SLVWD Board Meeting Summary
July 21, 2026
Prepared by Mark Dolson for FSLVW
NOTE: Provided purely as a public service — NOT the official SLVWD Meeting Minutes.
Highlights:
Water Revenue Certificates of Participation
System Consolidation Policy
Highland Tank Engineer of Record Construction Support
Board Policy Manual
Possible Action Regarding Customer Appeal of Water Usage Charges
Bear Creek Wastewater / Essential Operations Update
Purchase of a Used Telehandler Forklift
Investment Policy
Accounts Payable Listing
Rate Assistance Program Policy Amendment
Next Board meeting will be at 6:30 PM on August 6, 2026
Preliminaries
All five directors were present. Directors Fultz and Largay attended remotely, and Director Largay left after the first hour.
President Russ said the Board took one reportable action in the just-concluded Closed Session. The Board voted 4-1 (Director Fultz opposed) to recommend that the Board grant the General Manager the full compensation amount of 5% to be retroactively applied to his pay from the anniversary of his date of hire.
There were initially no changes to the agenda. At some point, however, Legal Counsel Gage Marchini pointed out that the Executive Compensation approval is required to be agendized for a Regular Board Meeting. Since the meeting this evening was a Special Board Meeting, this item was removed from the agenda.
There were no public comments on non-agenda topics.
Presentations
Water Revenue Certificates of Participation
This presentation was delivered by Ken Dieker of Del Rio Advisors. He provided a detailed account of the District’s bond sale on April 22nd. The bottom line was that the District found itself in a relatively favorable situation. Ken felt that the underwriters did a very good job, and the District should be proud of how this turned out. The Cost of Issuance stuck to the original $205,000 budget, and the all-in true interest cost fell from 4.84% at the time of the March 19th Board meeting to 4.55% on April 22nd.
The Directors unanimously appreciated the presentation, the good work, and the good news. Ken said he spent quite a bit of time (roughly an hour) with Jason preparing him to make the final call.
Unfinished Business
System Consolidation Policy
General Manager Jason Lillion introduced this agenda item. This item was previously presented to the Board of Directors on July 2nd. It was brought back to the Board this evening with requested revisions for final approval. The policy is intended to protect the interests of existing District ratepayers while ensuring the District can respond appropriately to consolidation requests—whether voluntary or state-mandated—in a structured and defensible manner.
The proposed policy addresses the following key areas:
Initiation and screening of consolidation requests
Request for Information (RFI) requirements
re-Consolidation Agreement terms and cost reimbursement
Technical and financial evaluation criteria
LAFCO and jurisdictional requirements
Funding and cost allocation
Water Rights & Environmental Benefits
State-mandated consolidation under Health & Safety Code §116682
Consolidation Agreement terms and Board approval process
Decision criteria and termination provisions
Key policy principles include:
The District does not proactively seek consolidations but will evaluate requests
Consolidations will only be approved if technically feasible, financially neutral or beneficial to existing ratepayers, and compliant with all regulatory requirements
All costs associated with evaluating and completing a consolidation shall be borne by the Requesting Entity, with 100% reimbursement required under a Pre-Consolidation Agreement
Nothing in the policy obligates the District to approve any consolidation
Director Largay approved of the final draft. It communicates that SLVWD is willing to contemplate consolidations, and the conditions are appropriately spelled out.
Director Fultz appreciated the revisions which, he said, addressed his previous concerns. He recommended some minor changes in wording in the interest of improved clarity. He also asked about the state’s ability to force a consolidation without District agreement. Jason said the state can mandate this for a failing district. The statute requires the state to fund this, but the state can determine the level that they will bring the failing agency up to. It is supposed to be based on current code.
Director Smolley observed that the District standards referenced under “Infrastructure Compatibility” largely specify how new systems should be constructed. However, most small entities can't meet this standard. Jason said the District really cares about the overall health of a candidate system (e.g., age of pipes, adequacy of storage, etc.). This is a metric that Staff is thinking about developing. Director Smolley found this to be helpful. He also recommended sending the policy to River Grove.
Director Layng and President Russ both expressed appreciation for the final draft.
There was no public comment. Director Smolley moved to adopt the revised policy with the recommended amendments. Director Layng seconded. The motion passed 5-0.
Highland Tank Engineer of Record Construction Support
District Engineer Garrett Roffe introduced this agenda item. His goal was to obtain Board approval for a Contract Amendment with the engineering firm Mesiti-Miller. This item was presented to the Board at a previous meeting, but the Board requested additional information to help them better understand the basis for this amendment and the effectiveness of the District’s construction-support strategy.
Garrett presented a table with a full breakdown of Mesiti-Miller’s work and fee estimates. He noted that Mesiti-Miller also reduced the size of their requested amendment from around $19,000 to around $16,000.
Rodney Cahill of Mesiti-Miller was present to answer Board questions. He said invoices are typically monthly, but there is some variation. Construction administration is typically around 10% of total cost. In this case, though, Garrett had his own team, so Mesiti-Miller initially estimated a cost of 2.5%. In the end it turned out to be closer to 4%.
Director Smolley said the most recent letter from Mesiti-Miller clearly outlined the reasons for the requested contract amendment. This is exactly what he wanted to see. In his own career, he said he always expected consultants to track their own budgets and let him know when they hit 85%. This is what Mesiti-Miller did in May.
Director Layng clarified that Mesiti-Miller was only billing for meeting time based on actual time spent in meetings.
Director Fultz said he appreciated the Mesiti-Miller explanation. He was surprised to see a Watsonville concrete supplier. He confirmed that Garrett expected the District to stay within the $1.5 million budget.
There was no public comment. President Russ said the Board appreciated Rodney’s participation in the meeting. Director Smolley moved to direct the General Manager to execute the Contract Amendment. President Russ seconded. The motion passed 4-0 (as Director Largay was no longer present).
Board Policy Manual
General Manager Jason Lillion introduced this agenda item. He said the current round of revisions to the Board Policy Manual (BPM) had its origins in 2024. The Board reviewed a revised version in September 2025. It came back to the Board in February 2026 where, due to substantial objections by Director Fultz, it was tabled and assigned to an ad hoc committee comprised of President Russ and Director Fultz. At a Board meeting in May 2026, the Board rejected the work of the ad hoc committee and directed that the BPM should be largely restored to the February version. The Board agreed it would be further worked on by GM Lillian and Board President Russ and also be reviewed by Legal Counsel. The version of the BPM being brought to the Board this evening mostly complied with this directive, but it included among other minor modifications a provision requiring a supermajority vote to censure a director as reviewed and proposed by President Russ and GM Lillian as part of their review and Legal Counsel review.
President Russ made some general introductory remarks in which he said he was appreciative of all the input and the various compromises.
Director Smolley said the latest version of the BPM largely tracks the February 19th version as requested, but the new supermajority provision raised new concerns (including the question of what would count as a supermajority). He said he was happy with the majority requirement in the February 19th version. However, he subsequently suggested that he might be willing to accept the supermajority if this would result in Board approval of the BPM this evening.
President Russ suggested that a supermajority could be understood to mean 4 out of 5 votes (i.e., all Directors except the Board member being censured).
Director Layng had some detailed questions and recommendations involving specific wordings. This led to a discussion about whether or not it was advisable to prevent Directors from returning to topics that the Board had already reached a decision on. Gage clarified that "in a future meeting" is one of three identified circumstances in which directors need not refrain from restating concluded items. The intent is just to prevent rehashing within a given meeting.
Director Layng said she would not agree to "supermajority."
Director Fultz said he had a statement that he wanted to read. This statement was quite lengthy and extremely contentious. It framed censure as a vehicle for politically motivated personal attacks on Director Fultz, and it presented Director Fultz as a victim of efforts to suppress his freedom of speech. It included multiple personal attacks and hyperbolic claims. Midway through this reading, Director Layng raised a point of order, saying that Director Fultz’s statement was off topic and should not be allowed. Director Smolley concurred. President Russ said he would allow Director Fultz to complete his reading. Director Fultz said he would vote against the revised BPM.
President Russ observed that, with Director Largay no longer present, three votes would be needed to approve the BPM in its current form. He noted that Director Layng was going to vote against it because of the supermajority requirement, and he said he himself would vote in favor of the supermajority requirement. He suggested to Director Fultz that, if he wanted the BPM to include a supermajority requirement, he should switch his vote from no to yes. This would allow Director Smolley, who was also on record as opposing a supermajority, to vote yes simply to resolve the issue this evening.
President Russ asked if there were any public comments, and was told there were none.
Director Fultz agreed to change his vote to yes, and the Board voted 3-1 to accept the revised BPM, with Director Layng opposed.
New Business
Possible Action Regarding Customer Appeal of Water Usage Charges
Finance Manager Cheri Freese introduced this agenda item. Her memo recounted the following sequence of events:
The residence at a property in Ben Lomond was destroyed in January 2023 after a redwood tree fell on the structure, and the property was subsequently red-tagged and remained vacant during reconstruction. The customer applied for the District’s Basic Waiver in January 2023. The waiver became effective on January 24, 2023, at which time the meter reading was recorded as 1,125. Under the terms of the waiver, the customer was exempt from the basic monthly service charge for up to three years, provided that no water was obtained through the service connection during the waiver period.
On February 7, 2025, District staff inspected the property and recorded a meter reading of 1,159, reflecting an increase of 34 units from the reading recorded at the beginning of the waiver. Because water use is not permitted while an account is receiving the Basic Waiver, the meter was locked at that time. District records do not identify how the water was used, but indicate that the consumption occurred sometime between January 24, 2023, and February 7, 2025.
The Basic Waiver expired in January 2026, and regular billing resumed. District staff initially could not obtain an updated meter reading because the meter was obstructed by construction materials. After the obstruction was addressed, staff obtained a reading of 1,159 on June 3, 2026. Because that reading was unchanged from the February 7, 2025 reading, District records indicate that no additional measurable consumption occurred during that period.
The previously unbilled 34 units were subsequently applied to the account, resulting in a consumption charge of $613.06 on the June 2026 bill. Although the bill displayed a prior reading dated May 6, 2026, the District’s inspection records indicate that the meter had already reached 1,159 by February 7, 2025.
On June 23, 2026, the customer submitted a written dispute of the $613.06 charge. The customer asserted that the property had remained vacant and uninhabitable, that no construction activity had occurred during the period in question, and that the June bill appeared to attribute the usage to a period when the property was not connected to the new meter. The customer requested removal of the charge and review of the meter and billing records.
The General Manager reviewed the dispute and denied the requested adjustment on June 24, 2026. The customer subsequently filed a timely appeal to the Board of Directors. The customer’s primary argument is that the property was vacant and that there was no apparent reason for water to have been used. However, the District’s determination is based on the recorded meter readings rather than the occupancy status of the property.
While the District is unable to determine the exact cause of the consumption—whether from a leak, construction-related activity, unauthorized use, or another source—the terms of the Basic Waiver do specify that water should not be obtained through the service connection while the exemption is in effect. The waiver unfortunately cannot extend to cover water passing through the meter because the residence was unoccupied.
The delay between the occurrence of the consumption and the resulting bill was caused by the account’s waiver status and the timing of account reactivation and meter access. While the bill’s presentation may have created confusion regarding when the consumption occurred, the underlying meter history supports the charge. Staff therefore recommends that the Board uphold the General Manager’s determination and deny the appeal.
President Russ noted that the $613 charge was partly a consequence of billing at multiple rate tiers. A small leak would have remained within Tier 1. He recommended that the Board revise the bill under this assumption. This would place it in the vicinity of $300.
Director Fultz asked if the District had locked the curb stop to ensure that nobody could use the water. For unknown reasons, the District did not do so. Director Fultz said he would have recommended reducing the bill to $150 or $200, but he was okay with President Russ's proposal.
Director Smolley said he liked President Russ's proposal because it had a basis in procedure. He also agreed that the standard procedure in the future should be to lock the curb stop.
Director Layng agreed with Director Smolley.
There was no public comment. Director Fultz recommended rejecting the dispute and rebilling at the Tier 1 rate. Gage Marchini said the Board could reject the waiver and rebill in a single motion. President Russ moved to deny the appeal (i.e., reject the requested $613 refund) and rebill at the Tier 1 rate for the measured 34 units. Director Fultz seconded. The motion passed 4-0.
Bear Creek Wastewater / Essential Operations Update
Operations Manager Jesse Guiver introduced this agenda item. He reminded the Board that the District contracted in February 2026 with Essential Operations to provide oversight, monitoring, staff training, and engineering support to help address challenges facing the Bear Creek Estates Wastewater System. One of the most significant challenges was the District's inability to consistently achieve the required 50% Total Nitrogen (TN) reduction.
Over the past five months, Essential Operations, working closely with District staff, has implemented several operational improvements to optimize system performance. Most notably, these efforts have resulted in the District achieving the required 50% reduction in Total Nitrogen (TN) during each of the last four sampling events conducted between May and June 2026.
District staff is pleased to continue working with Essential Operations to further improve the overall operation of the Bear Creek Estates Wastewater System. This partnership will continue to enhance staff knowledge and support the District's ability to operate the system independently, while also identifying the most effective use of capital improvement funding to ensure the system remains reliable, efficient, and compliant well into the future.
Highlights over the last five months:
Achieved and maintained compliance with the required 50% Total Nitrogen reduction standard during the four most recent sampling events, with reductions ranging from 57% to 62%.
Fine-tuned the recirculation pumps by adjusting pump elevations, optimizing pump run times, and replacing underperforming pumps.
Replaced trickling filter pumps that were not operating correctly.
Improved system maintenance by increasing the frequency of trickling filter screen cleaning and optimizing tank pumping operations. This included a one-time comprehensive pumping of all treatment tanks, followed by the implementation of an improved pumping schedule.
Enhanced operational monitoring by installing flow meters on several treatment process tanks and increasing bench-top testing to better track system performance.
Labeled treatment plant infrastructure to improve communication, troubleshooting, and consistency during operations and maintenance activities.
Future Plans
Continue monitoring and optimizing treatment operations to ensure regulatory compliance throughout all seasons.
Implement an automated sludge pumping system to improve treatment efficiency and reduce manual operations.
Inspect and evaluate the leach field to identify deficiencies and develop a rehabilitation and repair plan.
Prepare a Request for Proposals (RFP) to perform smoke testing of the collection system to identify potential inflow and infiltration (I&I).
Continue training District staff while developing a comprehensive long-term operations and maintenance plan to support independent operation of the wastewater system.
President Russ described this as fabulous progress. He asked how much of the consultant's expertise Jesse and his staff had been able to absorb over the past five months. Jesse said there had been good continuous communication and learning. The key was to make major changes to the recirculation.
Director Smolley asked if the changes were being documented for future reference. Jesse said they were. Director Smolley asked how much of the 50% reduction was weather related. Jesse said they never previously saw two of these reductions in a row. Four in a row is significant.
Director Fultz thanked Jesse for his exemplary leadership in this area. The options for replacing the system were simply unaffordable. He said he would like an update during the rainy season.
Director Layng echoed Director Fultz's comments.
Director Smolley urged Staff to share this good news with the affected residents.
There was no public comment.
Purchase of a Used Telehandler Forklift
Operations Manager Jesse Guiver introduced this agenda item. The District routinely performs work requiring the handling of heavy materials, lifting equipment, and access to elevated work areas in rough terrain. The question for the Board was whether the District should rent a telehandler on each separate occasion for its use or whether it should purchase a suitable used telehandler. Staff recommended the purchase.
Jesse said a telehandler's telescoping boom, rough-terrain capability, and compatibility with a variety of attachments will improve safety, increase efficiency, and reduce reliance on less suitable equipment. The telehandler will support upcoming in-house projects, including the North Highway 9 Bridges Project, the Harmon Street Main Replacement Project, and the Peavine Pipeline Project, as well as future capital projects. It will also be used for day-to-day operations, including unloading and transporting pipe and other heavy materials, supporting treatment plant and storage tank maintenance, and performing a variety of material handling tasks. The District's existing forklifts are not designed to safely handle large-diameter pipe and other heavy materials used on District projects. As a result, staff often rely on tractors and other equipment that are less efficient and not intended for material handling. Purchasing a telehandler will improve safety, increase efficiency, and enhance the District's ability to complete capital projects and routine maintenance in-house.
Staff contacted several equipment rental companies and equipment dealers to identify a telehandler that best meets the District's operational needs. After evaluating the available options, staff determined that a used 2018 SkyTrak 10054 Telehandler with 1,847 operating hours, available from United Rentals in Santa Cruz, offers the best overall value. The total purchase price, including sales tax and delivery, is $73,584. For comparison, a new telehandler with similar capabilities would cost approximately $170,000 to $180,000, before sales tax and delivery, making the recommended purchase a significant cost savings while still meeting the District's operational needs.
Alternatively, a rental would cost about $4800 a month, $2600 a week, or $1300 a day, all expenses included. Given the District’s needs, this might amount to $12,000 to $15,000 a year. Jesse estimated that the District would break even on the purchase in 3-5 years.
Director Smolley asked what projects in the next year this would be used for and what durations it would be needed for. Jesse said the North Highway 9 Bridge project has two upcoming deliveries, but the telehandler may also be used on the job site. The District is committed to using an in-house construction crew. The Harmon Street project will use it for 2-3 weeks. The pumpstation fire-hardening project will make extensive use of the telehandler. The Peavine Pipeline project will use it for unloading. The Railroad Main project will need it for delivering. The telehandler will also facilitate annual maintenance projects.
Director Layng was open to the purchase. She also noted that the telehandler could be resold.
Director Fultz said he had consistently supported investments in tools. He asked if the analysis included the cost of equipment maintenance. Jesse said it did not. Director Fultz encouraged Jesse to continuing buying tools like this.
President Russ agreed.
There was no public comment. Director Smolley moved to purchase the used telehandler for an amount not to exceed $80,000. Director Layng seconded. The motion passed 4-0.
Investment Policy
Finance Manager Cheri Freese introduced this agenda item. Her memo said the District’s Investment Policy establishes formal policies for the prudent investment of District surplus cash. The policy is intended to ensure that District funds are invested in a manner that prioritizes safety of principal, sufficient liquidity to meet operating needs, and an appropriate return on investments.
The proposed Investment Policy for Fiscal Year 2026-27 is substantially consistent with the prior year policy approved by the Board. The policy continues to identify the District’s authorized and acceptable investments, including LAIF, the County of Santa Cruz Investment Pool, certificates of deposit, passbook savings accounts, U.S. Treasury obligations, certain District debt repayment or repurchase options with Board approval, and certain obligations of the State of California.
Cheri said the draft policy was reviewed by the Budget and Finance Committee July 8th. The Committee requested that staff add a section identifying investments the District is not permitted to invest in. In response, staff added a new “Prohibited Investments” section to the proposed policy. This section clarifies that the District may invest only in the investments expressly authorized by the policy and may not invest in unauthorized or higher-risk investment types.
Director Smolley noted some minor discrepancies in wording.
Director Fultz appreciated the list of prohibited investments. He said he would be more comfortable just saying that all other investments are prohibited.
Director Layng had no comment.
Director Smolley agreed with Director Fultz. He noted that the prohibited list included terminology that could be easily evaded.
President Russ concurred.
There was no public comment. Director Fultz moved to adopt the resolution approving the investment policy with the recommended modifications. President Russ seconded. The motion passed 4-0.
Accounts Payable Listing
Finance Manager Cheri Freese introduced this agenda item. The Accounts Payable listing provides a summary of disbursements issued by the District for goods and services received during the period of 6/06/2026-7/16/2026.
President Russ said he learned a lot from looking at these details. He asked about the solar loan payments for the Felton treatment plant. These are nearly complete. He asked about the net metering credits that the District is getting, purely as a future point of interest.
Director Fultz had a historical comment. He said the Board was advised in the past not to approve Accounts Payable to avoid potential conflicts of interest. Director Fultz confirmed that this will now be a monthly practice, and he voiced his approval for this.
There was no public comment. Director Smolley moved to approve the accounts payable listing. Director Fultz seconded. The motion passed 4-0.
Rate Assistance Program Policy Amendment
General Manager Jason Lillion introduced this agenda item. He explained that there was a conflict between Staff’s interpretation of the approved Board resolution and the policy itself. The question was whether the approved $5 increase in the Rate Payer Assistance (RAP) allowance was intended to be an annual increase. The resolution references the Board-approved budget, and the budget approved in June, 2025 allows for another $5 increase this year.
Director Fultz said he had never supported the RAP in its current form because he regarded this as the responsibility of the State. He was concerned about any automated annual increase in the absence of some limit. He considered this to be bad policy all around and said he would continue to oppose it.
Director Smolley said it was not his understanding in the previous Board discussion that the $5 was to be incremental in each successive year. He calculated that this could amount to a $9000 increase in cost each year. Jason said the resolution was based on the approved budgeted amount. It would be up to the Board to determine what amount they want to approve. Director Smolley said he wanted this brought back to the Board on an annual basis. He didn't want to see an automatic escalator.
President Russ said he would like to see an explicit Board review with each budget cycle. Director Layng said she didn't think the Board’s intent was for the $5 to escalate each year, but she would be happy for it to automatically escalate as the rates themselves increase.
President Russ suggested that the Board approve the current $5 increase but that future Boards should decide for each two-year budget cycle. Director Smolley said he didn't correctly understand the original decision, as he wasn't thinking of the two-year budget cycle. He said he favored an explicit annual review. Jason said Cheri and they were okay with an annual budget cycle.
President Russ asked Jason to rewrite the policy to allow for an annual budget decision.
There was no public comment.
Consent Agenda
There was one item on the Consent Agenda:
a. Board Meeting Minutes 7.2.26
The 7.2.26 Board Meeting Minutes were approved by unanimous consent.
District Reports
May Financial Status Report
Director Fultz said he is still waiting for the June 30th report to see if the District hits its $6.5 million target number.
The meeting was adjourned at 8:55 PM.