 So he's Lou, we can't hear you. I think he's coming on. It takes a while to get on after he's. Yeah. He should be on now. He's just muted. And we're started the meeting. You're on Steve. Okay. Welcome to the board of directors meeting for the San Roosevelt, the water district. Let's go ahead and. I'm sorry, I don't see Lou Ferris on the meeting. Is he here? Right here. He's there. Okay. Great. Okay. President Swan. Here. Director Henry. Here. Director. Here. Director Moran. Here. Here. Director Ferris. Here. Here. Here. Here. Here. Here. Here. Here. Here. Here. Yes. Here. Great. Thank you. Rick, are there any additions or deletions to the agenda? I have none. And I'll ask district council. Do you have any? This is just for council. I have none. Thank you. Okay. Thank you. This portion of the meeting is reserved for the public to ask any questions on items not currently on the agenda. So you may speak on any subject you want. That's not covered today. You have. Three minutes to do some. And we'll be using that as a standard timepiece for all questions going forward, even on the agenda items. So they have three minutes to speak on anything and we'll try to limit it so that you speak once on a topic. And that's all. We want to try and get through these four items. It's a special meeting. So we want to be efficient with our time. And. And move this along so that we can accomplish all four of these items and. Get back to our air conditioned other rooms. Does anybody have any comments about something, anything not on the agenda. And I think it's CTV or the people watching for hands being raised. Correct. So if you're not seeing any hands coming up. Then we'll move on to. The existing. Items old business, as it were. One thing I'd like to do just to get it out of the way. Rick, I'd like to make a change and take the letter to Pacific gas and electric first and just so that it's done. So would you like to. Yes. Yes. Council. Nicholas. Does that require a motion or we just. Can move to that item. It does not require a motion. The board chair has the authority to change the order of the agenda. Okay. So it'll be item five D correspondence to PG and E. Regarding PG and E's wildfire. We'll move on to the next item. The recommendation is that the board review the memo. Provide direction regarding the attached revised letter to PG and E regarding tree removal. And PG and E wildfire mitigation plan. At the February 20th, 2020 environmental committee meeting during public comment request was made on behalf of the Valley women's club environmental committee. The letter to PG and E addressing impact to the watershed by PG and E's tree removal program. A letter was drafted and bought to the board of directors on March 5th. Staff received direction to work with Nancy Macy of the Valley women's club to update the letter to reflect the districts more specifically. At the April 16, 2020 board meeting director folds introduced a revised version of the letter included in this agenda pack after reviewing both letters. The board decided to move forward with falses version. Staff received direction to work with director folds, director Moran and Nancy Macy to finalize the letter. The final draft to see exhibit a. And a list of the recommended recipients exhibit B are attached and I'll turn it back over to the board. Thank you, Rick. Does, does anybody on the board have any questions about the revised letter that Bob worked on with? I forget who it was. Nancy or somebody else? Nancy and our environmental program. Oh yeah, partly right. With them too. So does any board member have any. I do, but I don't know how to. You did good. Fine. Lois just shouted out just. Okay. I just know you're here. What's what's your car? I think this is a good question. I think this was a failure of proper procedure. The original letter at the last meeting and I didn't realize I was approving force it to be. Written by another director. But it was originally from. The environmental committee. It was written by a board member who was part of that committee. It was written by a staff member who's part of that committee. It was also people from the public and from the committee. That helped with it. And I won't vote. I don't care. If the new letter is the best letter ever written. I don't think it was proper procedure. And I'm going to vote no. Thank you, Lois. Any other. Let's see. Okay. Oh, I can see a hand up, Bob. You have comment about the letter. Well, I can, I was just going to say I could offer a. To display the red lines. If anybody needs to see that. With respect to the procedure, I may be very confused, but I thought this was a. Letter that was introduced during public comment. At an environmental committee meeting. And was brought to the board for direction. And given everything that's happened. Wasn't able to go back to the committee, which is. Of course, where it should have gone had we not been in this current. Situation. And so at that point, it's back to the board. I'm very confused about the process, but. My understanding of the process was very different. Okay. Any other board member with any comments about that? I'll chip in a little bit. So. It was presented by a member of the environmental committee. During public comment. During a meeting a couple of months ago. And. That's when it was first read. And then it went to the board to be. Discussed and. We've taken direction. Since then. So that's my comment. And the only other thing is. I think director Fultz and. Nancy Macy worked on it a little bit. A while ago, a week or so ago. I was invited to that, but I couldn't get my zoom. Connection working. So I didn't participate in that. But I'm glad to see that. I'm glad to see that. It's to the extent of the letter, the letter. Addresses things that we are concerned about. And, you know, there's many ways of expressing the same interest. And I think it expresses those interests. And I'm glad to see that we're. You know, requesting PG and a clean up its act a little bit and be. Conscious of what's going on here in the San Lorenzo Valley. So I'm glad to see that. I'm glad to see that. Yeah. I'm glad to see that. You're right. Lude. You're the only one left. Other than myself. Do you have any questions about the letter? Yeah, I have no comments. Okay. Terrific. Thank you. I think the letter is fine. It, it's exactly as what we ended up discussing at the last board meeting. So I don't have an issue with it. But I'm glad to see that. As the public wish to comment on this letter. Not seeing any hands, then we're going to bring it back and vote on this and. So I'll, I'd like to make a motion then that we. What is it? That we approve this letter. As written. By the team of individuals involved in writing it. And that we, we sign it and send it on to. Everybody that's listed on the two lists attached to the. Draft that we have in our agenda packets. I'll second that motion. Thank you. Let's go for a vote, Holly. Oh, hang on a sec. I got a question. Sorry. Why Bob is it significant? Well, it has to do with who to send the letter to. And in what form. So if you look at the second page. There's a suggestion that separate letters be sent rather than see seeing one or another. And there's a list of folks here. So. One of the things that Nancy. Carly and I discussed and we weren't, we thought that this probably needed board specific board direction was which way to go. And so I think we need to be very specific about what we would like. Staff to do relative to whether it's CCs or. Separate letters and what have you. My. You know, I'm, I'm sort of agnostic on it the way it's written. It's kind of written towards. PG and E. So writing it to them with copies of these folks, I think would be okay, but you know, it's really up to the board, which, which way we would want to go. And I, sorry to interrupt the vote, but I wanted to make sure we were addressing this specifically. I don't know. I got a feeling we're all pretty agnostic about. The letter in Bob. So let's just say that we'll direct that in unique copy. Let's see. We'll just send one copy to PG and E and CC all these other people. Okay. Sounds good to me. That's my emotion. Can I get a second again? I'll second that again. All right. Let's get a vote, Holly. President Swan. Yes. Director Henry. No. Director Foles. Yes. Director Moran. Yes. Director Ferris. I'm sorry. I didn't hear you. Oh, you're muted. I'm sorry. I voted aye. Thank you. Motion passes. Okay. Perfect. Okay. You. Rick. We're back on the agenda. We'll go back to item five a, the unfunded liabilities. It's recommended that the board receive the information and the presentation by staff. There is no immediate action needed. However, staff recommends these issues continue to be discussed at committee level. The district has been having more conversations around unfunded liabilities. There are three main categories, employee benefit liabilities, deferred maintenance, which is large capital projects, large scale capital projects due to their past useful life, old redwood tanks, age, undersized pipelines, et cetera. There are smaller and routine projects, tank coatings or existing tanks extending their useful life routine facility maintenance meter replacement, et cetera. Some of these routinely occur in the annual budget such as the upcoming tank coatings, meter replacement and paying of the required benefit liabilities. Benefit liabilities are measured that the district can take to decrease these potential and save money for the future. Some of these deferred maintenance can also have a more detailed roadmap to the future. The finance manager has put together a PowerPoint and I will refer to the finance manager for reporting on this item. Stephanie. Just before you begin, Stephanie, I would really like to express my appreciation to the staff, you particularly and Rick and everybody else that invested time over the last couple of weeks and putting this together. I know it took a tremendous amount of effort and it was not a scheduled item in our normal agenda of things, but your efforts are very much appreciated by the entire board of directors. So thank you very much. With that, Stephanie, if you've got a show to go or a show to show, feel free. Stephanie, we don't hear you. Are you muted or unmuted? Hello, Stephanie. Maybe she's talking to one of her two unfunded liabilities running around that house. Our phone looks muted. Still don't hear. There you are. I heard the echo. Okay. Can you hear me now? Yes, ma'am. Okay. My earbuds must not be working. So I will work from my phone. So unfunded employee benefit liabilities. So what employee benefits are there? Essentially our district has two. We have our pension liability. Many people are used to the idea of how retirement plans work. We have two tiers. 2% at 55, which is commonly referred to as the classic member. And 2% at 62, which is called a PEPRA member. And that's for anyone that enters the CalPERS system. After January 1st, 2013 for the first time. The other employee benefit is referred to as OPEB. Other post employment benefits. And the district offers a retiree medical benefit for employees that continue to use CalPERS medical plans after retirement. And this is going to vary from when someone retired. So someone that retired 10 years ago, depending on what the amount was in their contract at that time, is what they is what they will be getting paid out at. Next slide. So might as well just get the cat out of the bag. So Gatsby 68 and Gatsby 75, essentially were the requirements to show your long term future obligation on your books. As of our 630 2019 financial audit, the pension liability was at 3.8 million. And the OPEB liability was at 1.1. So the district had roughly $5 million in unfunded employee benefit liability. Next slide. Here's some of the key terms that you'll kind of see being used a lot of times in some of this stuff. So the unfunded accrued liability, it's pretty much the present value needed to pay the future calculated benefit. A lot of this all gets put together from actuarials and actuarials use a lot of different assumptions to go into their projections. Some will be demographic such as mortality, disability and retirement rates. And then they also do economic assumptions for discount rates, salary growth and inflation. Amortization base is essentially similar to a mortgage. It's going to have the different amortization period, how long it's getting spread out over and the different rates. Implied subsidy. This relates to the OPEB for the most part. And this is where, again, more like an actuarial type of a thing where they, it's like a blended rate for active and active employees. We pay the same rate as the retirees would pay for their plan. So because of that, it's like the active employees are subsidizing the retiree premiums and that creates a liability that GASB requires us to show on our books. And then the net liability is just the difference between the liabilities and the assets. Next slide. So as we said, our OPEB is about 1.1 million. 60% of that is cash and 40% of that is that implied subsidy. So when people are funding their trust, if they have those created for this, you wouldn't necessarily want to fund 100%, because 40% of that is this implied subsidy, which isn't something that you are technically paying out of. Currently, our district only does pay-as-you-go method, so we don't have any offsetting asset. In 2018, the district did, however, create a section 115 trust fund dedicated to pre-funding the OPEB liability. Essentially what it is, is you're able to put your money into this trust and you're able to get better interest rate returns versus the district being able to invest our money not being restricted. So the idea is you're earning interest in this trust that's going to help you build up that reserve to pay for these future obligations that you know that you have. The nice part about these is you can get the money back. If we were to, for example, put 50,000 into the trust, if we spent 25,000 this year, we'd be able to take 25,000 out of the trust or take 25,000 from the trust to pay towards the liability. So on an annual basis, if you have money sitting in that trust, it will reduce this long-term net liability. So this is something that we recommend the district start to fund. Next slide. So the current pay-go method, we have seven retired employees that do utilize the Calcours Medical. We pay about $23,000 per year. And so the easiest way to go to start funding this would be a matching program. That way, you know, we're paying 23,000 to the employee. We're paying 23,000 to the trust fund. If the district ever got in a financial pinch and we needed some, we needed that year's money back, we'd be able to easily submit a reimbursement for that amount of money. And just to kind of put things in perspective, if we were to sit here and put away 23K at 5%, the rate of return over 10 years would be about a 300K balance. So that would be covering about half of the cash liability. So we could take a pause if there's board members or the public that have questions about OPEB. I'll leave it up to the chair for if we want to address questions right now for this specific OPEB portion, or if we wanted to take all questions at the end. Well, I think I'd like to take the questions at the end. I'd like to not try to do a deep dive on this tonight. I mean, this is a lot of material that you put together and provided us with. And I don't know if any of the directors or even the public has had an opportunity to go through it in as much detail with respect to all of the outstanding liabilities or unfunded liabilities that are represented. I would suggest then that we continue to go ahead and deal with questions at the end of the presentation. Sounds good. And just to preface it for everyone, like Rick said is specifically for this, we're not looking for the board to take any action on the employee liabilities. We wanted to get the information out there. I'm assuming this will be going back to committee for actual recommendations at a later time to come back to the full board. Right. I think we can go to them. There was what was critical. And I think you did a great job on that. Thank you. Okay. So we can go to the next slide that should try the next one. One more. There we go. It's a little cut off on here, but in the packet it should be legible. So now we'll go over the district's pension plan. So most state and local retirement plans have a defined benefit plan, which provides employees specific pension payments. Our pension system is through Calcurs. We sit in their miscellaneous risk pool, which simply means that we sit in a pool of money with a bunch of other agencies. So it's a shared pool. Now we kind of already went over the classic and PEPRA. It shows that we have 16 active employees that are classic members, 19 active employees that are PEPRA. There's 27 employees retired that were classic. And none that are PEPRA. It shows what the employer and the employee contribution percentages are. And the last line is the unfunded accrued liability from the actuarial report from June 30th, 2018. So that is the more, I put the most recent one that we have from that. So this will be integrated in the next year's audit. So the classic is sitting at 4.3. And the PEPRA is sitting at 38,000. The next slide will kind of, we'll start to explore why there's such a difference between the two. Okay. Next slide. So brief pension history. In the 1990s, pension funds were overfunded. In 1999, Senate bill 400 granted billions of dollars in retroactive increases to pension benefits. So everyone was sitting pretty with the dot com boom. And shortly after they pushed this legislative through, it crashed. So now the funds went from being overfunded underfunded. As it was starting to recover, the 2008 stock market crash happened and things just got worse. PEPRA went into effect January 1st, 2013. So that was a pension reform act. Essentially, pension funds would have, I don't, I probably would have gone completely under some sort of reform acted and happened to get things level loaded again. So this January, occurred January 1st, 2013. And it had a much different retirement age, different things to have. It is a less favorable package to employees versus the, the classic members. But it's what was needed to be able to help get tensions as a hold back to being in a little bit better state. More recently, CalCURS has continued to make more changes in some of their different assumptions and practices, such as lowering the discount rate, changing some of the years in their amortization. So anytime they do certain, you know, they do some of these, there's a reaction. So whenever they lower the discount rate, everyone's liability goes up. And so that's kind of pension funds. We're doing good. Certain things happen. And then that's when it's kind of created the situation that most agencies are in now. The next slide. So this is a CalCURS chart and it's just kind of showing their historical funded status. They have some of the key markers showing major things that happened. And it just kind of helps show when it was overfunded, some of the different changes and stuff that happened to where it swung the opposite direction to where it is. It's such an unfunded state. It has slowly started to recover, but it obviously still is a long road ahead for not just CalCURS, but pretty much all pension plans. Next slide. Some of the major changes that CalCURS made is they're shortening the amortization period from 30 years to 20 years. Most of us can understand that relating to a home mortgage. So instead of them amortizing what we owe over 30, it's now over 20. They are also doing level dollar payments for the unfunded liability. So agencies will have a higher initial payment, but overall it'll reduce the interest costs and eliminate negative amortization potential. And then they're eliminating some of their rate smoothing and ramp up and ramp downs that they used to do. So whenever they would make certain assumption changes, they would do a five year rate smoothing, which means you're impacted by it for many years. So they've changed some of those different assumptions. And all of these will start to show up in this next year's actual report. Next slide. What has our district done? In 2016, the district did a fresh start with CalCURS to amortize our then unfunded liability instead of being over 30 years, over 15, and this saved our district, well, it's saving about $800,000 in interest expense. The district also does the lump sum prepayment option each year. We make the payment in July about every year, which is about $300,000 where we have the option to prepay it instead of evenly over the next 12 months, and it saves us about $10,000 each year. Little footnote, the district has multiple options to continue to lower the UAL. Not only is there the unfunded balance, we're charged 7% interest on it all from CalCURS. Next slide. Some of the options the district has to be able to do is to make additional one-time payments. This gives the district the most freedom without being locked in. For an example, if the district chose to make 50,000 payments each year over the next five years, that would reduce our unfunded liability and it would save the district about $600,000 in interest over a 20-year amortization period. There's always the option to regress shorter amortization periods, similar to the fresh start that we did before. Your locked in is the only downside in that, and with CalCURS switching from the 30 down to the 20, essentially they're doing part of that work for us as well. And then similar to the OPEV, the district could create a section 115 trust for pension funds. It would work the same way. You could earn interest on it. It's nice that it stays being the district's money, but it doesn't do anything as of right now for chipping away at the larger balance. So this is something that would be good down the road for the district. And then the last item, some agencies go and take out a pension obligation bond to pay down their unfunded liability. Essentially you're taking on one debt to pay off another debt and you're just trying to hedge a better interest rate. It's actually not recommended by the GFOA, kind of for those reasons. You'll see districts that are in a dire situation that may be forced to do something like that, but it definitely would be more, the district has better options than something like that. Next slide to summarize. So having to show the future obligations is relatively new in the last couple of years to all public agencies balance sheet. So we're not alone. The vast majority of agencies have a large liability that showed up on their balance sheet in these last couple of years. We will likely always have some liability on the books. For example, the implied subsidy portion from the OPEB and then any changes in the market, you could be up a little down a little one year. We're not alone. Mostly all agencies are carrying these unfunded liabilities since everyone was impacted by more unfavorable market history in these last 20 years. This isn't unique to CalPERS. There's CalSTARS, then there's other nationwide pension plans that are all in a similar situation. What's important is that agencies don't ignore it. There are proactive ways to reduce the unfunded liability, which benefits the fund overall and directly benefits our district by being able to reduce that 7% interest that were being charged. Next slide. Final thoughts. It's obviously not a quick process. It's going to take years of thought out planning to gradually reduce the district's UAL. Planning and dedicating funds now will slowly start to help the district's financial future. That ends my presentation. And like I said, this was just more so getting the information out there, making it so the board and the public can understand the unfunded employee benefit liabilities a little bit better. I'm assuming once we start up the committees again, this is something that we can go back to the committee level on. And if the district or the committee wants to recommend something to the board, we can always bring that back. This is the type of thing that we can do an ex-budget amendment later on in the year, if that's the route that the committee wants to go. Thank you, Stephanie. Rick, did you want to go into the, the tank aspects of the, the tanks and infrastructure for unfunded liabilities or shall we take a pause and see if we have any questions for Stephanie on the, with respect to the pension liabilities, et cetera. Yeah, we can, we can go ahead and take questions on that. You know, the, the water tank unfunded liability. This is just the start of, you know, several sections in the operational end that the director of operation has started to put together. There's a lot more work to be done. We wanted to bring what we had and start, you know, rolling it out to the board. But if you want to go ahead and take Stephanie's questions first and we do have the director of operations that can talk about the water tank unfunded liability. Right. Thank you. Yeah. So once again, so I want to remind the other board members, this is not a deep dive into any of this stuff right now. So if you've got questions, make them pertinent and make them limited to the presentation and or any specific questions that you might have, but we're not going to, we're not going to drain this material. It's, it's, we're happy that we've got it. And I think it needs a lot of time to review it and, and digest before we're too, too able to dive into it in more greater detail. But are there any comments or questions or questions by any of the directors at this time? I have some questions. Go ahead, Lou. Stephanie, I have three questions for you if I may. First of all, do you know why? Or what the justification was for it for Senate bill 400. I was not even of age to vote. I have, I mean, it was. So I, I mean, it's, it's hard for me to say like what, I don't know what the political atmosphere was back then. It was my understanding from what I've read is it was overfunded. And everyone was floating on this.com bubble thinking that, Hey, what a great way to give it back. I know that the unions back then were pushing for that as well. And that's all some of the stuff that went into pushing Senate bill 400 back or pushing it through back in the late 1990s. Okay. Thank you. Question number two, the total liability for the unfunded liability is stands at just under $5 million currently. And I'm not a financial person. So I'm going to, I'm going to rephrase that and something that I can understand. It sounds like back in 2017, CalPERS sent us a bill for $5 million because of the monumental boneheaded decision to lower their projection. Is that right? No. It has nothing to do with CalPERS. It was actually governmental accounting standards that required, you never had to show what that future. Obligation, that future cumulative obligation is on your book. So it was accounting standards that changed that then said, no, you guys should be having to show this future liability. On your books. Now. So that was accounting changes to where everyone had these before that. They've had them for years and years. It just required us to put them on to our balance sheet that way. And then shortly after that, the GASB 75, which was the OPEB came on, required us to put it on the books as well. So it had nothing to do with CalPERS sending us the bill. People could all, you could always see what the action, what the liability was. You know, they put out these. Actuarial reports annually. So the districts had an unfunded liability. For decades. Well, now decades. So. It's accounting pronouncements, not CalPERS sending us a bill. But we were paying on roughly 10%. Into the retirement fund for all employees. Going way back, correct? Correct. So on top of that, we now, oh, you know, you can call it an accounting change. But to me it's a real bill that that's $5 million above and beyond the 10% that we're sending in every month for all of our employees going back here. Correct. So essentially it's sitting here and it's taking the contributions that you're making now. Losses, assumptions, all these different things and projecting out over the next 20, 30 years. For what it is you're going to have to be paying out. And it's the difference between the, it's the difference between the projected assets and the projected liability that you're going to have. Well, I guess my point is, I think somebody did a really bad job of trying to project. You know, what they actually, cost of retirement was going to be because this unfunded liability just keeps going up and up. So my final question is this, what is the chance that we're going to have another round of unfunded liability hit us that we're going to be, you know, required to pay down on top of $5 million? Well, So that's why pepper, that's why the, the 2013 pepper, pension reform act happened to stop these classic plans. That were essentially. Paying out more than what the funds were realistically able to out earn and interest revenue. So that's part of why, you know, when you look at the current, you know, it's four point something million in that plan versus the pepper plan is only unfunded by about $38,000. So that pension reform act. Kind of. It's partially to undo kind of what happened back with S B. 400 to reset the pension plan so that they can, you know, So as the classic members retire out and more people are on pepper, it will start to get a little bit more improved. But I mean, you're going to have things like market volatility that are going to always weigh in on that. You know, it's no different than people's private 401ks or different stuff like that. I mean, those were hit majorly as well in, in, you know, these different crashes. You talk about market ball volatility, but the assumption that I see on that chart is that they're still assuming a return rate of 7% on their investment. And I don't know anybody that's getting 7% today. So why do that? Why? So it, that tells me that down the road, there's going to be another, a delta of unfunded liability added on because of the difference between 7% and what people really are getting today, which is, you know, today is something in the negative region. I mean, they have been lowering the discount rate. They do it gradually. They don't just do it. You know, they don't just go from eight and a half to seven. It has been gradually getting lowered. I believe they are talking about, you know, which in turn is going to turn around and make our projected unfunded liability look worse. Still the gradual lowering, but the first time it was a half a percent, and then it was a quarter of a percent, and then it's a half a percent. We're still nowhere near reality. In my mind, assuming a return of 7% on, in today's, I mean, I mean, I mean, I mean, I mean, I mean, I mean, I mean, I'm assuming a return of 7% on today's market. I mean, it's unfortunately all theft that, you know, we, we don't have control over. This is the CalPERS people that manage the program, right? But, set these values. Correct. Correct. Yeah. Any other questions? Many board member. I see your blue hand up. Yeah. Thanks. And Stephanie, whether it's really good background information. I'm looking forward to talking about it in more detail in the budget committee, just to follow up on Lou's question, but what is the 15 or 20 year return on investment that CalPERS is getting? That's sort of a long-term return on investment. I don't think it's 7%, but I'm not sure what it is. It is ballpark, it is right around there. I don't have it in front of me, but over their long-term, and I mean, and I guess that's the thing that they always, these are long-term investments. So while it may not be right now, over the last couple of years, I mean, they actually had, they were surpassing the 7%. I wanna say this last year, they reported it was 6.8 that they got closing out, I believe 2019, but long-term, when you look at the long-term of it, it is roughly around the 7%. Well, I mean, I guess if you were to go back to the raging bull markets in the 80s and 90s perhaps, but over the last 20 years, I mean, if it was only 6.8% last year, which was a pretty raging market, I'm concerned that even seven is way too high and that this is what we're gonna talk about in the Budget Committee is what number we should be targeting at as a district, I think, in order to make sure that we're keeping our promises to our retired employees. Thanks. Thank you, Bob. Any other comments or questions from any board members? No, not from me, thank you. Okay, to the public then, do you have any questions or comments about this aspect of the unfunded liability discussion? Three, two, one, no. Okay, moving on. Rick? James? This is President Juan, this is District Council. I see a few hands up in the attendee column. Yeah. You do? Oh, I'm sorry. Okay, who do we have in the attendee? Okay, so I see the names now we've got. Well, at the top of my list is Larry Ford. So Larry will recognize you for three minutes. Okay, thank you. This is Larry Ford. I'm wondering what has the staff been planning to do about these unfunded liabilities? I mean, it's not anything new. You've been thinking about it and related to that, I'm wondering what opportunities are there for grants from outside sources like government agencies and foundations and that sort of thing. And then what opportunities are there to request maybe with a bunch of other water districts to have some kind of subsidy from the state or federal government? And if there were some grant or subsidies available, what is staff doing to prepare for getting some of those grants? Thank you. So, similar to how it's, you can't just go out and borrow money to pay this off. I don't believe that they're, I'm not aware of their ever being discussions of grants or subsidies from the government to pay off the pension liabilities. The state does have a lot of their own. If you look at the slide back in 2017, the state did pay in a large six billion from the state to pay down the state's unfunded liability. And so what that does is, I mean, if all agencies start to chip away at it, I mean, you put money in the stock market smartly, the idea is that you'd be earning more money off of the return, you'd be getting a higher return. So that's where the discussion kind of starts to come in. I don't foresee there being any bailout type of thing where we'd be able to get grant money or money from the state for stuff like that. But this is where the district, we did the fresh start in 2016, and the district can make these one-time payments to slowly chip away at our district's unfunded liability and save that 7% each year on that. That's where the example goes where, I mean, if we smartly choose to dedicate a plan towards this, five one-time 50,000 payments over the next five years, say 600 grand over a 20-year period, that number can continue to grow if we end up having years where we have surplus money. This is a good option for where some of it could be spent. I mean, obviously the district has deferred maintenance and other capital projects that it could go towards, but it would be smart to start to have a plan go towards these. Thank you, Stephanie. Next with the hand up is, it looks like Gail Mahood. Can we unmute Gail? Can you hear me now? Okay, thank you, Stephanie. That was an excellent report. Even I could understand it, even though I don't know much about finance. I just want to sort of follow up on what you seem to be implying at the end of your response to Larry. And if I understand it, then we've established this 115 trust to pay down the unfunded liabilities for the medical benefits, but so far we've not allocated any money for it. And then the second part of my question is, it also sounds like we've not budgeted this year or at any other time for these sort of one-time $50,000 payments to cut the other part of the unfunded liability. Is that am I understanding this correctly? Yes, that's correct. So one of the things that we were wanting to do with this budget process, if we had it slated that we were gonna be talking about these unfunded employee benefit liabilities at the budget and finance committee to hopefully get some money allocated during this budget, given everything, the committees have been canceled. I'm hoping that we can start it up again. And then if that is the direction that the committee wants to go, the board could vote to choose to allocate funds to some of these. Okay, and if director Swan will just indulge me for a second more, I guess I would like to jump off from that and advocate that I think we should restart the committee meetings. I just think that the budget committee is gonna have a lot of things to do this year because of both the potential budget issues that might come if we have a recession and a lot of people who can't pay their bills, but also to deal with this question. I think engineering has some things that has to be done. So I would encourage us to go back and do those meetings. I think the, especially the finance committee, the more people that are thinking about this, probably the better. Thank you. Thank you, Gail. And the last blue hand I see belongs to Beth Thomas. Beth, you are recognized. Hi, thank you. It was a great presentation, Stephanie, it's a really complicated subject and I've had a lot of familiarity with CalPERS and with PEPRA in my work previously. And I wanted to just say, I happen to know that you're right. I think CalPERS was estimating 6.7 return on investment for 2018-19 and over 30 years, they actually have had an 8.1% return on investment. And I think PEPRA was important because, and I was involved in management of a large union staff at the time, employees really took on some of that debt burden in addition to what they were already paying. The other thing that's interesting and I'm curious to know what happened in the water district, during the 90s, one of the problems, one of the practices that helped create this problem is that there were employer pension holidays because the pension was at 128% funding, they gave a lot of employers pension holidays, which means that while the employees were still paying for their percentage towards their retirement, that the employers were not. And I'm wondering if the water district, if you know what the water district's practice was during that time and why maybe that's part of why the unfunded liability is also so. Hi. That's an easy one. I do not know what the district did back in our 90s. Okay. Were you born in the 90s? No, later than that. But earlier than that, but now. Okay. Well, that did contribute. I think also the SB 400, which was CalPERS legislation actually also created some additional problems because they started funding some categories like police and fire got funded at 3% at 50, you know. So a lot of that's been improved through PEPRA and hopefully it will continue that way. But I think it's true that we're gonna see an even more difficult situation for the next receivable future given our current situation. All right, thank you. Thank you, Beth. Any other questions or comments from anybody in the public? No, okay. Now, moving on, one, two, three, three, two, one. Let's go into now. Was there an overview, Rick, that James wanted to do with respect to the tank maintenance stuff that with the spreadsheets that he started or that we have so far? Any kind of comments or overview that you wanna make, James? I have to unmute there. Yeah, I'll let the director of operations give you an overview and we can discuss a little more of what he put together here, James. Okay, so this is very rough. It's a start now. You'll see in the estimated cost of painting and coating for the 14 welded steel tanks. The costs are very similar all the way throughout. I did get some costs from some neighboring districts that have done recent tank paintings and coatings. The difference is that we don't know what is in our paintings and coatings so that has a lot to do with the cost. Say, if there's lead in the outside paint of the tank, the cost can go up a lot more for encapsulating or having to tent the whole project and sandblast. So it's very hard to predict without having each one of these thoroughly gone through from a painting and coating specialist that has not been done. Another thing you'll see is that most of these tanks have not been coated since the installation year. This has a lot to do with the deferred maintenance and the no money to do so and being told not to do so. Throughout all the years, a lot of our tanks are, I mean, and it could cause a situation where when we do go to do these, there will also need to be steel repairs done to some of these tanks before the paintings and coatings happen so they'll have to, there's some of the tanks are so pitted and worn at this point that now they're gonna have to go in and cut out sections and weld new steel in whatever and whatnot and make repairs and some of the roofs and that kind of thing. So that's gonna inflate the cost also more and that's another thing. I mean, you can't estimate that. We don't know what the cost of that is until we're get work, it's looked at by a specialist and that has not been done. Now Blair tank and Brookdale tank were on the, in the budget to be painted and re-coated this year. We have been working on the RFP, but it's been very difficult. We, this is our first time doing so. So we're trying to get an outline. We're working with, by pulling other districts costs and how they, and their RFPs together and pulling them apart and trying to put our own together. It looks like that we put this back in the budget for the next fiscal year to actually get the paintings and coatings done. As we're hoping to have the RFP done soon. So this will be, those are pushed back to next year. And as I said in my operations department thing that I did in March, presentation that I did in March, these, I wanna do two tanks a year. I would like to see us do two tanks a year for the next eight years. And that would get us through all of our tanks. And then we're also looking into a maintenance program. And so with the maintenance program, after they're painted and coated, if you go on a maintenance program, the cost of the painting and coating is spread out through those next 15 to 20 years. And you're not just paying out one lump sum after 15 to 20 years. And during those 15 to 20 years, they're coming out and touching up or, and making sure that these tanks are not in such bad shape that we have to do repairs again the next time we do paintings and coating. And the life of a steel tank is forever. As long as they're maintained, painted and coated and kept up, they will last forever. I'll move down to our, let me take some questions. If anybody has questions on the welded steel. I was just wondering, how long does it take to do an inspection? And then how long does it take to do painting and coating? The diving and cleaning inspections take about four to six hours per tank, depending on the size of the tank. We have one tank like our lion water, our lion tank, the three million gallon one. That actually takes almost eight hours. It takes almost a full day to do that one tank because it's so large. But they take about four to six hours normally per tank. Painting and coatings. I have a question too. Everybody's talking at once and I can't hear. Yeah. Just to finish off, my second part of my question was painting and coating, how long does that typically take start to finish? Painting and coating can take up to two weeks. Okay. I interject in here too on the paintings and coatings on a couple of these tanks. One of the big concerns on the single tanks is that we have to keep customers in water. And there's quite a bit of prep and work to be done to move storage around and to continue keeping folks in water. The Brookdale tank for one is a major hub and it'll be a significant project to keep folks in water while you're doing these painting and coatings. Is that included in the cost that's referenced here as far as the 200 to $500,000 for painting and coating? I don't think so. That'll be done in-house. That'll be a staff project. But we are doing the inspections and cleaning. Paintings and coatings are different. Keep in mind we are on schedule with underwater, with wet inspections and vacuuming, silt and rust or whatever deposits out of the tanks. That's, and you're correct me if I'm wrong, Jim, that is up to on schedule or painting. Those dates are also in this spreadsheet, the date of last inspection. And we have had repairs done to some tanks, underwater repairs to some of the coatings inside. We have done touch-up painting to the outside of some of the tanks, but it's not, some of these tanks are, and in the inspections are said with some of the pitting and deposits that are on there, they're gonna need repair. Okay. And it's time to get on top of it. Can I say something? Actually, Rick was first and then you, Lois. Oh, okay. I don't know how to contact you. So Rick, go ahead with your... Her too, Lois. Go ahead, Lois, if you don't mind, Steve. I have a simple question. I see that big steel is 80 years old and you're saying it's gonna live forever? Yeah. Definitely. Yes, as long as that tank, we continue to maintain that tank, it will live forever. Wow. And there can always be, I mean, and if it needs repairs, we go in and do repairs. They can do steel repairs on steel tanks. So the whole tank isn't destroyed. There'll be parts and pieces that are destroyed that'll be repaired. And big steel has been modified and upgraded through the years. We put, when we first had big steel, we bought it used from Lockheed. It didn't have a roof on it. We came in, put a roof on it. It has had paintings and coatings. And then we came back and put stairs on it. I mean, big steel has been maintained. So it's a big tank. Over a million gallons. Thank you. Hey, Rick. Okay. Thank you, James. I just wanna echo some of what James said. I worked as a house painter for more years than I'd like to think. And plan maintenance is what keeps costs down. And to the degree that we're doing that, and I hear that Rick, there is a schedule for periodic inspection. That's the whole key is staying ahead of any major repairs. So I'm glad to see that we're focused on this and it definitely needs to be a part of plan maintenance. Okay, thank you. Bob, you have a question or comment? Bob, did you hang up? You're still muted, Bob. Yeah. Sorry, my internet connection is a little unstable right now. Am I coming through clearly enough? Yes. Yes. Steve, can you hear me? Yes. Bob, we can hear you. Okay, well, Bob. Steve? Yep. Hello. Hello. Yeah. So sorry about that, guys. My internet connection went a little wiggie. So am I coming through okay now? Yes. Great. James, thanks very much for putting this together. I know this represents a culmination of a lot of effort in your part. And I think it's really great that we're starting to really understand where we stand with tanks. A lot of this tank maintenance is way overdue for sure. And your advocacy of making sure we take care of this is really appreciated. I had one question about the inspections that are done. Are those inspections, which I see that we've kept up on, do those inspections include an examination of whether or not repairs are needed and where those repairs are needed in the tanks? Yes, they do. And like I said, we have done repairs. Like recently we did some repairs in Brookdale tank to the coatings and the outside paint. And they do tell us, they give us a very detailed dive video with audio and they point things out and all that and show us where the pitting is and whatever or whatnot. And we definitely try to combat it, but it's not without doing the full painting and coating, it's not combating the whole situation. No, perfectly understood. Thank you for that. That's great information. Okay. Do we have any questions from the public for? I have a question for you. Who? Lou? Oh, okay. Lou, I have two questions for James, if I may. Sure, go ahead. James, looking at your list, if I take the average estimated cost, I come up with a figure of around $10 million. And that's obviously a floor, not a ceiling, but does that sound about right, Steve? Actually, I came up with, I actually went through and did estimated totals for the whole total at the bottom of my spreadsheet. It's not on the spreadsheet that I delivered. And it came out to about 3.5 to 4.8 million is what I got. Well, that's even better. My second question is since we're... Lou, I'm sorry. Yes, you're right, because you're talking about the total over everything? Yes, I am. Yeah, okay, yeah, you're right. But just the welded steel would be 3.5 to 4.8 million. Okay. And my second question is actually for all types of tanks. And that is, if we find out when we do the inspection, that there is repairs required and not just painting and coating. If we get to a certain level of repairs, I would assume that it would make more sense to replace than to repair. And if that's true, is there any thought given to if we have to replace the tank, up sizing it? I don't think that any of these tanks are so bad that they would need to be fully replaced besides maybe one. And that would be the Bear Creek Estates tank, the 75,000 gallon one. And that would also be a place to put a bigger tank if we ended up doing something like that. But all these other tanks, I mean, I don't think it's bad enough to where we'd have to replace them. I think to go in, do the repairs and paint and coat them and then put them on a maintenance schedule that it's gonna be the cheapest cost to the district. All right, thank you. If I can interject into Lou's question, any time Lou and for the full board, they re-replace a mainline, a tank, a pump, is looked at for today's standards in the pump for flows, fire flow, storage, to upgrade. And we upgrade wherever we can and wherever we have room. And a good example is the Redwood Park tank, the swim tank. The new site is allowing us to put the state standard fire flow of 125,000 gallon tank in. We always look at it. And once the master plan is done, we'll be able to run that much quicker and fundamentally we'll be able to run each one of those zones and do flow tests and so forth. Though the answer to your question, we always look to upgrade when possible. Go ahead, thank you. Thank you, Lou. Do we have any questions from the public? Okay. The first I see is E.J. Armstrong. If we'll take E.J. off mute, there we go. E.J., you're back on mute. Can someone take him off mute? There we go. Right now, there we go. So far, so good. Yes, thank you for this presentation. I really am interested in the tank issues, having been involved in a number of issues, balding tanks over the years. My question is regarding thermal imagery. Has there been any attempt to do thermal imagery around the exterior surface of the tanks? There has not. That could tell you a lot about what's going on with the steel. Good to know, there has not. Yeah, the fluke industries has some technology available to do that. It's very sophisticated and can really give a good analysis of the characteristics of the steel and indicate the points of failure. And that could be costed out well in advance. That's my question. My observation. Thank you. We will look into that. Great, thank you, Mr. Armstrong. Next, Mark Lee. Mark, let's take Mark off mute. You're still on mute, Mark. You're still on mute, Mark. There you go. Okay, I appreciate the presentation on the Capital Facilities Maintenance Program on tanks. I'm glad that they're keeping costs contained where needed and where it's advisable to spend money like that approach in sinker metal. Other methods for looking at cost steel deformation or leakage is through X-ray technology also used in the industry. So that may be something to look at. But I think the fluke industry model is excellent because it does use a photographic imagery based on heat sensing in various dimensions of the metal from various angles of the tanks. It's used in metallurgy. It actually developed in the aerospace industry for weld certification. Anyway, I appreciate it. I'm glad it's not 10 million per year versus 3 million over the life cycle of our existing tank inventory. Can you hear me? Yep, thank you, Mark. Appreciate your input. Anybody else in the public have a question or comment for James? Okay, we took that pause. James, was there more you wanted to address? Yeah, so I wanted to go down to, I want to go to the bottom of the spreadsheet now to go to the bolted steel tanks and talk just a little bit about these. Most of these are not that old. Obviously we have the spring tank. That's kind of an older one. We don't have the data, the Charlie tank, and it's kind of an older one too. But the other three are fairly new. I'm not quite sure of the understanding on the painting and coatings on these yet. What we have done though, with the bolted steel tank that we had at blue tank, it was deemed failed. It had a buckle in it from an earthquake in 89. And so when we, what we did was a refurbish and replace. And this on these bolted steel tank seems to be a lot cheaper than going with paintings and coatings to do a refurbish or replace. The cost was not significant. It costs us right around $250,000. We used the existing pad. We didn't have to put a new pad in. We just had to put some new pegs in around the pad to make it earthquake. Strength or up to standard. But these are, these have been a good thing for us. These bolted steel tanks and Nina tanks. We've been getting those inspected. And the cost of inspections about the same. And that's, and we estimate that at a total of 1.3. If we have to refurbish or replace. And then I will touch on the redwood tanks. Obviously most of our redwood tanks now are in process of being replaced. With six tanks that are going in out in. In the redwood tank site. We'll eliminate those two as well. And the Felton heights tank is also in the process with easements and stuff to be replaced as well. The other. Five that we have on there that are not in process. They're technically in process because they're redwood tanks and they're noted to be taken out of our system. But no plans and specs have been done on any of those other. Five tanks. And the echo tanks are all at one site. So that's why the cost of that is kind of, it seems like replacing three tanks would cost more, but it's one side. It would end up being one or two redundant tanks. To at the same site or a different site. So that's where I came up with that cost. And these are just estimated costs that I came up. The, the, the Felton heights tank that's just in the process of being replaced. Is it being replaced with a significantly larger tank? Yes, that tank is being replaced. I do believe with a. It'll be, it'll be sized for that area. 125,000 gallon tank to have fire flow and so forth. Oh, sure. Yeah. And we're going to need to replace a tank or any type of facility. We try to bring it up to the engineering standards of today. Gotcha. And we're, and that's another one that we don't have the room at the existing site. So we're just finishing up negotiating with a different property owner for a large enough site. That's why that one has taken so long to do. And we'll be back with that. Thank you. Thank you. Thank you. Thank you. And thank you. And thank you. Thank you. All right. That's why that one has taken so long to do and we'll be coming to the board. We have a proposal in the next month. To move ahead on that project. And that tank is also. Funded from the lost acres community. Where we took over that community. There's a payment that they will have to start making once we start making progress on that. small part small part yeah I'm not sure how much of it's funded but I know some of it's funded about 75 grand that had been installed a few years ago would have been mostly funded there we go so that's my presentation on my spreadsheet and like I said it's very rough spreadsheet there's a lot of work to do still and we will keep adding to this there's a whole there's also three concrete tanks that I don't have on here and there's a multiple polytanks that I don't have on here polytanks don't take much for maintenance besides inspection and cleaning the big thing is is once they if they get hit a weathering lifespan they start to maybe crack or something like that that's the expected and to replace a polytank is not a significant cost right thank you James appreciate work James any any questions from any of the directors for James on the this particular subject I got one state go ahead Rick so James a few meetings ago you put up for bid some of the scrap redwood salvage redwood from one of the tanks did you ever did we ever get a sale on that or what happened there so what happened there is I had my whole bid pack and everything all ready to go out and then we hit this COVID thing and then they have to come out and look at it and stuff and it's behind lock gates and stuff we didn't want we were told not to interact with public not to interact things so I asked the district manager if I should be moving ahead with that we came to the conclusion that we shouldn't move ahead with that until this orders lifted okay thank you right thank you Rick okay any any questions from the public I see again from April April Zilberg okay I hope I'm unmuted now you are April that was a very interesting presentation and I just have a question as a person who's kind of clueless about this when you need to replace a redwood tank do you replace it with a different material such as steel yes the majority time they're replaced with steel we have replaced some of the redwood tanks with polytanks for because of difficult access or no project ready to go when the tank failed so we go in and there's some of these sites that have polytanks or we're just temporarily put polytanks in there when we took down the redwood tanks that failed thank you that answers my question thank you April I see mark Lee go ahead mark yes following up our discussion on the third maintenance on the tanks the larger capital the projects are still it's a dynamic still it's not set in stone we're still working on to find details on deadlines and budgets correct this is still evolving you hear me I don't know if I have the answer for that I would say yes to that question mark we are still James and the engineering department are still putting together the spec on paintings and coatings we are incorporating a lot of inspection into the new painting coating specs painting coatings have changed a lot over the years especially with lead paints and so forth and the new coatings so that's what slowed this process down this year is putting together that that new spec so so we have we still have further chances down the road to comment as the public and rate payers here to look at the evolving maintenance deferred maintenance on those on there on the total tank population for the district correct you should be yeah the engineering committee would review specifications and and contracts and projects that would be done in the engineering committee okay thank you thank you mark any other questions from anyone in the public any directors last shot maybe two one moving on okay Rick back to you for our next agenda item Rick you muted there we go can you hear me now okay this will be item 5v the low-income rate assistance program it's recommended that the board receive the information and we'll have a presentation by staff this is meant to be a guided discussion to help you present different options depending on the discussion the board may direct staff to proceed with the developing a program the public water agencies rate revenues are subject to restrictions under prop position 218 and 26 that essentially prohibits utilizing those revenues to sub aside a rate assistance program the district has discussed using non-rate revenues or a donation program to potentially fund a low-income rate assistance like a lure a lira program the presentation will hopefully guide discussion around the most feasible option for our district at the April 16 2020 board of directors meeting a local group calling itself friends of the s of the water submitted a proposal for board review and it's attached in your packet and at the April 16 2020 meeting of the board directed staff to bring the subject back to a special meeting of her for further discussion with that the finance manager will have a PowerPoint and we'll take her and present that I'm definitely okay can everyone hear me yep yep okay um so low-income rate assistance program to the next slide so essentially we need to figure out what is the district ultimate goal personally when we're talking about developing a plan like this I like to think about the viability of the plan that something like you know it's something like this a plan that the district wants to have for years to come obviously pros and cons to everything so first idea is to create a long-term program to give discount on bills monthly you know this for a monthly discount on a bill it would likely need to be an internally ran program is the plan to create a one-time relief for customers in need this could be an internal or an externally ran program do we want to create a temporary pilot program for the more immediate future until a before one is formulated and then if there's any other reasons that board members can think of that that may fit into that next slide who's going to run this program so depending on the type of program we pick is going to start to point us in the direction of if we think it's going to be an internally staff ran program or an external internal there'll be different options constraints and costs that we can have if it's ran externally through a third party like a 501 C3 that we partner up with some of the questions we may want to ask ourselves is how much controller input would we have in that situation and how important is that to the district this would obviously have a lesser impact on staff if customers are directed to go to a third party to get to get something so one of the things we'll want to weigh is pros and cons for an internally ran program versus an externally ran program next slide how is it going to be funded is it going to be district funded through non-water rate revenues the district does have property taxes mobile lease revenue that would not have some of the same restrictions as our water rate revenue is the district funding through customer donations to the district or a combination of the district could do their own donations as well is a district partnering with a third party for them to receive the donation and again similar situation to weigh the pros and cons of that one of the pros for if it was a 501 C3 company is it would be able to be a tax deductible donation versus if the district were to be the ones accepting donations it would not be and then some of the other pros and cons in this situation would be if it's a set amount versus an unknown so if the district were to be donating a fixed amount through some of our non-water rate revenues we'd be able to set the actual dollar amount versus if it ran purely off of donations that can also get complicated because what if you don't have enough donations one month or one year and next slide I I asked Gina to put together a slide explaining AB 401 AB 401 was adopted in 2015 and required the state water resources control board to take the lead in developing a lira plan by 2018 they finally released a report just a couple months ago in 2020 she list out some of the different highlights you know they acknowledge that local agencies are gonna have a hard time coming up with money on their own due to prop 2018 and 26 to the strength and they were wrecked this SWR CB was recommending that it be a statewide program recommend the 200% poverty level similar to what PG&E care program bases their stuff on discusses direct water bill credit renters water credit and crisis assistance recommends using state income tax and taxes on bottled water for funding the next step is for legislature to consider the recommendation since it involves creation of new fees it will take a two-thirds legislation legislative approval vote if it gets immediate traction maybe beginning as early as 2021 so and I mean that you know from the conversation Jean and I had that's been accelerated given the COVID pandemic we think that there may be a chance that they do look to accelerate this but either way we are talking about a year plus out and so that's kind of where my one of my previous slides is saying do we want to set something in stone now do we want to do a test program with a before one coming down the pipeline it may be soon to where we are told essentially what it is that we have to do we just don't know quite yet next slide and this is some of the things that I think we'll want to keep discussing I'm assuming this is going to be going to a committee as well internally ran program thoughts how much money each year fixed versus variable if it is a fixed amount that'll help us set the number of applicants allowed if funding is reduced how do you reduce the applicants enrolled what will it take to run the program internally probably a pretty high volume the first year as far as setting up an actual discount on a customer's bill for a monthly program that's relatively easy for us to do and there'd be ongoing annual renewals we strongly suggest that we piggyback off of the PG need care program it is what a lot of other agencies do as well the overall well thought out policy needs to be developed and then other smaller things like how heavily do we want to advertise the program you know that again can be a discussion for for down the road for depending on what the board decides next slide thought on third party ran program it would likely need to be a one-time relief it'd be pretty difficult to operate with a third party to get monthly bill discount going it could run purely from customer donations it could be a combination of customer donations and district donations and then you run into the how important is program oversight by the district you know some of these places partner with you know United Way or different things like that and I kind of wonder what type of control they have my guess is you don't have a whole lot of control other than then partnering with them and being able to help designate funds to them third like I said before a third party benefit it does encourage you know the tax deductible aspects of it next slide what are other agencies doing lira programs there's some sort of discounted rate programs it's most commonly found in cities and counties the majority of public water agencies such as ours you don't have near programs in place but some certainly do a lot of this all goes around that all it's we can't use our water sewer rate revenue it would have to be a non-rate revenue we do have some of those options other agencies may not which is why it's not as as common below are four examples of agencies the Calaveras County water has about 13,000 water customers their program allows 200 in the program with a $20 discount on their bi-monthly bill so their program cost them about $24,000 per year they keep it high level just stating that it's funded by non-rate revenue Coachella Valley has 109,000 customers they administer it through a third party through donations and some funding from the district there's is a $100 credit once per year option El Dorado irrigation has about 41,000 customers their program is for sewer only they allow up to 1500 in the program with a $25 discount on a bi-monthly bill so that's a $225,000 program and from what I read they mapped out within a few months at their number of applicants also there's a funded by non-rate revenue Valley recently started their pilot program they give a 30% discount on the basic meter fee and charge the flat tier one rate to residential customers so a person using 6,000 or less gallons of water they'd be getting about a $23 and 42 cent discount on their bi-monthly bill they state that there's is funded by their property tax revenue and when I spoke with them within the last couple weeks they had only four customers enrolled they do have it posted on their website but they don't proactively you know advertise it and last slide so any final comments you know based on this discussion I'm assuming this is gonna be going back to a committee I believe we have been discussing starting committees out in June again but this kind of at least opens up the conversation for the board to discuss some of the different avenues that they think would be most feasible for our district thank you Stephanie very well done okay any questions or comments or thoughts on the subject from the board members Lou okay first of all I'd like to thank Stephanie and the friends of SLB water as well as other ratepayers that have made their comments known about the subject on the the SLBWD website it's been really helpful at least for me I support a LARA program particularly a one with a modest start and one that is legally viable and helps most deserving ratepayers but after having a discussion with Stephanie about about the financing in the particulars something came to my attention and that is that I was assuming that the property tax revenue we get which is a which is approximately $800,000 a year is not a steady flow of revenue there a few years ago they stopped the contribution for a while I believe it was because of some financial hardships with the library system but the bottom line is that that's not a guaranteed amount of money and given that and since that would be the basic funding source because we can't use ratepayer money I would hate to start a program and then have to stop it when we no longer had the property tax revenue so I'm recommending that we basically hit the pause button for six months and hopefully by then we'll be able to determine a clearer picture of our financial future and therefore what we can support in terms of the LARA program. Thank you Lou. Anybody else with a comment? Yes. I do. Go right ahead Lois. Thank you. Saw your virtual blue hand. I actually talked to our supervisor about AB 401 and he got back to me and he gave me the name of someone who's supposed to know all the information and he gave me a phone number which of course didn't work and so I called him back and left a message and today I found a message on my machine from his office and I'm gonna have to call them again because I it was too late to get ahold of anybody when I saw the message so I'm hoping I can get some answers from the person he's directing me to. The other thing is yeah property tax I when I was on the Long Pico board for a couple of years there we didn't get any property tax because of I have no idea I can't remember the reason. I was also thinking maybe we need to do just kind of a test program say okay $25,000, 208 customers that would be $10 a month or $120 for the year and see how that goes just do a test program don't just jump in and I I'm sure I'm not making some people really happy here I'm not against doing something for low-income people but I want to do it smartly carefully and this has come up time and time again and there issues about how it gets funded who gets the money to the right pairs how much burden on staff it might be or do we go outside it's a big issue and I I would like to see this done I'm supportive but let's be careful thanks loss any other comments questions I mean I'll go oh Rick go ahead thank you Steve so I fully support a program that helps people in need with their water bills and this is a program that is trying to do that so I'm fully supportive of that I want to make sure that the most needy are the ones that are helped and however whatever number that is that we can afford but it's the most needy not first in line I'm not in favor of a first come first serve approach to this and if it has to be modified from the care program I mean we've had a couple of issues with PG&E here most recently about their billing of us for the power outages and now with the environmental concerns about the fires and now we're going to use PG&E as a model so I'm a little reluctant to do that but I understand you know it's efficiencies perhaps and so one of the things about reaching out to people I noticed there was a comment in there is I think this is why I wanted to support the chatterbox that we just funded the last meeting is these are this is what we need to do we need to go out and target the people that are most in need so I believe we can use this outreach component with the chatterbox I'm in favor of doing this at well here's first I have a question that maybe Rick or Stephanie can answer is currently we have no cutoffs of water because of not paying bills so in effect we do have a low income assistance program working right now is correct okay so we can categorize it as that right so I don't know how long we can continue doing that but as numbers come in that will make it clear for an analysis and as far as this you know this the state and you know this is not just a local problem it's a national problem and it's not a total state problem so I would hope that the state has said they're interested in doing this and they need to be pressured into doing this at the fastest pace we can help them do so I would like Lois's approach to talking with the representative and if we need to do more of that we should do that that's basically where I stand thank you thank you Rick any other thoughts from anybody if not I'll share mine so I agree with I agree with all of you right now all the other directors that have spoken so far and I think it one of the I mean low-cost assistance yeah that's that's fine I certainly support that and I'm really curious to see that since the state has gone to the effort of of this maybe 401 and it's at the point now where it's it's in maybe two years behind its schedule but at least now we're in a situation where it looks like they might actually do something with it sooner rather than later I would be inclined to let the state who's going to be doing something with a mandate anyway and forcing us to adhere to it wait and see what they do and then and then see what that would impact that's going to have on us as you pointed out Rick's when we pass the resolution to not turn off anybody's water at the last meeting that pretty much is a little program to some extent so nobody none of the people that were impacted as as low income or anybody that may have been recently affected by layoffs as a result of the the COVID crisis it doesn't seem like there's anything that we need to jump on immediately or to take an immediate action other than what we already did at the last meeting so for that reason alone and the fact that 401 is in process to some extent I'm leaning towards lose suggestion or let's do nothing for six months and watch it and also during that period we'll also see what additional impact our community is going to have with the result of the layoffs because I don't know where it is how it's impacted our 8,000 connections yet and if it's significant impact then that may cause us to rethink exactly what type of program and how we want to put it in place and manage it so those are my thoughts given where we are today with what we know about the the COVID crisis etc any other comments from any director if not we'll go to the public and let the public comment so for all those 16 attendees we've got the first hand that went up that I saw was Tina too so Tina you are promoted to the top of the list thank you I'm also in support of a Lyra program I think it's a good idea however I also understand the unfunded liabilities and the other this financial issues the district is going through so any Lyra program I feel like should be done responsibly with like fiscally responsibly however I don't think that there should be a cap on like the number of residents that you allow to give applications to you because then it does become a first come first serve I think that we should definitely target the lower income individuals and that they will I don't want to say self-select but the idea is that you'll end up with a with a cap just based on income alone so I don't think that a cap on the number of applications is a good idea because I think it would exclude people who maybe move into the district who you know aren't familiar with the program the other thing I disagree with you about is that I don't think you should take a wait and see six-month approach I think that the people who maybe can't pay their bill right now when that bill comes due or when you ever you decide that you're gonna start electing for those then they're not gonna be able to pay it then either it'll accumulate over months and I feel like if you send out a lifeline to some of these people now versus six months from now you're going to have a better response and I just think that that's it's unfair to wait on six months for the people that meet it now and yeah so that's that's my point okay thank you Tina next with the comments from Lauren you're the next blue hand I see or Lauren Lauren oh it's Lawrence Larry Ford sorry oh okay sorry here I am yeah I thought maybe there was somebody else there yeah um I wanted to thank all of you directors and staff for working on this problem I think it's a really it's a really important one and I appreciate that you're even interested just a couple of comments I think it's really important to focus on who really is needy that's come up before but clearly neediness is not is not necessarily limited to what their income level is and so I'm not sure how to resolve that problem but I think that's really what we're looking at is who are the people that are really hurting anyway and then I wanted to reiterate that my suggestion that the district staff focus on what kind of grants they can get they might not be able to get grants for a Lyra program but they might be able to get grants for other projects which would offset other costs and make other funds available for things like this the problem that I see is I don't know who your grant writer is now it's a lot of work to do a lot of grant writing but I think that would be something that potentially could be really valuable to the district so those are my suggestions thank you thank you Larry okay and next up James Mosier can you hear me yes thank you all again I'd like to reiterate what Larry said I really appreciate the board's interest and support for moving forward on this I just want to have I have a few clarifications in terms of the funding it's right that the you do have 825 thousand dollars in property tax that can be variable but this program could be funded out of other non operating revenue and I believe that that won't be a problem long term you may have to move to some of the other account in terms of the delayed cutoffs that the that the that the district has done so far which I support strongly it doesn't really constitute in my mind a Lyra program for this reason you're simply delaying the cutoffs and delaying the need to pay the bill and at some point the district is going to have to say we've got to pay up and that's when the Lyra program would be kicking in some sort of Lyra program to be helping people it's not just the delay we're talking about it's talking about really helping folks but third thing is I am not at all I've looked at I've read the state report and the looking at what the state is looking is thinking about in terms of doing a statewide Lyra program I've talked to our assembly person about it and it needs a two-thirds vote of the legislature this is a major major hurdle for anything getting out of the legislature as you know I don't think we should be waiting to see what the state does I think we should be taking the lead of other local agencies that realize that in the meantime as long as we have the means to do it that we need to be helping people we can anticipate in the next six months a year we're going to have many ratepayers that need this kind of help and I'm very sympathetic to what Rick Moran said about relying on PG&E for anything but in talking with the water board staff and researching the other programs relying on the care program at PG&E it's a it's a it's a very straightforward thing the PG&E does the staff work determine who is available who's got the whose income matches this it would greatly reduce the staff time needed to institute a program for us to rely on it if you try to do some other way of determining eligibility the staff costs are going to go way way up in the program you're going to end up spending a lot of money on staff time rather than on helping people so I those of us and the friends of San Lorenzo Valley water after looking at this carefully decided that was really the way to go and I'm not sure if Cynthia Denzel was going to be talking I'm not sure if she's on if she is I'm taking she can reinforce what I'm going to say next which is that she has talked to I think the only 501c3 agency in the Valley who I think would be viable for doing this and that's the Valley Churches United and in fact they have an informal program right now and there have been some donations to them specifically to help folks who are in need of emergency funds to avoid a cutoff because of unexpected financial problem but they are have very limited staff they don't want to take on anything major on this would take some discussion with them but there is there is some hope for that but that for those of us who have looked at this that is just one piece of the puzzle the more important piece is the lira program such as the ones that Stephanie described in other districts where there's a there's a discount the same as what PG&E does for low-income people of PG&E rates they give a very significant discount and we're hoping that the district can move forward in this it does need a deliberate process I'm glad it can go to committee I think you need to move on it now I like Lois's idea of a pilot program to get it just to get to figure out how to do it so that when people's needs really come forward in the next six months through a year we have something that's going to really address this issue thank you thank you any other public comments and James I saw you thank you very much I'm not ignoring you Cynthia you're up that avoid James can you hear me now yes you must be with me I want to thank all of you for your thoughtfulness about this I think all of the concerns raised are really valid and we all share those concerns I feel from talking to Stephanie I'd like to have more information from Stephanie about the need that she observes what the district sees how many people the kinds of issues that need to be addressed among ratepayers and it's difficult to do that without getting into privacy issues but I think that staff can guide us on where we should put our efforts and whether this is something that needs to be addressed immediately or can wait for a while and just what options they would prefer to see so I I did talk to Lynn Robinson at Valley Churches United and they have also had their operations interrupted by COVID because they have to be careful also about you know distancing from clients and that she told me that did slow down their ability to take applications so I think all of us everyone involved is trying to fill their way through this so we just need to maybe if the committees can meet and it can be handled on through the committees to keep thinking about this working as Jim said towards you know a more permanent program that would be helpful thank you Cynthia any other comments from anybody Elaine no coming up here Elaine fresco hi yes I just wanted to also confirm or Lowe's the suggestion and what Jim said about having a test program just to get it going and see how it works out sending it to committee I think is a good idea I don't agree with you Lou Ferris about waiting for California because well look it took them two years just to write a report and they have a lot of other things on their plate right now so I think just starting a small test program for us would be very valuable that's it thank you Elaine Beth you are next on the blue hand list that Thomas can you hear me yes hi thanks yeah I'm really interested in pursuing some kind of a program that will provide some relief for members of the community who who have economic difficulties my concern about having a temporary program you know trying it out is that I think that that will become very confusing to people who would need to take advantage of that program I can't imagine how you would say well we're going to do this program and then all of a sudden have to pull the plug on it or something I think we'd have to think that one through but I do support the idea of having a program that would provide some help for people who need it thanks thank you next blue hand I see is Mark Doulson hi mom yep thanks I want to echo everyone's appreciation of the excellent work the staff and the board have done on this and and I don't want to repeat everyone else so the only thing I'll add or reiterate is that you know I think as you continue to deliberate there's there's always the temptation in a difficult situation to just postpone your decision I I don't understand any really good basis for saying well let me just think about it in six months maybe I don't need to think about it at all I think you you have to make a decision and sure decision but I think it's a it's just fooling yourself if you say well I support it and I'll think about it in the future figure out what you want to do that's my input okay thank you anybody else even like to just clarify one point hang on hang on Lou let's get back to we got another citizen here we're going order April Gilbert I thank you again I'm so glad that the board is considering a lira program and I do think it's important as other people have already said not to wait too long but to take it to committee now and start working on some of the questions that were brought up in the earlier presentation because exactly this is gonna happen people who still have work now are not gonna have work in a few months or people whose payment is in arrears and you you're not turning off their service but at some point in the future you're gonna say start paying us there does have to be something in place to help those people so I would really appreciate it if the board moves forward with exploring the options and committing to doing something sooner rather than taking a wait-and-see approach and a pilot program might be fine I don't really have an opinion about whether it should be a pilot or not at this point thank you thank you any other public input if not Lou would you like to clarify your point yes thank you I obviously wasn't clear so let me clarify that I do not support waiting for the state I think that would be a mistake there's no telling when that might be resolved if ever what I do advocate waiting for is a stable revenue source and I'm hoping that in say six months we will know whether or not our property tax revenue will continue to be stable or not because that's a big deal if we can't rely on those property tax monies I don't know where we're gonna get the money to be able to support a program like this although we might eventually find it so it's really not a matter of waiting for the state it's a matter of making sure we have the money to start something so that we don't start it and then stop it I think that would be a disaster so that that's just a little certification on and I do believe that it's it's reasonable to send this back to committee and further work on it not lose the time just not put the money in the budget and tell we're sure that it's a stable money story thank you Lou Bob I had one comment and one question so you know programs like this that are that are sort of rate support programs are really most effective at scale and one of the challenges I think that you know we face particularly where compared to a lot of the other ones that were examined is our really really small scale scott's valley of course has fundamentally different economic demographics than than we do and that also helps them at one level with respect with respect to the legislature in terms of getting to that scale because clearly a statewide program is the scale you know the legislature the house is at 75 percent democratic majority the senate at 72.5 percent both well above the required two-thirds vote to do this and certainly with a number of people who are losing jobs you know there's there's going to be an urgent need not just you know in our area but in Los Angeles and San Francisco and the other areas that are much more heavily populated this is something that I hope the state legislature can look at and very quickly adopt something that said I'm certainly supportive of taking it to committee and let's dive into a more comprehensive fashion than we can do here one question for Gina legally Gina is there any way to target specifically those most in need or are programs like this really first come first serve to whatever caps are put on the program well I think it's not an either or that's good but in terms of determining financial need I think the most significant difficulties are the ones that were identified which is the administrative burden of figuring out you know what constitutes financial need and then how to determine eligibility and that's where the state water board recommended relying on the PG&E CARES information in order to make that determination so the district wouldn't have to so that that aspect of the program doesn't have to be dependent on you know the number of people that the district can take or whether you know getting in is done on a first come first serve basis or not they could be independent determinations but if but if we did decide to go down the PG&E CARES route we would really not be able to say we're going to target those most in need it would be whoever comes in with a PG&E CARE approval to whatever to whatever gap if any we put on the program that's right okay thank you okay terrific uh okay so what are we going to do with this issue I I have my hand up again oh I'm sorry you didn't paint it blue go right ahead Lois Lois I just wanted to say the reason I suggested a pilot program is the very opposite reason of what Beth was saying I feel like if we just jump in and say hey this is what we're doing well that then if it doesn't work people are going to say gee you promised me X amount of dollars if we have a pilot program keep it small see how it goes that perhaps we would get a good idea of the best way to go forward and people wouldn't be necessarily expecting the the money the other thing is I talked also to Anna Eshoo our our congresswoman for our area and I said to her um what what's going to happen if people can't I said our water district is running just like it normally does but what if we don't get money and she was saying well we're thinking next stimulus bill may be help for for utilities and I'm thinking yeah right I don't think a lot of people are getting the $1,200 they were promised let alone getting money to utilities but there's all kinds of ideas out there and I went out today and I saw more cars and people out that I've seen in two months and I'm hoping that maybe things are going to turn around by June I don't know I hope spring's eternal for me I think people are just pissed off at staying in their houses loss okay so uh yeah I have a couple of suggestions here we need to give the staff some suggestions or guidance as to what we would like them to do yeah yeah I have a public comment who's talking Mark Mark Lee uh yeah I think you already commented Mark what do you have do you have something significant to yeah it wasn't on this wasn't on this topic at all pardon me I was not speaking on this topic at all okay sorry go ahead I am absolutely amazed at the creativity and the brilliance of the friends of the friends of the Santa Rosa Valley water district putting that report together and leading the charge I want to give my head off to uh you know James Mosier, Tina Toh, Cynthia Denzel, Elaine Fresco and Beth Thomas, Mark Olson and April Zerbar for their their good research on this and I I think just the opposite I think the board is being too conservative I think we should move forward with the program ASAP we have 30 million people unemployed the the COVID virus is not going away in fact it's going to get worse so I have a totally different thing people are not being able to afford this program our our water rates are increasing five percent a year you have an existing budget of 10 million 827,750 which is increasing to five percent in 2020 to 11 million this only represents a subsidy of literally 1.7 percent I don't think we should even rely on property tax I think we should move forward and get this program initiated using the CARE model I don't know what everyone is worried about this is a drop in the bucket there are a lot of people that are struggling to pay their regular water bills as they go up 5 per cent per year so I'm in favor of not slowing down the process but immediately taking a proposal before the district committee and getting a program initiated ASAP and I think it's waiting for the the assembly to come up with a strategic plan statewide is folly they're going to drag their feet on this for years after talking with Assemblyman Mark Stone he said this would this may take another year or two to implement so I would not rely on our state assembly we need to act individually and independently for our own rate pair and I don't think it's going to be a difficult process to do I think we can use the CARE program that's already up and running and I do not think we should hesitate let's move forward thank you thank you mark okay back to the the board for with respect to direction for the staff does anybody want to offer a suggestion at this point what I'm hearing from most of you that we're discussing this is the fact that we should probably put it into a committee or send it to committee and let them study the details that have been provided by the the friends of fill in the blank organization and the research that Stephanie has done and compiled with with this and also the a little more time will help us understand the conditions of our own valley a little bit more and the other impacts that we might see down the road I do think if we can get the committees coming back in June that would be plenty of time one of the one of the suggestions I would have to the committee and to staff currently would be since we are in the mode of not turning off people's water and we know that there are some people who probably will have a large balance set in three months or in six months from now that we develop some sort of a program to specifically address that condition which we know is likely to occur as well as or in conjunction with the whole Lyra concept and program going into committee and I assume it's budget and finance to be the appropriate committee to deal with this so what do you all think fellow directors I think that's a great idea thank you I agree too and we can I can work with the chair of the finance committee miss Henry and put this together and get it agendized for that committee and we may once we get back in running in June we might even be able to have a second meeting to kind of catch up and they get these these important items through great idea uh rick ricks i liked everything you said there so i agree that it should go into the committee i uh support exactly what you said thank you terrific okay wonderful so we don't okay anybody else any other director got a comment no okay so so that's the guidance rick we don't need to vote on this right no we'll take it right back to committee and uh i'll meet with uh chair henry we can get this going and uh get it to uh the committees wonderful okay let me ask quick the finance manager do you want to add any to that uh step or that sound good to you we should get her yeah i think i think taking it back to committee we can dive into it a little bit more and focus been on which type of route we can you know we can kind of lay it all out a little bit better right and because you know we are monitoring our current accounts closely um and and you know we're seeing you know positive with our rate payers paying their bills right now i know it's early um and then that'll give us a little bit more time to to repair more information great okay moving on last item on the agenda tonight and uh rick okay uh item five c this is the proposed rate increase uh this is a recommendation that the board review the information and staff's recommendation is to adopt a motion to proceed with the prior approved rate increase to take effect in 2020 you have some alternatives to freeze or stop the approved five percent rate increase from taking effect in 2020 the freeze or stop half of the approved five percent rate increase or two and a half percent from taking effect in 2020 you could take uh no action uh staff does not recommend alternatives one and two because they would have significant long-term negative impacts on the financial health of the district as briefly summarized in this memo uh staff does not recommend alternative three because a final board decision regarding this issue is needed in conjunction with finalizing the fiscal year 2021 budget uh a little background uh according to the ab 401 final report recently released by the state water control board uh drinking water is a basic basic human need expenditures to meet basic water needs are expected to continue to rise rapidly due to the need for water systems to replace aging infrastructure uh meet treatment standards uh diversity uh diversify supplies and maintain a well-trained workforce a number of factors explain the rising rates for water service three of which are relatively unique to to water among the basic service sectors first water has been historically underpriced compared to the true cost of service leading many water systems in california to underfund or put off infrastructure maintenance replacement and other critical activities second increasing stringent water quality standards also require additional costs for treatment and operator training which further stress financial capabilities third a percentage of federal support in total public infrastructure infrastructure spending for water utilities have fallen from 30 in the 1970s to less than five percent in 2015 in other words water systems must finance their own operations to a much greater extent than in the past in 2017 there was a study that found that the district's cost of water service would increase approximately 9.7 million uh in 2016 uh dash 17 the 10.6 million in 2020 2021 in order to meet its revenue requirement the district undertook a proposition 218 process in 2017 and and ultimately approved a water rate increase to be phased in gradually over five years the upcoming uh year uh four increase would be five percent going into effect with bills in november 2020 your five is also scheduled to be five percent taking effect in uh 2021 uh an overview the attached rate schedule and scenarios project for the next five years of revenue and expenditures below summarize revenue that permanently would be lost to the district from stopping or freezing the scheduled rate increase i do believe there is a income projections for rate increase uh attached to this memo the lost revenue would compound and be much greater over time frames longer than the next five years unless the district approves catch up rate increases the continuing prior approved rate increases would help to ensure financial health for the district in the face of possible revenue losses due to covid 19 uh anticipated losses and expenses related to wildfire risk and management uh compliance with stringent regulatory requirements and the need to maintain aging infrastructure also these funds can uh be used to reduce other long-term liabilities and or future water infrastructure capital projects just a little background this item was requested by chair swan that he put on the agenda and other directors is why it is on this agenda as well and with that i'll turn it back over to the chair swan for questions there is a uh like i said there is a spreadsheet there we do have the finance director still attending the meeting and she'd be more and happy to answer any questions or i could ask if she would like to add anything additional uh she could feel free too um if anyone has any questions i'm more than happy to answer but essentially i think is essentially showing the compounding effect uh when a rate increase doesn't occur how quickly that can add up thank you staphany um okay uh blue hands are popping up i don't know rick okay thank you i i guess this is for staphany staphany could you give me maybe some specifics on what are the long-term negative impacts uh on the financial health of the district if we don't do this so i just need some concrete examples of what you think those impacts are i mean it's for the least amount one it's 1.3 over five years that's 1.3 million dollars that could be used proactively to reduce our unfunded liabilities and have direct longer term interest savings from our CalPERS pension like we were discussing um it's being able to accelerate or fully fund some of the other deferred maintenance programs that we know we have on the horizon i mean pretty much every item that we talked about at this meeting so far all involved money and we pretty much are coming in with this fiscal year 2021 budget wow we're coming in we're coming in break even which means if we wanted to go do some of these programs we really wouldn't be able to without taking out of reserves so i mean it it it could be used for a lot of different things okay thank you that answers my question so i i'm going to share a comment then before i call on bob number one i hate proposition 218 i think it's a license to steal and every time the water district has pulled that card out of the deck over the last 10 years or so it's been extremely aggravating to me and a number of other rate payers you know i i just i mean i'm in favor of one of the things and this goes back to the platform that some of us ran on to get elected was stop giving away money which we've done a good job of that and to roll back or attempt to roll back the rate increases which we haven't addressed at all until this potential opportunity i'm almost of a mind to say vote them down completely no rate increase and and force the district to live within its means you know within the budget it's got within the revenue it's got and it can seriously pursue those new revenue opportunities that that have been mandated at the beginning of this year um so i'm just i i mean having being a realist also having been on the board now for a year and a half i see the realities and the expenses and realize that you know there are a lot of these unfunded mandates or liabilities that exist and there's operating expenses and there's a crappy infrastructure that's been allowed to go on for far too long and so i hate the idea of pulling out a rate increase that's going to be used wisely but then again i'm not 100 sure about that either just my rambling thoughts on the subject of the rate increase because we haven't addressed it in the first year and i wanted to wait until we got a little better uh footing before bringing it up and talking about it again or addressing it but um this is some thoughts right now i'll have more later bob please share your uh thoughts and comments with us well i wanted to um talk a little bit about historical challenges the boards have faced in the past whenever there's been a prop 2018 process certainly the last two for the most part all of the increased revenue has gone for increased operating expenses with with very little of that having been used to expand the amount of money that's available the margin that is the operating revenue minus the operating cost the margin available to deal with some of these very critical uh challenges we have and the unfunded and underfunded liabilities aren't just the pensions and the op-ed it's the tank maintenance it's the meters it's the 150 million which is our guess of uh infrastructure that has to be replaced over 50 years which is three million a year it's the 30 years looking back that was not addressed in a sustainable and systematic fashion that we have to catch up on it's the lira program it's um pump maintenance it's um the uh the entire totality of of what is in in front of us and we have yet to put that all that we've got pieces of it now we have yet to put that all together um and so that's one side of the equation that is we we do definitely need to be putting more money towards oh i forgot about the reserves we do not have our reserves fully funded yet either so there's lots of places for money to go what i'm looking at with this year's proposed budget though and i'm not sure i understand the concept of flat i'm i'm looking at a 733 thousand dollar increase in operating expenses over what we're estimating for this year coming in at and that was before uh you know the coronavirus really hit big time and an estimated uh 485 thousand dollars in revenue increase so that means that this revenue increase is going entirely to increased operating expenses which means that the margin that we're applying to uh these unfunded liabilities is shrinking it's actually going from 3.2 million again estimated actual for this year to 2.9 million this is exactly the bind that previous boards got into that you do this rate increase and operating expenses eat it all up and so there's not enough money available for for those really critical things so i hope that we're going to be able to keep making progress towards getting our hands around the unfunded liabilities and and you know i really like to continue working with staff on that but if we're not going to do that and we're going to see this kind of operating expense increase just to run the district and the uh revenue not even covering that so that we can just stay in place then i'm not in favor of doing um rate increases and i think that would have to be coupled with also saying we're going to do a flat expense budget as well um that is we're not going to go up 10 in expenses and four percent in revenue we're going to do flat on both um i think the economic fallout from this shutdown is going to be a longer term than we expect the unemployment planes that have been filed in santa cruz county now again not just in our area in two weeks exceeded an entire month during the 2008 crisis so we are definitely going to see a longer term effect um at this point i'm i'm not in favor of either the operating expense increase or the rate increase until such time is we have a very clear picture of unfunded uh liabilities a multi-year process by which we're going to commit to the community how we're going to address those and a budget that reflects both in a very systematic and comprehensive fashion and we are not there yet thank you bob any other director comments this time or questions if i'd like to say some words yeah go right ahead luke uh first of all to to james um okay i i put this item on the agenda and i could probably talk about this ad nauseam so james i'm going to give you authority to put me on the clock and stop me at five minutes okay moving right along i've been thinking about this a lot in the last week hello yep we are you okay i thought i lost you i've been thinking about this subject a lot in the last week and i've vacillated back and forth basically all week and finally i set back took a deep breath and produced it down to some simple axiom i thought about what i what i promised myself when i was appointed to the board a year ago and that was to follow some simple rules number one always have the best interest of the ratepayers in mind number two always listen to staff because after all they are the subject matter experts so towards that and then thirdly uh is to listen to all ratepayers because everybody has good ideas number one the interest of the ratepayers by my reckoning and correct me if i'm wrong the rate increase this year will be the seventh increase in the last 11 years and these have not been insignificant increases as i look at the the numbers from the california state water resources board they say that the average water bill for california has increased by 45 percent between 2007 and 2015 well they don't live in the san arenzo valley my water bills and i have them right here if anybody would like to look at them in the last 11 years my water rates have gone up by 345 percent in a vacuum that wouldn't be terrible the problem is all of my utility bills have gone up have gone up by a commensurate amount and that's slowly eating away at my fixed income in retirement to where i might have to move out of california in less than five years so i'm very attuned to to the ratepayers in this valley and you know one other data point uh the first time we did the 218 process there was a thousand protests so the second time there was 2,500 might we actually defeat the next rate increase you know considering that that that that delta i don't know but i do believe that we're running into a uh a rate payer um induced uh i mean we're getting tired of rate increases because they never seem to end we never seem to give back to the people that keep this this just re going um and i think the the ability of ratepayers in the to absorb future increases is clearly diminishing at the same time i think i talked with stephanie about the numbers and she makes a very compelling argument if we reduce the rate increase we effectively reduce it forever and and that is that that really gave me pause and and made me think that that may be that's something that we can't do especially with going what's going on with the economy right now so here's the last point and that's on the the other ratepayers input there was a rate payer that that sent something to the board just yesterday that i thought had a pretty good suggestion her her idea was doing a a temporary rollback for say three months for all ratepayers that would be a one-time cost not a continuing cost in the and and reduce our ability to raise money in the future and i think that's something that's that's worth considering uh to again think about what's in the best interest of the rate payer but at the same time you know this is probably the worst time to think about foregoing a rate increase because i'm sure we're going to find out far too late in the future that it was something that we desperately needed so with having said all that i would i would suggest that we do some sort of rate increase similar to what that rate payer suggested as a one-time event and that's it that's my suggestion thank you lu any uh any other directors with a anchoring to make a comment me go right ahead okay well i decided i heard some comment about wasting money um and i took a look back at what we have done what this new board and new district manager has done uh since december of 2018 one thing we have an engineering department it saves the district money we have a professional registered engineer and an assistant engineer to facilitate capital improvement projects in house with considerable savings to the district we have a master plan that is being worked on and should be completed by the end of this year prototype uh all right i can't even talk uh mainline replacements identifying deficiencies within the distribution system and long-range planning and financial forecasting we have eliminated the lawsuits that cost this district so much money and did nothing to help we've also reduced the attorney bills the probation tank the probation tank has been completed and upgraded from 100,000 gallon tank to a 500,000 gallon tank in addition to the that the district received a very prestigious award the american public works association for environmental sensitive construction projects the swim tank the district moved forward with purchasing an alternative project site for replacement of the swim tanks in venloan the alternative site has an estimated cost savings of about 500,000 in addition to the alternative site will allow us to put required amounts of storage to provide adequate fire flow fire management plan we have a fire management uh plan that we're moving forward with the district has procured a consultant to start the process and is moving forward as part of the process the consultant will be looking to apply for grants and lower costs to implement this program integrated pest management plan the district is moving uh the district has developed a draft integrated pest we have also uh have a public advisory committee for facilities we have just voted to do a public outreach plan plan with uh chatterbox and we also just did a survey a customer survey we have a new website which is a da approved streamlining better search engines more information capital improvement uh section to give customers an update on construction thanks to staff we have a loan of fourteen million five hundred thousand dollars much better than the USDA loan that wsc was putting forward and charging us a fortune fund for and one of the good things about the loan we got we got all the money upfront and it's in the bank and it's earning some interest granted we're paying interest but we're earning some interest on that and and that's helps um we have prohibited the use of glyphosate in on district property the lion tank access road lion tank and the water treatment plant was damaged during heavy rainfall the cost to fix that is going to be tremendous in millions of dollars granted we have FEMA but the district has to pay before you get FEMA money so and FEMA money is only out there for so long you get a date that they want you to be started um we purchase um nine generators to and they're in the process of being installed as we speak um the surplus property manana woods is as we speak is getting a commercial property appraisal the pipeline projects which quail hollow lion sequoia california drive that's all part of the five pipelines that are funded by the loan um the revised fall creek fish ladder it went from six inches to 12 inch steps cutting the cost in half upper ziany stream wood enhancement project which i believe was all paid by a grant has been finished i don't think we've been wasting money we've been proactive i believe the water district needs to continue to move forward not step backwards or stay in place i think we need to say what we want to do about this rate increase because the budget is due to next month and i believe we need to say we're going ahead with the rate increase we don't have to approve it it's already been approved i get what steve said i hate the 218 process also it's almost impossible to stop a rate increase what at this last rate increase there was a huge huge push by people in the district standing outside with protest letters for people to sign bringing them in bringing but there were not enough in fact they were they didn't even try to verify that all the protest letters were legitimate because some of them were duplicate some of them people didn't live here they didn't bother with that because they're just it costs a lot of money and they fell well below the threshold full to protest so that's that's my look at this i think we need the rate increase and we need to go forward and if we get to september or even january and and things are not working people can't pay or whatever we can change and move the rating say hey we're gonna not do this right now or and we can modify the budget at that point the budget is not written in stone that's it thank you los any other comments from any other directors at this time no okay well we can go to the well if yeah well we'll just go to the public any of the anybody want to comment uh james and uh mozer right ahead you need to me i'm muted you're you're not you're not muted right now okay great thank you i appreciate the opportunity of talking to the board about what i think is a critical issue um i first i want to um agree with lois that this board has made some uh good decisions in terms of cost savings the hiring of an engineering staff uh and getting rid of that horrible lawsuit uh both constituted good cost savings it's the way you do cost savings as you identify where you're spending is not optimum and you figure out how to do it more efficiently it's a uh as a former director of a nonprofit i learned the hard way how to do cost cuts and the way you don't do cost cuts is to simply say okay we're going to cut four hundred dollar four hundred thousand dollars out of a budget that's been developed like this and it all has to be done in an emergency there is reasons why the budget operating budgets is going up you're doing a lot of work you can look at this rate increase i mean you can look at the budget and you see somewhere around four hundred and forty thousand dollars of it going to increase costs for that loan the loan was really important the rate increase was it was the rationale for it was exactly so you could get the loan so we could do the work that needs to be done i think the idea of saying to staff at this point you find however much it is three hundred and fifty thousand dollars of this budget and make a cut between now and june it is a recipe as lois said we're taking a step back we should go forward this you don't have to vote on this rate increase it's already been voted on it's already there we need that money we're the whole discussion at the beginning my gosh this district desperately needs uh to continue to fund that's part of the reason why the friends of sandlands of valley water looked into the lira program because we were concerned about these rate increases and its impact on low income people that's why the lira program is so important as the state as the state report says we can it's going to cost more that's what we're looking at think about climate change think about this covid the covid impact of the covid all of this my gosh those of us who are going to afford the rate increase i am happy to pay a little bit more in order to make sure this district stays financially healthy so i strongly support the idea of simply going forward with the budget as proposed by the staff thank you thank you uh tina you're up next i just wanted to reiterate um mr mozier's comments that i also support the both the lira and the rate increase i think that it is imperative to the budget and um as a rate payer i am willing to pay a little more in support of it great thank you very much uh next up nancy macy you're still muted there you go yeah something got into the way of my marker sorry sorry okay thank you very much for the chance to talk on this issue um i think it's imperative that you keep the rate increase um you've got so many things coming up and we have so much of undeterminate nature in the future because of the uh pandemic that it would you'd be shooting yourselves in the foot um look at what your staff has done trust your staff they are very smart intelligent hardworking people who care about this district who care about their jobs and they've done a brilliant job in showing you why you need to keep this and the things that rick was reading um you know that was for the whole state of california that are of the whole i guess of the whole united states but anyway um yeah we're we're right up there with everybody else and my husband and i are on limited income we're retired we're not out there um you know having to make money and we're lucky in that respect we do have some income but uh you know how long can anybody count on that but we are willing and um grateful for the opportunity to keep our water district healthy and i think close for her rundown of that very interesting series of accomplishments and um go for it you guys don't be scared it'll work thank you okay thank you uh peter galblum can you hear me yeah yeah can you hear me yes okay great um i listen to all this very carefully i don't think i heard any director or staff members say you didn't need the money yeah from the rate increase right um i heard somebody say you think it was bob that there was a campaign promise or it might have been steve i'm not sure that you ran on this well you ran on reducing unnecessary costs as jim mosher said and you did that you got rid of the litigation you settled it under the the rupture of attorney's fees and i think pretty much everybody including those of us who who ran you know were against you guys in the campaign think you did a good job of doing that and that was smart and get rid of that but i again haven't heard anybody identify any costs that are in the budget that you think are unnecessary the rate increase as i understand it is going to add an average of or add for the average user a dollar or two per month um if people can't afford that then the lear program or you've already put a moratorium on it but it's not going to be many people who are going to be in a different position if they have to pay a dollar or two more per month for their water bill if you think that there's some costs that need to be cut that there are some excess costs in addition to what you've already gotten rid of and you got rid of the fat if you think there's some additional cost i think it's an incumbent upon the people who think there are unnecessary costs to identify those costs staff has told you and as as as lou said trust the staff they're the ones who are doing this this is their job they're the professionals in this they've told you what they need if you think they're wrong then tell them where they're wrong tell them look you don't need this line item you don't need this line item we don't need to repair all the infrastructure we don't need to maintain the infrastructure we'll just let it all keep going down the drain or whatever it is but you guys or women whoever thinks you don't need the money identify what the expense you don't need staff's already told you they think they need all this they're not going to like that how can they identify something they don't think they need they think they need it all so again i think it's incumbent upon each of you who think that you don't need it to say why you don't need it by identifying costs beyond those you've already got rid of that that can safely be cut and maintain the district's mission of delivering safe reliable water at an affordable rate thank you thank you peter anybody else uh synthia your hand is up can you hear me i would like to say that in my own neighborhood i see leaking pipes i see crumbling roads i really want infrastructure to be improved and it is not saving money if you let things deteriorate to the point where you pay much more i really appreciate uh director henry's listing of all the things you have accomplished and to me that's the argument for continuing with the rate increase so that you guys can continue to fund infrastructure repairs thank you thank you april your next step thank you i appreciate what synthia just said it dovetails perfectly into what i wanted to say and that is that we've had a low rainfall year so far and i'm really concerned about fire so it would be fabulous if we could keep moving forward with our tank repair and replacement pipe repair and stuff so that there's enough water in case there is a fire in one of our neighborhoods so i i think we should stick with the rate increase the way it's already planned thank you april uh gail thank you um i also want to advocate um proceeding with a five percent rate increase as planned i understand director faults is concerned that our operating expenses are rising at rates uh greater than our revenues but then it's his responsibility to identify what are those uh expenses that he thinks we can get rid of also it doesn't make logical sense to say that because we are spending more than we're taking in revenues we can't fund our our long term unfunded liabilities and then that's true but then simply say okay we're not going to raise the rates secondly not raising the rates as i brought this up last time is leaving money on the table there's a lot of people in the valley that can afford the average rate increase a month it's basically me going down to the raven and have one chai latte a month i'm happy to give that up and send the money um to the water district instead and finally the point i want to make is the danger of uh not increasing the budget in one year stuff made the very important point that it has this compounding interest effect in that it even if you stop it for one year you never can get that money back and you lose a lot of money down the road and so it's really important to go ahead as planned if you need to help people at the low end with some lira kind of project that that's fine but it would be a terrible mistake to not go ahead with the rate increase now and then we'd find ourselves five years down the road um being five million dollars in the hole because of that thank you thank you mark doleson thank you i agree with so much of what's been said i'll try to say something a little bit different which is that as soon as i can tell virtually all of us agree that the district has looming expenses and the more revenue that's available to meet those the better i think everyone agrees that the board and the staff have done a number of outstanding things to to move in the direction of improved efficiency and cost savings and i think everyone agrees that we want to spend as little as possible everyone shares that goal the the uh sticky point that i see is that i i see uh two directors and i'm thinking of bob and steve right at the moment based on what you've said asserting that we we can magically achieve that goal by just imposing by fiat a limit on spending and that's that's a matter of faith and i don't think i could shake your faith in that but i don't i don't think that's an evidence-based position that's all i'll say thank you larry ford thank you i i want to say that finally i i remember when uh ten years ago or so the one of your predecessor boards made the decision not to go ahead with a rate increase and it was it was horrible because that you know we knew what the consequences of that was was going to be we were going to have a delay in you know the repairs of of infrastructure that was decaying and it just uh it was terrible from from my point of view a couple of dollars a month a dollar a month whatever it is that's perfectly affordable because i put it into the context of how long we've been waiting to catch up on on the deficit and um now we're finally making a lot of progress as lois described and went on at great length and i'm really pleased about that and i'm really happy to pay for it thank you thank you anybody else okay elaine did you already talk on this matter if not please go ahead and begin speaking um hi yeah i'll make it short um i just think that it would be very short-sighted to forego this rate increase i know that uh director folds mentioned a couple meetings ago about the optics of of the rate increase and i just want to see i think that uh lois henry made a very good case that you already have very good optics and and it it's not worth it to forego this rate increase just for how it will look because it's so important um and i actually did not really understand uh director faults you are saying that our operating expenses are increasing and for that reason we shouldn't raise the rates uh and and you're also pointing out that we have very a lot of unfunded liabilities i i'm not great in accounting but i don't understand that so obviously i am i'm very happy to pay this rate increase that's it thank you anybody else okay i think we've all gone no mark make up your mind are you raising your hand or not okay no more hands all right coming back to the uh the board all right so uh i don't know if anybody has any comments uh in addition to what we heard there's a lot i make a motion uh you can uh i was just gonna say lois before you make a motion if that's what you'd like to do uh we don't have to do anything right now so we don't have to go to the freezer stop it we don't have to uh we can take no action if we choose to or we can vote to get knock it down so those are i would go ahead and make your motion i would like to make a motion to keep the rate increase because we need to get this budget done and we need to have an answer none of those three things were staff was not saying we should do any of those three things and i i agree with um those who said we need to trust our staff and the reason we have a district manager is to give us information and we have a financial director i'd like to make a motion that we keep the rate increase and get the budget rick your hand is up uh yes i wanted to make a comment uh i'm quite willing to second that motion uh as long as i get an opportunity to make a comment about the subject of the budget all right i don't know let's ask uh gina are we in order or are we uh stepping on our toes it's appropriate for director moran to make a comment if he wishes prior to seconding a motion thank you go ahead rick all right uh so here i am trying to um put my head around all this a lot of this stuff is uh new to me in the regard of i never paid attention to my water bill when i was going to school or 15 years ago um but it has become something that's important to me now um so when i hear that the water the price of water has been historically underpriced all right i'm going to take that as uh an honest answer all right so that's part of maybe why um other people have spoken about the the large percentage that our water bills have gone up in the last few years okay so if it's underpriced we're trying to catch up for you know uh past policy all right so um water is a top priority with me so i would uh gladly find other ways to save money to make sure that i have safely liable uh water and i think uh lois made a long and eloquent list of the things that this board has accomplished and all of those things require money and i haven't seen this board misspend money i've seen them be real tight with money and i don't think um they're being uh frivolous with any of the money that's being um budgeted um the most one of the most important things about uh being on this board is for me is to being transparent so here we are we're talking about this a lot of people have chimed in it's a difficult situation to use this zoom technology but people are interested in doing this and we're talking about it upfront and being honest with each other and uh it's been pretty civil so i appreciate that so uh in that regard i'm willing to um second lois's motion okay we have a second and i'm just wondering do we even need this vote what's the purpose of it we already have if it's to keep the rate increase we already have the rate increase plan chair swan i think the purpose is that staff we're going the board seems to be going back and forth i don't want to you know i guess for lack of a better term on the fence whether they're going to to stop the rate increase or whether to let let the rate increase play out and staff needs to know so we can adjust the budget or work these numbers into the budget um i don't want to go back and forth every board meeting or every um finance meeting up to november and be on the fence on the rate increase and i think stephanie i mean if you want to chime in on that we'll agree with me that i would like to put this item to bed because we're spending a considerable and and don't get me wrong it's a very very important issue we're spending a lot of time on and we're not making a decision um i'd like i'd like to put this to bed and move ahead it's difficult to put the budget there yeah okay thank you rick uh okay so we have a uh a second you would like to make a comment go ahead i think that rick has made a very good point i think that's a good reason to proceed also i'd like to ask dina point of order there's been a motion and there's been a second don't we aren't we required to fulfill that vote yes there should be a vote taken i think the point that was being made was was a broader one but you're absolutely right director ferris with a motion in a second the matter should be voted upon then let's call for the vote go ahead uh calling okay okay excuse me what is it we're voting in right yeah holly could you read back what the motion is thank you uh lois henry made a motion to keep the rate increase and get the budget done thank you okay president swan yes director henry yes director fulce no bigger pardon no no director moran yes director ferris no uh three yes's motion passes okay well thank you all very much for tuning in this uh the hour of this board meeting is now uh come to a close and uh we are adjourned