.
Jim Mosher said he strongly supported consolidation, and that there were also legitimate concerns for current rate payers. He noted that when the Felton system consolidated with SLVWD, there was no expectation on the part of the Felton ratepayers of special meetings, but he agreed that these meetings could make sense during the construction phase. At the same time, he thought it would be good to have some parameters around the meetings and agendas to avoid overburdening Staff. He observed that there were lots of variables on the table for everyone and that everyone is under stress.
President Mahood said she was willing to compromise in response to Bracken Brae’s desire for monthly meetings, but she still felt very strongly about having a sunset date. Following some further discussion, Director Hill said that in his experience with fairly large and complex projects like this, both sides benefit from coordination meetings. He was reluctant to lock in monthly meetings for the next year and a half (i.e., until the completion of construction), but he agreed that a lot of coordination will be needed. He suggested agreeing to “regular coordination meetings on a schedule to be agreed on with the schedule to be refined when the Consolidation Agreement is signed.” Director Smolley agreed that monthly meetings were appropriate until there is a draft Consolidation Agreement (in September).
Gina provided revised language specifying that “[the monthly meetings will continue] until September 2022 unless the parties mutually agree to continue them at that time." Director Smolley moved to approve this, and Director Fultz seconded.
There was no further public comment. The motion passed 4-0.
Notice of Award for Engineering Services for Consolidation of Bracken Brae and Forest Springs
District Engineer Josh Wolff introduced this agenda item. He explained that the District received five bids for work on the design phase of the construction that will be required to enable the consolidations with Bracken Brae and Forest Springs. The required planning involves determining the existing conditions in each of the two mutual companies, identifying necessary upgrades and/or repairs within each, determining an optimal strategy for connecting to the existing SLVWD system, analyzing storage and pumping requirements, producing construction documents, and providing engineering support during future bidding and construction.
The low bid ($343,205 vs. a high bid of $816,434) was submitted by Sandis Civil Engineers. The District has been happy with their previous work, and Staff recommended that the Board approve the contract with Sandis. The Engineering Committee discussed this and agreed. Director Smolley reiterated his agreement. Director Fultz said he would like to see the District broaden its base of suppliers, but he knew Sandis had done good work.
Director Hill confirmed that this work will be funded via a grant. Director Smolley sought further clarification on the status of grant funding (from the Department of Water Resources). Rick said Josh and he resubmitted the proposal for agreement on a larger amount of funding and expanded scope of work, and they were expecting a response in the next 30 days. Director Smolley requested an update in June as the District currently has a promise of funds but no signed agreement. Rick said the District has written authorization to move ahead on the project and receive reimbursement within the existing scope of work and funding level.
Director Fultz asked if the District would be initially expending its own funds. Rick said the District could submit paperwork for monthly reimbursements even without a signed agreement. Director Fultz asked about the possibility of DWR clawing back these funds if the larger grant amount is ultimately not approved. Rick said there was a verbal (albeit not written) agreement that DWR would reimburse the District for complete work within the current scope and funding level of the grant.
Director Smolley moved to authorize the District Manager to enter into a contract with Sandis in the amount not to exceed $343,205. Director Hill seconded this.
There was no public comment. The motion passed 4-0.
Unfinished Business
Addendum to Freyer & Laureta Cross Country Pipeline Constructability Study
District Engineer Josh Wolff introduced this agenda item. The Board was being asked to accept an addendum to the previously reviewed Freyer & Laureta report. This addendum was added in response to the Engineering and Environmental Committee’s request for more analysis of: (1) the cost differential between a buried and above-ground pipeline, and (2) the effects of a temporary construction bench on possible future erosion, debris flows, flooding, or other natural disasters.
Director Smolley said the Engineering and Environmental Committee had raised questions about the addendum but concurred with the Staff recommendation that it be accepted. He asked Rick for his thoughts on moving forward at this time. Rick said, now that the District has the Freyer & Laureta recommendations for replacement and information on the cost differential, his preferred next step would be to undertake a peer review with another engineering firm specializing in relevant technical issues and geology. He said the District was simultaneously working with FEMA to determine what percentage of the replacement cost they would cover for an above-ground pipeline. The District resubmitted all of its reports to FEMA this week. Rick said Josh and he will be working on a scope of work statement to submit to a local engineering firm with top engineering and geology professionals with extensive background working in the Santa Cruz mountains. The environmental aspects will most likely be addressed separately in the EIR process.
Director Fultz said Director Smolley and he toured part of the pipeline replacement route for the Peavine intake, and there were places that are pretty challenging. He suggested that there might be intermediate solutions between the totally above-ground and totally below-ground extremes. He said he was not enthusiastic about creating a 14-foot-wide road on a steep mountainside, nor was he enthusiastic about above-ground pipe.
Director Hill observed that the estimated difference between the buried and above-ground options is relatively small (between 3% and 5% of the total cost), presumably because Freyer & Laureta assumes that the same wide bench is needed for either solution. He agreed that there could possibly be an intermediate solution.
President Mahood also agreed, saying that some of the District’s surface water sources are more important than others. She said everyone was surprised by the small cost differential. Also, she said she didn’t originally have a full appreciation of what is involved in building the bench. She found herself increasingly nervous about this from a geotechnical aspect, and this made her want to revisit other possibilities.
Director Fultz said the old bench was sometimes only five to six feet wide, sometimes narrower. Also, an enormous amount of fuel is still present, and there will be more within a few years. He agreed that not all sources are equally important and suggested that it might be possible to access some sources at different locations. He said he would not be comfortable with a 14-foot bench in some areas that he saw on the tour.
Speaking as a member of the public, Jim Mosher said he was happy to hear Rick say that the District will be getting a second opinion. He asked about the feasibility of duplicating the original above-ground construction process (which was far less expensive). He encouraged the Board to review alternatives and to get more ideas on the table.
Larry Ford said he too was pleased to hear about a second opinion, and he would be happy to offer input on who to work with. He expressed concern that the District has not yet explored all available options, and he specifically asked how other water districts have dealt with similar challenges. He also asked what other designs for capturing water are feasible (e.g., collecting water at Highway 9). He wondered what the absolute minimum-cost solution would be (maybe something like the project that Rick oversaw 30 years ago relying upon CCC manual labor and helicopters). He noted that the public will need to weigh in because there will probably be a lot of resistance which can introduce a lot of delay. He also worried about waiting for FEMA to decide what they will cover. Lastly, he mentioned that he was involved with a Glenwood Preserve project in Scotts Valley where they were able to use special equipment to construct a really narrow trail.
Rick said a lot of this will go back to the Engineering and Environmental Committee. He said he would love to see the pipeline buried and protected from all elements, but he also noted that any melted pipe will potentially contaminate the entire pipeline with VOCs. He felt that peer review was particularly appropriate because everyone inevitably has their own opinions. He said two highly recommended reviewers have been selected so far. Director Fultz commented that the original pipeline was an impressive construction accomplishment which would have lasted much longer had it not been for the fire.
President Mahood moved to accept the report with the addendum, and Director Smolley seconded.
There was no further public comment. The motion passed 4-0.
The meeting was adjourned at 8:15 PM.