 With that, gosh, what day is it? June 30th, okay. With that, I would like to convene this meeting on June 30th of the Board of Directors of San Lorenzo Valley Water District. And this is hoping that the third time is the charm. This is an adjournment of a meeting on 617 that we only got partly through because of power outages and then on 628 because of technical difficulties. And so we really apologize for any members of the public that were inconvenienced by this and we hope tonight we'll go better. So are there any additions? And, oh wait, you have to call roll on Holly. Sorry. President Mayhood. Here. Vice President Henry. Here. Director Ackman. Here. Director Holt. Here. Director Smalley. Here. Okay. Are there any additions and deletions to the agenda? Staff has none, sir. Okay. Then this is the time for oral communications by the public on any topic within the purview of the district that is not on the agenda tonight. Are there any people that, ah, yes, looks like Beth would like to say something. Okay, Beth. Hi, waiting to be unmuted. Thank you. I just wanted to say, you know, I do understand that we are living in unprecedented times for a number of reasons. And I know that, you know, some of what has happened with the last two meetings that have been canceled, you know, were unavoidable. But I do think that it speaks to a problem which really needs to be addressed by the board. And I hope that the board will put it on a teacher agenda and create a policy to deal with the fact that the public only has one way to access board meetings at this time. I understand the reasons for that, but because of that, there needs to be a different way of notifying the public and of making a choice, you know, in the original meeting, it was the choice of the board to continue with some of the matters that were important to the public and the public did not have the ability in any fashion to interact with that. So I really would urge you to take up the matter of creating a policy for these things because we know we're gonna have lots of PG&E power outages and a lot of natural reasons that technology is not gonna work. And I think it's very important that, since you've chosen to have only one way to access the board by the board meetings, by the public, that that be dealt with in a policy. Holly, did you wanna have a quick question or answer response? Well, there's actually two ways that the public can access. By going to the website and finding up with notify me and then you will automatically be emailed with information, any information that you choose that you wanna learn about. And then there is also going to the website and actually looking at the agendas and meetings that are coming up on both the agendas and meetings as well as the calendar. So there's more than one way to find out what's going on. I believe Beth is referring to more of the kind of things that happened these last two meetings. And we really shouldn't have an extended discussion of this but I agree with Beth and we need to have a better way that we could communicate with people. I mean, we do have, there is more than one way, Beth. You can phone in. I think I can phone in. Yeah, but still your point is well taken that we don't really have a clear way to respond when things are in real time that we have to tell people what is going on. And so I guess I would suggest that we, perhaps this is something that should be agendized by the admin committee, because it's kind of up their alley. I was just going to suggest that. Is that what you're gonna say, Bob? Okay, so all right. So let, I take your point, Beth and we'll have Bob as the chair of that committee talk to Rick about agendizing it. Thank you. Joe Serrano. Thank you. Good evening, board members. Again, this is Joe Serrano from LAFCO, the local agency formation commission. I hope everyone's doing well. The reason why I'm here this evening is to personally invite the board members and your staff to join LAFCO and CSDA, the California Special Districts Association for Educational Workshop that we'll be hosting on August 11th from 10 to noon. This workshop is tailored specifically for independent special districts in our county to talk about best practices and share resources. For example, what do you do when you have to cancel a meeting? How do you inform the public? This is a great opportunity to just learn from other special districts because you're not the only one. These issues happen. So you can just learn from others. That way you could be prepared for other unexpected challenges. The workshop's also going to talk about other legal requirements for special districts such as the Brown Act, website requirements, ethics training. So what LAFCO is trying to do is just provide another outlet for you to be as efficient as you can. And the best part, this workshop is absolutely free. We are, again, trying to help the special districts out. I wanna see all the special districts including yours to be successful. So this is just a workshop for you. So feel free to sign up. Again, it's gonna be on August 11th and it's open to the board members and your staff. So I encourage you to join me. Thank you. Yes, thank you for bringing that up. We did receive the LAFCO invite and I spoke with district council and we are planning to bring this to all committees and to the board, the invite and encourage committee members, the LADOC committee members and board members to attend and key staff. So we are aware of that. I thank Joe for bringing it up again tonight and we are planning to bring this to the board as an informational item. And hopefully to get everybody to attend. Rob? Will it be possible to attend remotely? Yes, it is a web meeting. Correct, correct. Because the governor has extended the virtual requirements until September, just to make it accessible to as many people as possible, it's gonna be a online workshop. Thank you, Joe. Are there any other comments for oral communications? Seeing none, hearing none. We'll go on to the unfinished business and the first item is a public hearing and possible adoption of the 2020 urban water management plan. Thank you, Chair Mayhooth. We have the environmental planner here to present this item on the public hearing and possible adoption for the urban water management plan. Carly? Great, thank you both. The San Lorenzo Valley and the Scotts Valley Water District partnered to develop a joint 2020 urban water management plan to fulfill the requirements of the Urban Water Management Planning Act of 1983. Both districts contracted with water systems consulting ink to prepare the document. The urban water management plan is required to include a water shortage contingently plan as a standalone document to be submitted alongside the urban water management plan to the Department of Water Resources. Tonight we have Spencer Waterman from Water Systems Consulting to present the purpose of the urban water management plan, an overview of the joint plan sections and the water shortage contingency plan. Please help me welcome Spencer Waterman. Great, thank you, Carly. I'm gonna share my screen here in one sec. Okay, can everybody see my screen? Okay. Thanks for persevering through some previous technical difficulties and having me here this evening. I look forward to summarizing and receiving feedback on the Urban Water Management Plan or EWMP for short, as well as the Water Shortage Contingency Plan or WSCP for short. And we've already had some feedback from important staff and we plan to make adjustments to the plan based on the feedback received. And I'll talk about that a little bit more at the end of the presentation. And Spencer, we're still not able to see your screen right now. Oh really? Yeah. Walter, can you make sure that Spencer can share his screen, please? How about that? There we go. Move around some windows here. All right, so we can start off with a little bit of background and recap about the EWMPs. As Carly mentioned, they're required by the California Water Code and they must be updated every five years in the California Department of Water Resources or DWR for short, develops guidance to help meet the Water Code. The intent for the EWMPs is to support near-term and long-term planning for supply, demand, drought, and other potential shortages. And per DWR requirements, this planning process was prepared in coordination with the San Margarita Groundwater Basin Groundwater Sustainability Plan or GSP for short. And this coordination helps to ensure the projected demands for the next 25 years can be met with available supply. And new requirements for this EWMP cycle included adopting the WSCP, sorry, the WSCP as a separate standalone document from the EWMP. And the intent of that is to allow some flexibility to amend the plan separately if needed. The WSCP provides a framework for shorter-term, water-shortened response in between five-year cycles. Lastly, EWMPs are a prerequisite for certain loans and grants. So as Carly mentioned, Scotts Valley and San Lorenzo complete individual EWMPs in prior years. However, the districts prepare to combine regional EWMP for this round because they are adjacent water districts that share a groundwater resource and they have a long history of partnering on various projects and activities. The required elements for the EWMP and WSCP are shown in this table. And the first three elements give the background and setting of the district as well as the EWMP process. Then the water use and water supply chapters inform the water service reliability and drought risk assessment, DRA for short, chapter to identify potential and long-term, start potential long and short-term shortages. These in turn inform the description of long-term conservation measures known as demand management measures or DMMs for short. And they also inform shorter-term measures which are covered in the WSCP. The Senate Bill X7-7 chapter or SB X7-7 for short explains the district's compliance with per capita water use standards that were established in the 2010 and the 2015 EWMPs and the district achieved these standards. So one change that's happened since the 2015 plan is the update of water demands. And as I mentioned about the SB X7-7 water use target shown in the bottom right of the screen is the target that had to be met with 85 gallons per capita per day or GPCB for short. And as you can see in 2020, the district was below that. So for future demands, they're based on the assumption that current per capita water use will rebound and come up a bit to the SB X7 target of 85 gallons per capita per day in 2025. And then the assumption is that this per capita use will remain constant thereafter through 2045. And for reference, 85 gallons per capita per day is roughly the same as the past five-year average GPCB. Future demand could increase through the variety of factors and the CWMP conservatively projects demand to promote planning for water resource management strategies for these potential demands. It's important that there are new water use efficiency standards that are under development by DWR and they will supersede the SB X7-7 target and they could potentially be lower. And knowing this means that it's important to continue to promote conservation for meeting these future standards and to enhance resiliency for drought and other potential water shortage conditions. The 85 GPCB target was applied to population estimates derived from the association of Monterey Bay Area Governments with AMBAG for short. They developed projections in their 2018 regional growth forecast. The estimates assume that the annual growth will be 0.15% from 2020 through 2045. So to meet notable and recycled water demands, the district will rely on the Santa Margarita groundwater basin, local stream diversions and the city of Scotts Valley's Water Reclamation Facility. And since this EWMP is a joint effort between Scotts Valley and San Lorenzo, there are chapters that summarize shared components as well as other ones with district specific information. Therefore, a combined supply summary chapter describes available supply for the shared Santa Margarita basin, prepared in coordination with Montgomery and Associates, who are preparing the Basins Groundwater Sustainability Plan or GSP for short. Based on GSP analysis, San Lorenzo, Santa Margarita's basin supply is projected as 928 feet per year through 2045. Additionally, the district anticipates continuing to use recycled water for the Spring Lakes Mobile Home Park and has available supply from the city's reclamation facility. So based on the analysis of supply and demand, it's expected that the district will continue to contemptibly use the Santa Margarita basin and stream diversions, as well as continuing to promote water use efficiency. Use and management of these resources will allow the district to meet demands while contributing to supply sustainability. The reliability analysis and the UWMP shows that the district can meet demands in average and drought years through 2045. As I mentioned previously, water use efficiency will continue to be a vital resource management strategy for the district. And the various programs that have been successful for water use efficiency are summarized in the DMM chapter and in this table here. The district anticipates continuing these successful programs. While the district is expected to be able to meet long-term demands, there is a potential for shorter term shortages due to a combination of foreseeable and unforeseeable events like earthquake and fire, as you folks know well. Since Scotts Valley and San Lorenzo have been overlapping in neighboring service areas, which is a shared groundwater resource, the WSCP was developed for both districts. It contains shared and district specific components. And an example of the shared component would be GSP-defined groundwater triggers, which are called sustainable management criteria. And an example of a district specific component would be the use of different weather stations and rainfall-based triggers for the two districts' different pre-occupies. The WSCP is now required to be a standalone document incorporated into the WSCP, as I mentioned earlier. And it's intended to be a guide to help the districts and customers identify potential shortages and how to respond to them if they occur. As I mentioned, they can also be amended separately from the WSCP if needed. The WSCP also addresses a new requirement to develop a documented process for what's called an annual assessment. And those will be due starting in July 2022. The WSCP shortage stages are summarized in this table. And take note that there is an additional stage five that was added to address the new DWR requirement to have a stage considering greater than 50% shortage. Other required components are included in the WSCP and most of those are new. The intent of these components is to lay out an actionable plan for identifying shortages and responding to them effectively. A lot of the effort to update the district's current WSCP include the documenting sources and protocols that the district already carries out as part of proactive management. So in summary, the key takeaways from the WMP are that the district's supply is expected to meet demands through 2045. In the event that there are short term shortages, the district's updated WSCP provides a roadmap for anticipating a respond to them. The district has achieved the required conservation target from SVX7.7 and is positioned to continue meeting forthcoming efficiency targets with its man management measures. Lastly, the WMP is anticipated to meet all DWR requirements and maintain funding and grant eligibility. And as I mentioned at the beginning of the presentation, we have received some comments from the board and staff and they will be addressed in the final WMP. The board chooses to conditionally adopt the WMP based on those changes. Generally, we will address some typos that were called out and more specifically, some specific changes include adjustments to section 8.1.1.2 and that's on board packet page 68. And that adjustment will include a clarification about historical groundwater contamination which is no longer relevant to this WMP source. Also revisions to sections 10.2.9.1 as well as 10.2.9.2 which are on board packet page 91 will be revised to clarify the history and status of block moments applied to potential. So with that, I'd like to thank the district board members and staff for all of your valuable work we've put throughout the process so far. And I'd like to discuss any additional input on the draft UWMP and WSCP. Thank you. Let's see, Mark, how about if you start out? Sure. I've got three comments that I wanted to discuss. It would be helpful I think for other members if you were able to pull up these pages during the discussion. So that we can see what it is that I'm referring to. The first is on page four dash four and it's related to the projected water use. Is this section four dash four or page? This is page four dash four, section 4.2.3. And from my initial read of this, the section states that the residential GCPW is assumed to be reduced over 25 years, but then the data that I see in table four three shows that it's increasing. And I understand from an email exchange that residential use per person is expected to decrease, but then the overall population is expected to increase. So that's why this is showing a small increase in demand. If that's the case, then I recommend reword some of this to include the explanation that you provided to me in an email so that it's clear to any other reviewers why there's that difference. We can definitely do that. One thing I'll note is that this section is for Scotts Valley and they did choose to go a different route with their methodology. Where they took residential customer class and specified that they did expect residential gowns for Catholic today to go down. However, they did expect some more growth from other categories, such as commercial. And when you combine the declining GPCV with the commercial plus additional population growth, that's why it's increased, but we can definitely add that. And I understood that after the email explanation that you provided, and yes, I understand the Scotts Valley's but I still think it's clear if that is part of it. Mark, would you mind if I've just followed up on that question of something that's related that I know? Sure. Yeah. So if you look at table four three, it shows the use, the gross use going up with time, but on table 11-6 in the drought risk assessment, you see that the gross use, it seems like it's going down. So these two tables don't agree with each other. 11-6. 11-6, which is on page 101 or 99 of 173 on our. Yes, okay. So for Scotts Valley, they did assume that per capita water use is going to come down at a certain rate between certain years. And so we interpolated between those milestone years. And so I believe what you're seeing here is a result of that, where we're not seeing a lot of population growth here in between these next five years, but if we are looking at a longer term growth up to the next 10 years, we get a lot more population growth associated with that. So I think that's what's reflected here as well as. Well, I guess what I'm sharing are the totals on table four three, which show an increase over time in the projected demand. And then gross water use going down in table 11-6 and gross water use. So it seems to me those are the same, that has nothing to do, this is the total, it's not based on individual residential units. And so it seems to me that those should be the same. And I don't understand why they're different. I mean, it doesn't really change any, it doesn't change conclusions because the changes are not big, but it just kind of makes one, it's worrisome when one table doesn't agree with you. What's, that shouldn't happen in a report, a document like this, it's gonna stand with the state. That's all I have to say on that Mark, go ahead. Okay. Next, I've got a comment on page five-five and it's related to table four-five that's on that page. This table shows increases projected at, I think it was about 1% over the next 40 years. And as I expressed in an email, I thought from everything that I've been hearing over the last at least three to five years, San Lorenzo Valley Water District has been on a declining basis. And I understand from further data that you've provided since 95, that that's what you're basing this 1% increase on. However, when I look at that from the period from about 1998 through 2008, it's nearly flat. And then their gradual drops. I understand that projecting this increase at 1% might be more what conservative of what we might need. But then this feeds into the Santa Margarita Basin's Groundwater Sustainability Plan and causes us to then say, do we need to have more water available based on that sustainability? Are we then gonna be spending more to provide those resources in the near term for something that we're projecting out as far as an increase over the next 40 years? So that even after I read your explanation, I was still questioning, do we want to continue to project this out at the 1% increase that we're seeing? Can I just add on that? But I think that this is coming out of the draft GSP for Santa Margarita. And I've worried too that this slight increase is basically what was assumed. And I don't know. I think that that might be a little bit old. In other words, it's something that came up a while ago. And it is probably, like you said, a conservative estimate. In other words, it's taking a conservative case that we're modeling. But again, this just goes to the issue of making sure that everything syncs up between the Santa Margarita Groundwater Report, which does make this assumption that kind of counterfactual assumption that in the modeling, that there is a slight increase in population as opposed to, excuse me, a slight increase in population as opposed to... Amy? Thanks. So I'm just curious on that subject in terms of how you get to the baseline number that you used for modeling. In some strategic planning documents for other industries possibly, I've seen where they give ranges, like a sort of high, medium, and low, and then provide some modeling assumptions across all of those. And I'm just wondering why we don't do that with this kind of planning process? Because it does seem like it's more variable than we're allowing ourselves to consider here based on these limitations. Yeah. So the main reason why is this is compliant with methodologies and templates and tables that we have to fill out to meet DWR requirements, which only allow you to put one scenario. And so you kind of have to make your best bet on, well, we want to be more conservative and plan for that or do we want to be lower and maybe not having to supply or sorry, maybe invest or, you know, it's kind of a basket of economics and whether or not you plan for the higher amount or the lower amount. And generally, the kind of rule of thumb is to project higher. And so to meet DWR requirements of just using one, that's what we've done in this plan. And other agencies do provide a good demand envelope, basically a highly well-meaning medium, and then they'll present that report. However, what actually goes into DWR's tables and templates is just no. So we make a good point that it's unfortunately a result of creating a standard requirement. Well, I think that, I don't understand that, but certainly that doesn't stop you from putting in a statement to the effect that that's why this has been chosen so that people don't, you know, aren't confused. You know, especially when you do something that's counterfactual, people think this is a mistake. And instead, you know, if you explain that, you know, we've observed it one way, this is the other. And then of course, from, we've learned from the GSP model, whether you want to include it or not, is that these kinds of differences are not the driver, right, of its climate, rather nature rules off. And, you know, we can vary these by a percent or two and it may control when we get in trouble, as opposed to if we do, but, you know, and I think that you could address what Jamie's asking by just simply making that statement, that the, you know, sensitivity modeling that they've done so far shows that this assumption is not, is not really a key one in model this. I agree, we can definitely explain that a bit more in detail. Jamie, did you have a follow-up on that? Just wanted to express my support. Okay. Then let me go back to Mark who we've, we sort of derailed. Gail, I think your point on, although this is, this increase is conservative and if we were to essentially flat line projected usage, I still think that based on what I've been seeing over the last, what 25 years data, this appears as though that it would still be conservative, even if we flat lined usage from here on out, is it really changing anything in the groundwater sustainability plan? No, it's all, it's all climate-based. That's the driver in that much more so than our projected either minimal 1% increase or a flat line usage. So, okay. Moving on then. The last comment that I have is on page 8-6 and Spencer, you referred to this earlier, but I wanted to be clear on what the resolve is and it's the first sentence in the section on groundwater quality. Are you deleting that sentence then? Yes, that was pulled over from the 2010 groundwater management plan and really having to share it here. Right, because I saw in your email explanation, you wouldn't mind deleting it, but I just wanted to make sure that, yes, that's because it really doesn't link into any of the rest of what is being said there. Okay, good. I'm good then. Those are all my comments. Thanks. Jamie, did you have any? Not right now, okay. All right, gotta get to my unmute button. Yes, I had a few questions and comments. Just to clarify for me, is the gallons, 85 gallon calculation based on water produced or water sold? Based on water produced. Okay, so I think it's really important that that is like blaringly out there because we have something like a 25 to 30% differential between water produced and water sold. And my concern here is that by saying 85 gallons per person, we're actually giving people sort of a false sense of what they're actually using. And one of the reasons why I would really like to see an indoor water calculation, in which my calculations would come up between 38 and 42 gallons per day, depending on whether you're talking 22,000, 23,000, or 24,000 people, I think that. So we are so far below the state mandate for indoor water usage per person per day that it's not even funny. It's 20% around that range. So I think this has also implications for the messaging that you make to the community around where conservation has to go. And when you're at 85 gallons, it's a very, very different message. Oh, the second part was on the water shortage effort. You know, my perspective is that, excuse me, our community is undergoing a demographic shift really as we speak, where typically we're seeing younger families moving in. And I think that trend will continue for the next decade as those of us that have been here a while move on. And so it'll be interesting to see if the population increase, which I think may actually go up a little bit faster, will be offset somewhat by continued conservation efforts, particularly in the area of outdoor water. And so while I understand that this one size fits all the downside of state-oriented centralized regulation only allows us to communicate one scenario, it sounds to me like we as a district and certainly staff as management may need to be looking at other scenarios as part of their operational planning. Would that be a fair statement to make? Messaging, you know, residential indoor usage to your customers versus this state-defined overall per capita use, for sure, and be a more kind of official way to put it in terms of residential. And considering demographic change, there are models to view that, however. And sir, can you move closer to your computer? You're kind of cutting out the... Sorry. Thank you. Is it better now? Yes, it's better. Okay. Yeah, I would agree with you that, you know, we're striking the balance of just meeting a requirement here. And there's a bit, there's a lot more nuance to it than presented. So I think you've all brought great points where we make these generalized with the box targets and projections. We can revise language to state that, you know, that's not set in stone. I mean, there are other metrics that should be used, especially residential indoor, when you're talking about communicating conservation and potential water statements. So I think we can make adjustments to the language to address that without, you know, just throwing out the whole methodology to view your standards. Well, I would like the DWR to, at some point, move to a more flexible regulatory model that takes into account the conditions of the particular district that you happen to be regulating. You know, calling us urban is insane, but, you know, that's a topic for another day. Lobbying Mr. Stone and Mr. Laird. I did also want to say as a clarification that you're talking about Scotts Valley and San Lorenzo Valley sharing the same groundwater basin, but we don't necessarily share the same aquifers in all cases. So just to be really clear about that, we share only one aquifer, which I believe is the Long Pico aquifer, which we tap into to serve our Scotts Valley customers. And under a conjunctive use plan, we could perhaps not do that for half the year and rest the wells and we would be way out ahead, but that is the only place that we share water in the groundwater basin, as I understand it. Is that correct? Yes, that is correct. Yeah, I believe the other wells that we have are tapping into the Santa Margarita aquifer, somewhat confusing because it's the same name for both, I guess, for the groundwater basin and the aquifer. I guess this question would be for, actually before I go to Rick. So when you're planning for the water shortage contingency, what's the ultimate goal? Is that to drive the district to be looking at additional sources of water or conservation or both? What's the objective there from the state perspective? In the state perspective, they do want you to look at your locally applicable criteria. So you look at groundwater level, rainfall, whatever you consider when you're thinking about, all right, in the next year, five years, we have a shortage. And then they want you to estimate how much would that shortage potentially be. And then that gives you a target to then try to assign reduction measures, whether that be irrigation on certain days, and that sort of thing, which that's a core component of the contingency plan. And they do want agencies to look at other options. So operational changes that could happen or supply augmentation. And so some agencies do use supply augmentation measures, but that's not specifically called out in this plan. Yeah, the only real supply augmentation we would have would be, I mean, the major one would be to tap into the lock, loam, and allocation that we're entitled to. But to do that, if we were going to actually process raw water, would probably cost them the or, I mean, it's a step function. It's not something you can just sort of feather in easily. It's a 15 million, maybe $20 million operation to get that in place. And so that is a substantial sum of money. So for us, really, if we don't do that, because we only get water from our local environment, it's all about conservation in that case. Okay, the next question is for Rick. Rick, after reviewing the report, what kind of immediate operational changes do you anticipate making to how you run the district? Other than having to file this annual report now, yet another piece of paper we have to file. You know, that's an interesting question. What are, and I'm not sure they would be considered to call operational changes, you know, our system in the water system, you know, doesn't allow for many operational type of changes that would react in not in a positive manner. What we're looking at is the unaccounted for water, the reduction in unaccounted for water. The district needs to, and it's not operational changes to reduce that, is as much as it is strategically, you know, from leak detection and from the knowledge from our operators and from usage throughout the system that target these areas where our water loss, we believe is the greatest. You know, we just completed, again, another round of a professional leak detection with professional equipment and so forth. It's coming back and engineering is working on, as you call, as we call it, a heat map of these leaks and so forth to try to pinpoint, but it's not one area. So what we're looking for as operational-wise is to reduce our unaccounted for water and, you know, maximize our use of surface water and potentially maximize the use of the locked moment water. But I would say operational-wise our top concern is the unaccounted for water and move from there. And obviously climate change has a big part in this, you know, with the amount of surface water available. Yes, understood. So I think that's a really great point, Rick, and I'm glad you brought that up. I think when I ask you a similar question about the 2015 report, there wasn't a whole lot in there at that time to address, but I think this unaccounted water is correct. And it may be that a policy of doing that every year, as opposed to every three years, might be a better approach for us. I've always been concerned about the three years. I think I expressed that back in 2018 when we had the first report come in, but I think we really need to be looking at doing that every year. And, you know, that should be, you know, I agree that we should do that as often as needed. That'll be based on data as we start hopefully turning the curve unaccounted for water. I mean, this year we made huge strides with the tank replacements in Lumpiaco and a couple of other facilities that we took offline and replaced. We lost a big amount of water this year with the CZU fire. You know, that's understandable, but, you know, that account for water is water we already produce. You won't have to go out and look for new water and develop. So that's our number one priority. Yeah, and I definitely support that. I mean, the preliminary numbers you provided on the leak detection were pretty impressive relative to what we have to conserve overall as a community. So I'm looking forward to that final report. That'll be out on that agenda to the full board, the full report on the leak detection program. Sounds great. Thank you. Okay, is that, can I move on to Lois then? We can come back around again if people have more questions. Lois? Sure. I don't necessarily have any questions, but I wish there were more members of the public here because this is a great document. And if you look at it and you think, it's like reading a whole novel, but it's easy to read and it's broken down by chapters. If you only want to read about SLV, there are, it spells out what chapters are about SLV. It gives so much information like how big our district is about rainfall, rainfall about the elevation of the district from 200 feet sea level up to maybe 1400 feet. It's just full of information that I think people would find interesting and this is easy to read. And they're probably not gonna look at the numbers like some do, but they're gonna read it. And realize, wow, this district is a big area. If you check, if you look at what Scott's Valley is and what SLV is, it's such a huge difference. And I just found it fascinating to read. And one question, well, it's not really a question, it's a comment about Loc Loman and our 313 acre feet that we can take out. I can remember when I first heard that word, acre feet. I thought, what, what is acre feet? And I don't know, I didn't notice a description of what acre feet is. I was told, oh, okay, imagine a football field covered in water and that's an acre foot. So I'm trying to imagine 313 football fields off in the distance, which is virtually impossible to do. The only other way I guess you could describe it would be by gallons and that might be such a gigantic number, you can't figure that one out either. But people are gonna hear acre feet. What is that? And that's exactly what it was aiming at here. We need to move on. I mean, do you have a question or what's the? I was making a comment. Okay, just never, I'm done. Okay, okay. Rick, did you wanna? I can respond, you know, Director Henry's got a great point about how this reads and one of the management team we're talking and thinking about is taking this report after approval and pulling sections of it out and trying to do some feature pieces in the local, on our website and the local papers, just sections of it. Not try to feed the full report to the public, but take out sections at a time and try to get that information out, you know, on water use on gallons per capita a day and try to make it read so people have an interest. And, you know, small bites of information people will take, but the full report, you know, it's quite the read. But we hope to be able to break this down and get a lot of this information out through either local media or our website. Yeah, I actually, I have some questions, but I thought what was interesting about it was the fact that it allowed you to sort of compare side by side, the Scots Valley and San Lorenzo Valley. And I often wish that I had had this document in front of me when we were discussing the potential consolidation that a lot of this was very pertinent to that question. But anyway, Jamie, did you, you had your hand up. No, sorry, I was just clicking the wrong button. I do have some questions and I guess my overall comment on this was the statement that you make on page 10 of your presentation was that this report aligns with the Santa Margarita Groundwater Base and GSP. And I would dispute that strongly. One of my dissatisfactions with this report is if you read it, the, I would feel like my attendance at Santa Margarita for the last two years has been a waste of time because everything's honky-dory. We've got enough water. And the whole point of Santa Margarita is we may have enough water now. We're in balance more or less, but we're kind of like we've drawn down our checkbook to $2.37 and we're in balance at $2.37. But if something goes wrong, we're in trouble. So we need to create a buffer. And so I felt that the sort of overall message that everything is fine, especially as it's put into the future is simply wrong. The other thing that's not consistent with the Santa Margarita Groundwater Base and is that the climate modeling is totally different. The climate modeling that has been used here is basically the historic record from the 1970s through recent, okay? The whole point of doing the GSP is to predict or simulate what goes on in the future. And we, the best science is telling us is that temperatures will rise, rainfall probably about the same, but that will, and it might go down, it might go up a little bit in terms of Santa Margarita will be conservative and assuming that rainfall drops a little bit. But the main conclusion from Santa Margarita is that it might not be next year, it might not be five years, but if we don't do something to bring a buffer back up, especially in the Lompeco, we're gonna create a bad situation. We'll draw down the Lompeco enough that people will have to deepen their wells. And so I'm just shocked that we could take that GSP and come to a conclusion that everything is fine. And it just, it sort of assumes that the groundwater basin will recover. You say, well, we'll draw it down, but it will recover. Well, it may recover, but it will recover on what time scale at what cost. There's also environmental costs if you keep drawing down the aquifers. So I just found it puzzling that the two reports could be so different, especially when Montgomery and Associates is involved in it. The other thing I found odd was that your calculations of the effect of five years of consecutive years of drought would not put us in a bad situation. And I just don't, I think anybody would question that just from your own experience that surface water is gonna go down a lot. And I noticed that the surface water, for example, in the Felton system is only predicted to decline 94 or 97% over these big droughts. And I'm going, how can that possibly be after five years of serious drought if only just because there'll be so much more infiltration into the dry ground. And certainly at some point we'll be subject to requirements of bypass flows for salmonids, at least in Fall Creek. So I just, I guess I would like an explanation why that's so different. And I guess I just feel like you're making my job harder as a member of the board of Santa Margarita that has to come back and talk to the public about it to basically have a report out there that says, well, we're fine, the groundwater basins will recover. Yeah. So there is some inherent differences between what the GSP is looking at versus the UWMP. And basically we went and developed our projections and had the consultants from Montgomery and Associates review it. We developed the shortage of water in conjunction with them. And then we also had the district's hydrologists look at it. And so I'm not an expert on how much surface water is available under a myriad of conditions. So I can't speak to that. However, I will say that they reviewed it and provided it adjusted based on that. Can you tell me who reviewed it? Yeah, Georgina King and John Fio. And the second point I'd like to make is that UWMP is not as granular. And that's the point of kind of developing the DRA, the drought risk assessment, as well as the annual assessments because things change every year, right? And so that's the point is we try to set kind of a baseline even though we know it can go much more supply in one year and much less supply in another year. But the overall consensus that at least my understanding of it was that in the long-term when compared to the modeling that was done for the GSP that what we were presenting was acceptable and in line with the GSP, it's my understanding. It's mind-boggling that we're paying for Montgomery and Associates to do two reports that come to entirely different conclusions. Jamie? Well, I guess I'm struggling with the idea that if there's a baseline water model out there that can be really reflective of what we expect to happen during climate change, right? Because even if we assume that we may get the same amount of water in a 10-year period, it may all come in two years and then we may have drought for eight years and most of that water goes out to the sea and we don't get the opportunity to benefit from the recharge. So I guess that the question of climate change really does loom very large in the context of how, regardless of how much water we think we're going to use or have, how we get that water and whether it's water that can be captured and contained in the existing aquifer. So, I mean, I'm concerned that the idea is that we looked at a model for how much water we believed, how much rainfall we would get and made assumptions about how much water we could actually collect in our various collection systems because we don't know how that rainfall is going to arrive. Well, I think that just to answer the best climate modeling now sort of says that rainfall will be about the same but as you sort of implied that it'll be in bigger, heavier storms and everything will be much more irregular. So big, heavy rainfall, more droughts, more extended droughts. So, the average might be similar and of course just what you said is your ability to capture it when it's really coming down, becomes a storage issue, which is, that's really our problem, right? Our problem is a storage issue rather than total rainfall. But it does point to why it's important when you're making these assumptions, making these kinds of models to have a climate model that is realistic when you're going out to 2045, doesn't matter for 2025, but when you're going out farther, I think it's important. Well, I wanted to pick up on a point you were making about the study and that is, I mean, I guess I thought the reason, one of the reasons we went with the much more expensive option with WSC is that we were going to get harmony between the models were being put together. So, can we ask for a refund if we're not getting that harmony? I'm actually kind of, I mean, I'm actually kind of disturbed that you came to that conclusion, not that you came to the conclusion, but that is where we're at. So, I've expressed my concerns about this topic in the past, I won't belabor it here, but boy, this is not good. If you're not happy with the result, I sure as heck shouldn't be because you're right in the middle of it. I think WSC has some explaining to do here on what's happening and perhaps that could be taken offline. I also wanted to mention that, I don't want to be polyannish about this, but there are going to be new technologies even be brought to bear on the issue of water over the course of the next few decades. There are some really exciting things happening in Israel, for example, in other countries that already are in the grips of this kind of water shortage climate change. And so part of what we're gonna have to do as a community as well is prepare ourselves for the adaptation to what happens with climate change. And I think maybe that's the bigger conversation to have with the community that as these things happen, we as humans are gonna have to adapt and we're gonna have to adopt new technologies and new things to be able to get us through that. And what may be seemingly impossible now, 20 years from now, who knows what will be there? And I have faith and confidence in human ingenuity to address issues once we really have to put our mind to it. And I think we're getting to that point with climate and water that we really have to put our mind to it. I have a lot of other kind of technical questions, but I think I won't belabor it and I'll put them in writing and send them to Spencer instead. Any other comments from the board before I go out to the public? Bob, you have your hand up, there we go. Okay. All right, let's go out to the public. And are there any questions or comments, Cynthia? Thank you. Yes, I really appreciate the clarification on the gallons per capita per day because I was really questioning that. I've seen all of these different numbers that don't seem to fit reality. I know in our household, we use 42 in the winter and maybe 50 in the summer. And so to see 85 as the target seems wrong, but when you explain that there are so many losses that the water we're taking out of the aquifer, the streams is that high, that makes sense to me. And I agree that maybe then that it really is important to let the public know that we are doing a good job conserving at home, but the district needs to do that leak stoppage. And then the cost of that operation is something that we're gonna have to bear and that's really important to know. I also agree with Lois. Thank you for the question about the equivalent of what acre feet is. And I worked it out for myself, but I think saying it in terms of units that every homeowner sees on their bill from the district would be much clearer than you could say, this is how many households are using this much water per year. And that would give us an idea of what that translates to in terms of usage in our district, how much improvement in our source of water that would be. And then I agree that it really is critical to know whether in an extended drought there will be a requirement that Loch Lomond release water into the river and that water will not be available to us. When you say SLV is gonna have access to this many acre feet of water, but that water will not really be available because it has to be put into the environment ahead of human usage, that's important to know. And then I'm very interested to hear about these new technologies that might help us produce more water or use less. I think it's important to have that information for the public. Rick Rogers, I really appreciate your suggestion that you will be putting articles in the paper and explaining all of this to the public. I think it is difficult for most people to attend these meetings and especially when they change. So often the newspapers, especially Scotts Valley Post, I really appreciate their layout, their clarity, they make it easy to understand. They keep everything page by page, so it's easy for us to read through it and get that information. And I agree the website is a great source of information and more members of the public need to be made aware, maybe through links, I think you were talking about putting out newsletters with links to places on the website where we can get certain information. I think all of that is wonderful. Thank you. Thank you for your comments Cynthia. I wanna just clarify one thing about the 85 gallon per day and that is, it's not that that's a target, that is again a somewhat conservative guess and Bob makes some statements about how much we use indoors versus outdoors and that's really kind of unknowable because we don't have a way of, you can estimate it, but what we do know is that historically people have used between something like 70 and 106 gallons per capita and that doesn't have to, that is what people consume based on what they're billed. This has nothing to do with the water that is lost, okay? That's, it's not calculated based on what water we lose. So the 70 gallon per day per person was during the really severe recent drought. So that reflects kind of what people are doing when in 2016, when people were really conserving water. And so that is presumably because, you know, they've got some indoor usage that's probably less than the state standard of 50 and then they have some outdoor usage. So adopting 85 is not because that's where we want people to be it's there because we have to make some kind of assumption and again, we tend to be on the conservative side when we do that to make sure that we have enough water. Bob, did you wanna comment on that? I think given your statement, I wanna make sure I clarify exactly where these statements are coming from and how I calculate them. So I basically look at December, January, February numbers for water sales. I take the percentage that goes to residential and multi-residential which is about 90% of the water sales. And I divide that by 22,000, 23,000, 24,000 population. I think the number that is in this report is low but the census will be out soon and we'll know more very quickly. And that is how I come up with what the indoor water usage is under the radical assumption that during those months not much outdoor watering is going on. Now, of course that can vary. Some months we have dry months but that is I believe the best way to get to a number of what the community is using. If there's a better way that somebody has, I'm certainly willing to hear it. I have not heard one yet. No, I think that's reasonable. In addition to that relative to our water usage, I'm looking at the table right now from our annual report. There's a 25% drop-off between fiscal year 2014 and 2015 from 1995 to 1500 in terms of water sales. And we've been bouncing around that 1500 since then, 1461, 1503, 1601, 1506, 1557. This year I think we'll be a little bit above last year. So we are pretty much permanently 25% below where we were and I think that's due to the unbelievably great work that our community did to permanently change their water usage primarily I think indoor. So I think we actually have some pretty good numbers here that we can use. None of these numbers are anywhere close to 85. And I just believe that that is a misleading number to be putting in there as the sort of baseline without providing additional context. Any other comments by the board? Cynthia, did you have something else you wanted to add quickly? I just wanted to say I have no way to know how much I'm using outdoors and how much I'm using indoors. So all I see is the total that I use. And to me, that's the important number. That's what we should be looking at. I don't know how you know how many people are in my household but I know how much we're using and how many people are in my household and I can calculate that. So I appreciate that Bob is using total population rather than per household usage. So thank you for that clarification. Okay. Jamie. But if we're using total, well, I guess I'm not sure that that's a perfect basis because if you're using total population, not everybody who lives in the San Lorenzo Valley and associated communities is the San Lorenzo Valley Water District customer. I'm only using population for the San Lorenzo Valley Water District service area. Okay. But even in the service area, not a lot of wells. I think it's not worth us going into the details. I think Bob's point is well taken and Cynthia's is that people really permanently change their behavior in after the 2016, 17 drought and that we are at least indoor usage will well below but the 50 gallon a day sort of state canonical number, but and so you can argue about the 85 whether that's right, but and I think that again that's another thing that if you ideally when you do this kind of modeling, you do sensitivity analysis, right? And you would go and take Bob's and you would say, okay, 85 seems reasonable because we assume that on average in the summer people use a lot more water because they're watering their vegetable gardens. That's why people are complaining about $400 a month bills and you could make some. Okay. And then what happens if that's the case? What happens if people, we forget about gardens and we're only using green and that's one of the frustrations of these kinds of reports is we and in reality, the Santa Margarita report too is there's very little of that. There's one scenario that's chosen and so you just don't know if you change that variable, how it will affect the result. Bob? You know, it's macroeconomics versus microeconomics, right? So at a district level, my calculation is macro. Each individual is going to have their own calculation and without us going and doing a household survey, which from a privacy point of view, I just have no interest in doing, we can't get to micro numbers and put together bell curves and standard deviations and all that. My primary concern for doing those calculations is to figure out whether or not we're A, beating the state estimate because at least from the material I read on the web, California has stated that Monterey and Santa Cruz counties are superior in terms of their water conservation. And it's nice to know that that is backed up with real live data. And at a macro level, I'm also concerned about how much water we're selling for revenue, how much water we're using out of the aquifer, how much is being unaccounted for all at a macro level because micro level we can't get there without invading privacy. I'm not interested in doing that. Mark? Yes, I have to ask, is any of this discussion that we're having about how much water we're using changing this urban water management plan? Are we providing any comments to Spencer in the discussion that we're having about this or are we at a point of being ready to make a motion to approve the plan? Yes. I'm not sure we finished public comment. We got sidetracked after Cynthia. Okay. I don't know if there's any other. There's no other. Let me just go back out. I don't see any hands raised, but just let me ask for Mark. No, that was my comment. Thank you. I'm sorry, Mark, me among the public participants. Yes, I agree with the director, Paul says assumptions here. Myself just doing a micro slice of the 7900 ratepayers since 2016, 2017, I've dropped my water rate from three units down to one consistently every month. I do not like many of my neighbors do not water in my neighborhood of a fairly affluent residents do not water their landscaping because it's too expensive. And people are being very, very spartan. I can go door to door and everyone's complaining that they had simply gotten too expensive. And it fits the model of what Bob is assuming here. And based on that, I think we should flush the 33% reduction in domestic use through the system before approving the urban water management plan as an environmental planner, myself and trained. I think it's incumbent upon us to use the right data. Well, I agree, but I think the one thing that would happen going to Mark Smalley's point, does this really change anything? And the answer is, is if we made other assumptions which are that people are using less water, then that's good in the sense that already they're assuming that the result of this report is everything's hanky-dory. So it'll be especially hanky-dory if people are using less water than the 85 gallons per day. So I don't think that that necessarily it's critical to change that particular number and less. I mean, I don't feel like it's necessary, but maybe other people do. Perhaps comes into play more with thinking about what's gonna happen with Santa Marta Reed and groundwater where that kind of modeling has some serious economic impacts. And this plan doesn't, right? Because it's saying we're fine. So that's what I would say. So I will get back to what Mark Smalley is saying. We have a recommendation from the staff to adopt two resolutions that approve the Urban Water Management Plan and the Water Shortage Plan. And these are resolution numbers. Well, we don't put the numbers. They would have to have different dates on them than they do now. And so the question is, is whether anybody wants to make a motion on that? There is some, Chair Mated, there is some corrections to the resolution on dates because of the adjournments of the meetings. The resolutions have the original dates of June 28th. We wanna make sure that those resolutions reflect when we had the public hearing and so forth, et cetera. So we just, those are the only corrections that I see to the two resolutions. Gina, do you have anything to add on those resolutions? No, no, that was it. It's just that the dates need to be updated to today's date as the date of the hearing and the adoption of the resolutions. And I would just suggest that if this is the discretion of the board, if it's necessary to clarify what changes are gonna be made to the Urban Water Management Plan before it's in middle. Yeah, I think that right now it's basically saying that we adopted and it's been authorized to be filed. So that's what the resolutions say right now. But wouldn't we say with changes? Is there changes? That would be the change that we would have to change. We need to just change the resolution to that effect. That's all. And so in other words, the date isn't the only thing we would be changing in my view. Oh, okay. Well, I wouldn't recommend trying to specify in the resolution itself what the changes are because this resolution gets submitted to DWR with the Urban Water Management Plan. I'm more suggesting that the board be confident of what changes are gonna be made to the plan itself before it gets submitted, perhaps separately from embedding the language in the resolution. You could, for example, have a motion that says, approve the resolution subject to the changes that were just explained by the consultant or something like that, would be my suggestion. That's fine, but I do think we need to make sure we're saying with changes somewhere somehow. So that's a good suggestion. So are you saying, Dina, that Spencer should state with those changes, he did at the beginning, but restate what those changes are and we're on two topics? Yeah, that's my suggestion. Have him restate what the changes are and then when determined, acceptable by the board, have a motion to approve the resolution subject to those changes being made to the Urban Water Management Plan prior to no. All right, Spencer, would you like to just restate those? Yeah, so would I be just stating the ones I made in my presentation about written comments that were received or am I also talking to the ones that we discussed tonight for example, explaining the difference between overall gallons per capita per day versus residential and also why one demand projection was chosen versus a sensitivity analysis of a high and a low. And I would defer to you all on that what exactly you want to change in that final plan to satisfy desires. Sounds good to me. Okay, so I'll list what I have right now and fill me in on what I missed because I wasn't able to write notes over discussing. So generally typos throughout the report from written comments from Director Smalley, we will address those. We will make a change to section 8.1.1.2 to clarify, we'll actually to delete the worst paragraph discussing groundwater contamination. And then we will revise sections 10.2.9.1 as well as 10.2.9.2 to reflect district direction and language about lock lemon supply potential. We will also add some language to describe the sensitivity of demand projections and that there are different methodologies to use. However, a rationale for why this one was used to meet DWR's methodologies. And then we can also add a description of the difference between overall gallons per capita per day, which is total water produced divided by population versus residential indoor gallons per capita per day. And that's- I would say maybe the more accurate thing to do right now might be to use water sold. So that doesn't make a distinction between indoor and outdoor, but that does make a distinction between produced and sold. I think that would be, we know those numbers for sure. Would that be okay, Gail and everybody that we use real numbers that we know for sure? Yeah, yeah. We're reporting the annual report. Right, and I think he's just clarifying that the 85 is the sort of number that is being used is the overall consumption or sold. Sounds great. Would anybody like to make a motion? I'll make the motion that we approve this urban water management plan as outlined in the resolution and clarified with comments that Spencer's going to proceed with. Would you like to include the water shortage contingency plan within that? Because there's two resolutions. Yes. Okay. I would like to include it in that also. So the motion in front of us is to adopt both the urban water management plan and the water shortage contingency plan subject to the changes that Spencer Waterman discussed having to do with the groundwater contamination, the correct language surrounding the use of black lemon water and clarifying the methodology for getting at demand projections. And that these be submitted that we're authorizing them to be filed with the California Department of Water Resources. Thank you. Yes. Is there a second? Second. Okay. Is there any discussion of the motion among the board? Okay, then I'll go out to the public to see if anybody has any comments. Hearing them seeing them, we'll come back and can you take a roll call? President Mayhood? No. President Henry? Yes. Yes. Director Fultz? Seems to have lost Director Fultz. Director Smalley? Yes. But did we have the motion passes with what we have? Yeah, so I think without, and we can check with Bob to get his vote because it's three to one now. So you can get his vote when he comes back in. Okay. All right. With that, we go on to the next item of unfinished business, the draft 2021-2023 by annuals budget. Yes. Thank you. The Director of Finance is here to present this item to the board. Hello everyone. In the package, we have the district's first by annual budget, which is covering fiscal years 2021 through 2023. Happy to announce that the district does have a balanced budget where our revenues are covering our expenditures. I'll go ahead and share my screen now so we can go through kind of some of the high level points and I'll be able to touch base on any of the different areas that people have specific questions on. Overall, the district's primary budget for the first fiscal year of 2021-22 is 34.1 million and 22-23 is 28.8 million. Capital projects is exceptionally higher in both of these years than the district's average. And this is greatly due to the CZU fires. We'll go through the entire budget in full detail but we do have a lot of extra supplemental support in this package to show how this fiscal year is rounding out, which does help tie into more of the details. So the high level overview shows you where the district's beginning reserve balances are expected to be and then kind of the flows of the operating, the operating, non-operating revenues, the different expenditures that are going on and then the capital improvement piece is kind of multifaceted to where we show how much capital expenditures are gonna be, but then we also have the portion showing how much is being funded by grants and FEMA and then the portion that's being funded by debt which then shows you the remaining amount that's being funded through the additional income during that year. And so it's showing that we're gonna be projected the fiscal year 21-22 to end at about 5.8 million in reserves. And then the district has a reserve fund policy that was adopted at the last board meeting and it kind of shows you the different types of reserve balances that we have. One of the changes that will be made is the committed fire recovery will be switched to stating it's a restricted fire recovery fund, but essentially what happens is so we have this 5.8 million, the funds that are restricted go first. So that's where you're seeing the debt, the fire recovery is gonna be sitting as restricted. Then it's gonna go into the compensated absences and then from there it goes into our operating reserve fund and our capital reserve fund. And so that's kind of how the 5.8 million breaks down. And then going into the next fiscal year, you'll see we're starting with the 5.8 and then similarly it goes through the flow of revenues, expenses and capital. An important thing to note for the capital piece here is it actually is showing that we're receiving more money and this is due to the timing of the FEMA reimbursements for the district. And so the overall increase is about $4 million to the district's reserves in fiscal year 2223. So we are projecting to have an ending year reserve balance of 9.8 million, which based off of our reserve fund policy, we are now hitting all of the target levels of our reserve funds. We actually are ending with a slight surplus to reserves of about $139,000. So this is positive. One thing to note is that this does include the fire recovery surcharge that has not yet gone through the full prop 218 process. One of the things we're gonna do in the budget document is help footnote some of this more in detail as well. And so that fire recovery surcharge is sitting up in the district's operating reserves. I'm just going through some of the different highlights of the package. This is for showing how this current fiscal year 2021 is shaping to end. And it's comparing what the original budget was versus what the estimated actuals are. This is then also showing all the different capital projects that were part of fiscal year 2021. And then the resolution and we flow into the full budget package. And the full budget package will give you a greater breakdown of what all of those different balances are. It'll take you down into the department levels to where you're able to see what individual departments are spending in the different categories. So each of those pieces kind of break down a little bit more in detail in the entire document. Obviously the fire is kind of the biggest moving piece new in the biannual budget process. I'm trying to get to some of the different highlights. So this shows you the high level of the breakdown of the operating revenue where obviously the majority of our revenues are coming from our water usage and our water basic fee. This is where we start to see that fire recovery surcharge broken out a little bit more. Depending on how the Prop 218 process goes, if it goes through, this will remain unchanged. If it does not, then we'll be going back after this and doing a budget amendment. Similarly, non-operating revenue, the majority here is our property tax revenue that we receive. And then operating expenses, this is breaking out that the amounts are the same because it's showing it in two different perspectives. It's showing you the by category, which is salaries and benefits, professional services. And then it's also breaking it down by individual departments. Some highlights for this year is we have three internal promotions in this budget. We have one new hire for a special project manager. Additionally, the district chose to utilize some of the funds from us getting the loan upfront. That money is sitting in a bank account earning interest. The district has chose to utilize that interest to help pay down our CalPERS unfunded liabilities. The first fiscal year has $200,000 in there for this. And the following fiscal year has $100,000 in here. There's also $100,000 in expenditures for a new rate study. We are ending the five year of the last rate study. And so there's $100,000 in this budget for the next one. There's $30,000 in there for a going digital campaign, sorry, $40,000 in there for a going digital campaign as well. And I already discussed the fire surcharge. Non-operating expense budget, this highlights all of the different debt that the district has. So this is the debt principle and interest payments. It shows you the different maturities of them and the current interest rates that they're all at. One of the changes that we're gonna add, I know it's inverted, is we're gonna go ahead and add a line above the top of our org chart in the budget and also on our website to include the community to help show that the full spectrum is it's the community that elects the board, which elects the district manager and so on and so forth. I'm gonna scroll through a lot of these, but in general, here's an example of one of the departments where it gives you an intro to the department, kind of what that department does. And it gives you a chart showing kind of what the historical trends for expenditures and headcount have been. Then it goes down to a little bit more detail and I'll showcase some of the different high level points that are going on in that department. Bear with me. Capital projects. So this is where this year gets to have a lot more activity than in the past. So these are broken out by project type and then the far right column is showing the different funding sources. Another thing we're gonna update is we're gonna explain that all of the ones that are saying FEMA, those are the ones that are related to the CZU fire projects. But this kind of gives you a breakdown of showing which projects are being funded by which loans, which ones are FEMA that we're getting back and then which ones are being paid through the district's reserves. So overall, that's the high level of the budget. If anyone has specific questions, we can continue to try and drill down into some of those. Apologize. Gina, can I ask you a question before we start this discussion is should I offer Bob the opportunity to register a vote on the last item? I mean, it passed, but whether he wants to put his vote in or not. It's a little, it wouldn't typically be how you would do that. However, given the technology issues and so forth, I think the board's been fairly flexible when somebody has dropped out right at vote time. So under the circumstances. Okay, I will extend that courtesy to you Bob if you would like to. And I do appreciate it. I know we've done it before in other situations. Of course the computer crashed right as the vote was coming. And I even did a hygienic boot before the meeting. So what can you say? But yes, that vote would be no, excuse me, yes on the motion and yes on the resolutions. So let's start our discussion of the budget. Jamie, would you like to start? Yeah, thanks. So a couple of questions. Looking at the capital project listing, Stephanie, where are you? You said the projects that are listed as FEMA are the projects that are listed as like 15 million loans slash FEMA, the projects that we anticipate, you know, the fire recovery surcharge revenues would be helping to fund. So the ones that are 15 million slash FEMA, those are the projects that were identified and should be initially funded through the loan. So this is where we're gonna be paying for those projects through the loan, but what's gonna end up happening and since they are also FEMA, is we're gonna still get that FEMA reimbursement on those as well. And so that's where, you know, at the end of the day, we're gonna end up having more money that is sitting in the bank on the front end that is essentially going towards paying down that loan. Right, right. But I think that it would be, because we have made the effort here to ask for restricted fund, in terms of trying to travel, follow that money through the budgetary process, as a communication tool, it would be sort of nice to represent for people how we envision, I mean, I understand we're gonna be using fire recovery surcharges to pay back the loan, but maybe in the context of this document, reflecting where the fire recovery surcharges are gonna be critical for those projects to go forward, right? That might be helpful for the public to understand, just in terms of how we communicate that. So that was one comment. And then when we looked at the table that showed all of the operating revenue sources and you had the committed fire recovery fund in there, I'm just curious, why wasn't that already listed as restricted? So the technical term for restricted would be a legally contractual committed is where the board has designated a specific purpose for money. And so in this case, the board was designating. And so originally that's where it got labeled as being committed. But given we all were talking so much about, wanting to restrict this money, we kind of talked to legal counsel and the fact that it's going through an actual 218 process, that's where we're sitting here saying, we actually think it's fine to go ahead and call it restricted because the prop 218 process is a binding thing. So we changed it on the reserve fund policy at the last board meeting. And then it's gonna be getting changed to stating restricted in this document as well. Sure, and I just want to say, I want to congratulate you on the development of this document. I know the kind of standards that this CAFRA reporting holds you to and on your small staff doing, what you're doing to put together a budget like this, a budget report like this is really impressive. So congratulations to you. It's a really great solid representation of our budget. Only one piece of other feedback I wanted to offer and this is just a minor nuance thing as a communications professional. Thinking about when you're referring in the narrative to the fire recovery surcharge, just being very careful to continually remind people that it is not, that it's subject to approval because people right now, the public I'm sure is looking at the fire recovery surcharge information they just received in the mail and trying to understand more about it, somebody who might come to our website and look at this document might kind of assume that it's a foregone conclusion. And so, just making sure that we're really careful in the way that we communicate around that. But that's a nuance and I appreciate that you had a lot to put together in a really short period of time. So congratulations on the budget. Thank you. Bob, did you want to make a comment? Bob doesn't seem to be hearing us. So how about you, Lois? I want to thank Stephanie. I have asked repeatedly that the budgets be easier for people to understand and she has put in so many comments. I believe she's really succeeded in making this very understandable to the average person because a lot of people just draw up their hands when they see a budget. So thank you, Stephanie. Mark? Yes. And I appreciate Stephanie the fact that we've now been able to go to a biennial budget rather than simply an annual. So it took a lot to get there. I know that you've heard from previous boards on the need and the desire to do that. So good. I do have a question on the debt service coverage ratio. I see that it declines from a number of 2.23 to 1.51 and not being familiar with these budgets in the past, what has it typically been running? I thought I've heard before that we needed to stay above 1.25, was it? Correct, yes. So most debt covenants require you to have about a 1.25. We were running around a three. I mean, we had a very healthy debt coverage ratio because the district had been doing a lot of pays you go in letting older debt retire. So once we started to take on that first 14.5 million COP, obviously our coverage ratio is gonna go down a little bit. We then just took out this $15 million loan. So the debt coverage ratio is gonna continue to go down a little. Ideally, you wanna be sitting around double that 1.25. So you really wanna be sitting above a two. This is showing that if we were to, it's obviously a very conservative forecast. It's showing no increase assumptions for revenue. It is showing increases in the operating expenditures based on the history. And so what it's kind of helping to show is, there's a rate study in this budget for a reason. They're gonna sit here and evaluate that and try to help figure out how we can sit here and maintain a healthy balance of revenues to expenditures and make sure we're covering our debt service coverage ratio. So based on this debt service coverage ratio, I interpret that as we shouldn't be considering additional loans at this point or we're getting into the area, at least five years out of being less than 1.25. Correct. So that's kind of what would happen if we just stayed status quo for how things are going now. Back when we were getting 13.5 million, we still had a few years of rate increases in the forecast. So all of that goes to showing the investors that we have a healthy, that we have essentially a healthy balance sheet. And so this kind of is showing that our debt abilities will continue to weaken as the years go on. Obviously you do a rate study if we're able to have different things forecasting out, that'll change all of that. So outside of this rate study, increased rates, what can we do or what are we doing to bring this ratio back up above two? I mean, so it's basic. I mean, it's either you decrease your expenditures or you need to increase revenues to a certain extent to offset the increase of the expenditures. Okay. Well, that helps me better understand this then. And that's it for the questions that I have at this point. Thanks. Yes, I'm going to briefly cover some of the remarks that I made at the last meeting where we discussed this. There are things that are good about this budget in terms of its format, the comprehension, and to the page we're looking at right now. I think this is one of the most important pages that we've seen in a budget document ever because it does give a longer term view of things. And in a capital intensive, high fixed cost business like ours, long term planning is very, very important. The year to year budget was just not a good tool. And I want to thank Stephanie for walking me through some of the fund flow movement as we get to the final endpoint where all the FEMA money's in, all the repairs are done and the restricted account is in place. And just to be very clear on that, the expectation I think the community should have is that $5 million that's raised, assuming that it goes through, would either be used to pay in cash for repairs and or that we would have money in a restricted account with which to use to pay principal down on years going forward. And or we reduce one of our loan amounts that we can prepay by some amount. And it could be a hybrid where you do all of those. But that is the expectation that our community should have. And by placing in a restricted account, it certainly maximizes that that as a result. Though of course we'll have to see if our estimates on repair costs actually come through in the past, they repair costs have just skyrocketed in this area. And I like the fact that Stephanie is including now a retrospective view of capital projects for the year. And Stephanie, I hope going forward, we'll be able to do that as well. Be able to get a look at what actually was done in the capital budgeting area for the year as we move through it, as well as at the end of the year looking backwards for that year. Unfortunately, there are things not to like in this budget. And those things not to like are the increased headcount and the increased operating expenses. I was curious, so I decided to take a retrospective view over the long term of our numbers. And our operating expenses have increased at a compound rate of about 5% a year since 1997, about 6% a year since 2013. Inflation during that time has been relatively constant at about 2% a year. This means that we've been increasing our operating expenses at a rate of about three times inflation here in the last eight years or so. During that same eight year period, your water bill for a four unit bill has gone from $35.71 to assuming the surcharge passes this November, that same four units will be $95.65 or an uplift of about 2.7 times, representing a compound growth rate of 11.6% a year. In addition, looking at the long term, about 82 cents of every dollar that we take in and operating revenue goes toward operating expenses. Now, of course, that goes up and down on a year to year basis. That's sort of the average over the course of that 25 year period. And it's held fairly steady depending on what time slices you look at. That means really that for every dollar of rate increase about 80 cents of it is going directly into operating expenses. And in the case of this year, once again, the vast majority, if not all of the operating revenue increases consumed by operating expense increases. These are all very serious numbers that keep us on the hamster wheel of not making a whole lot of headway over the gross numbers that we have in front of us with all of our capital obligations. Yes, this number here looks pretty good with respect to reserves, but we also have $10 million in tank maintenance that each year is getting bigger. We have many projects that have been deferred over the years that are not being addressed. Yes, pensions are being addressed to some extent, but if you use a more reasonable rate of return of about five and a half percent, our pension obligation is north of 6.5 million and we'll probably get bigger over time. So we still are not yet grappling with the essential issue, which is the operating expense increase rate that we're seeing. If there isn't some way to lower that to a more manageable rate of about 3.5%, still 150% of inflation, we're never gonna be able to address these capital obligations in the manner in which we have to engage them. And that is a very disappointing thing. So as I have in the past, I oppose this budget, I oppose the surcharge only from the point of view that I would like to see us come back to the table and put together something that really starts addressing those issues in a more substantive fashion. That is not to say I don't recognize the good work that's been put into the format, I just don't like the numbers and I don't like where the numbers are going and it's not a place that we as a district need to be going. Are there any other comments by members of the board before I go out to the public? Well, let's see if I can see people. I don't see any. So are there any members of the public that would like to make a comment, Cynthia? Yes, I would like to hear Director Fultz's suggestions for how the operating budget can be reduced. Bob, did you wanna respond to that? Yes, I can. Okay. And we had a conversation about this before I believe at the last meeting we discussed this, which is to summarize, it is the board's responsibility to establish policy. It is not the board's responsibility to mandate operational adjustments or tell the district manager how to run the business on a day-to-day basis. The suggestion I made then, the suggestion I made today is that we establish a policy about what the rate of growth and operating expenses should be. And then it would be up to the district staff to put together the operational plan to meet that policy. Just as an example, if over that 25-year period we had increased operating expenses by only 3.5% or 150% of inflation, we would have approximately $30 million of margin, operating margin, in addition to what we gained, that $30 million would have maintained all of our tanks, zeroed out the pension obligations, put a lot of money into infrastructure and also replaced all the meters. This is just a very simple numbers game. And the faster your operating expenses increase, the less money you have an operating margin to apply to capital projects and obligations. Jamie? Thank you. So, Rick, I'm curious, you know, Bob obviously has some expertise in this area. So I'm not questioning his numbers, but I am curious from you, are the inflationary assumptions and rate of cost increased? Are those accurate to reflect the district's growth in operating costs and revenues? And would you agree that those sort of baseline assumptions reflect how the district has managed its growth over the period that Director Foltz is citing? I don't disagree with Director Foltz's numbers, but these are budgets and operation expenses have been improved by boards in the past. This is not something that staff took on their own. This is through a long process where the boards have reviewed information. You're looking at one side, you've got to also look at what the district has went through and how the district has grown. And there's more to just the number side and you need to look at the amount of disasters, droughts, everything that the district has went through. And, you know, we constantly hear about staffing. And then if the board wants to do a staffing and compensation study, I strongly recommend it. But I don't think we'll ever put this issue to bed, frankly. There's more to it than just, you know, the side of the expenses over the last 25 years. The questions are, is, you know, why, or what has that been expensed on and what we've went through in the last 25 years and the age of our water system? I mean, it's, you know, I'm not saying there isn't areas that we can reduce. I mean, there always is and that's the intent moving forward, but there's reasons for all of this. And boards in the past have seen those reasons and have experienced those reasons through budget times and have approved these budgets. And it's different. It's a real process. I mean, Bob will probably disagree with me, but there's a lot more than just the numbers right now. Yeah. It need to be like that. I agree with what you're saying in context, Rick. And, you know, I have some personal reservations about the idea of proposing a policy that would put it basically a governor on the budget arbitrarily. And, you know, I agree. It's because context is everything. You know, telling that story about, you know, what are the things that have happened to the district over the past 25 years that have changed the direction that the district might have, you know, been headed in and therefore impacted budgets and assumptions over time. That might be a good story to tell at some point too. That was it. You know, I'll just pop in to say that I think when you sort of take annualized numbers like that, some fairly big increases happened when we merged with Lompico and took on Felton. So there was, you know, that there has to be a growth and expenses when that happens. So I think to just average things over 25 years doesn't make a whole lot of sense in that regard. Mark, you had your hand up next. Yes, in the six months that I've been on the board now, this is at least the second time I've heard Rick make the suggestion of this staffing and salary study. And I wanna ask, is it time that we go ahead with something like that? Do we do that ahead of the rate study that Stephanie is implying we're going to do, I believe it's next year, as part of the budget? Maybe that will help us better understand and potentially address some of the questions that Bob is bringing up because I don't understand where to go to be more conservative on the operating budgets that we're doing. But I think Rick is making a suggestion, all right. Is it time that it's a board we authorize that? I appreciate the comment, Director Smolley. We are coming into a timeframe that the district may be looking at opening up negotiations with all employees. And I think we should hold off the discussion of doing that because it would be a staffing study, a compensation study. There's a lot more to it that we need to consider and talk about as we move forward. And that is coming up very soon. Well, then I will ask Rick, when is the appropriate time? Very soon. I need to get with council and talk about when we're going to approach the board and talk about opening up agreements and talking about these subjects. I know you don't like very soon, but I just don't have those dates in front of me, but it is coming up. Thank you for recognizing that very soon aspect of the comment. Okay, thanks. Lois. I wanted to comment about the last 25 years. There was a very long time when the district didn't raise rates. They boards don't like raising rates. And that went on for quite a while. Also, the district sold a big piece of property. A whole lot of money came in. And if you look at how they spent the money, it's like they gave it away. They didn't really, they didn't fix tanks. They didn't do a lot of things with that money. They just, it's like it just dribbled away. And I forget what was it, Rick, about $10 million or something? The property that was sold? Plus or minus, I don't have those numbers in front of me. Yeah. 10.5. 10.5. So, I mean, that's part of the problem right there. You inherit what happened in the past. Yes, I'm aware of the issues associated with averaging things over long periods of time, but the trends are the trends. And whether you like the trends or not, if you look at the trend lines, and it's very clear where it's going, it varies a little bit around the trend lines, but not a lot. So, I think these are kind of the long-term historical view that boards need to look at in order to kind of get a sense of where we're headed into the future, right? Sort of when you're planning, the first thing you usually do is identify where you are and where you've been. And so that's part of what I'm trying to do and educate myself in that area. I would encourage all of you to look at the 2016 staffing study. I've expressed this before. I have serious concerns about the methodology that was used because it certainly wasn't any methodology that I've ever used or ever seen. There was no benchmarking. There was no quantitative analysis whatsoever. It was sort of a list of things that folks would like to have, but no quantitative assessment around it. And I think that's part of what we're missing. If in fact we are going to staff for peak disaster time, then we need to make that very clear to the community what that means in terms of cost. And there's certainly justification for making that statement as opposed to using mutual aid or other emergency type situations. But that is a conversation then that we need to have and we need to have explicitly. The nature of our terrain and our climate is that most of this kind of work probably needs to be done in drier months as opposed to wet months. Well, that speaks more to seasonal type work as opposed to year round type work, particularly for certain aspects. So there's a lot of different things that we could talk about in a real staffing study but not the one that was done in 2016. I really don't want to see a repeat of that. And I would encourage the board not to go down that path either. So look, this is a, I agree with Rick that this is a conversation that we've had in the past that we're going to have in the future until we come up with not only the plan around the operating expenses, but also what that means relative to capital obligations. Your operating margin is the money that you have to apply the payment of debt and to other capital obligations that you have. And I'm not talking just about pensions and reserves, I'm talking about everything, including deferred capital maintenance, capital investment, all the rest of it. We have no plan for how we're going to pay any of that down at this point in time. And that is also a serious concern, not only for or should be for us, but also for our community because ultimately they're the ones that are on the hook. And when you see bills going from $35 to $95 in the space of eight years, that is communicating something to your population that we need to say, okay, what did we do with that money and where are we going in the future? Right now it's not clear. We don't have that yet. I just had a question that about sort of related to the budget and staffing issues. And I think one of the, and it's a question for Rick is we see what the fiscal year 2021 budget requests were for capital projects. What sticks out there is how many things, we didn't spend that money on because presumably the fire, everybody was busy with that and the recovery. So I guess what I'm concerned about is that we have a very aggressive plan for next year in terms of capital improvements. And I'm trying to understand how we're going to get all of those done with the staff that we have. Can you just talk about that in general? I'm still not saying anything negative or positive about anything. I just wanna understand how we do this, how we get three times more capital projects done than we kind of normally do. No, and that's a really good question, Gail. And past managers in the past and all said, hey, you can give me all the money in the world but we can only get so much done with bandwidth and staff consultants. We will use a combination of consultants to do the heavy lifting of the plan specifications, construction inspection and district staff will our district engineer and the two folks in the engineering department will facilitate the projects moving forward, the admin and necessary in-house honoring of the project. We won't do any of the plans and specifications in-house. We've done a couple and just finishing up recently and the director of the engineer, no more because that takes up so much staff time and then you'd have the day to day. The director of operations he'll take care of the third department will take care of the switching over old to new and working with contractors on getting, so we have to maintain live water service while we make these improvements. So there's a big project on switching over from old to new and that's what the operations department we're doing. It's a heavy lift, the accounting department has a tremendous heavy lift on the billing, environmental to review. It's an all hands on deck, the contracts just with contracts with district council. There is a big lift, but we're gonna utilize consultants and move this ahead. I worry more about getting materials, we're getting shortages on everything. We're getting the state health is telling us stock up on water treatment chemicals. There's a shortage on that. Steel is a big shortage. I'm more worried moving forward on getting contractors. So we just tried to bid the fish ladder and get any contractors to bid. There's other reasons there too, but there's just not the workforce out there and people are picking choosing the easy projects where they can make money and then materials. It's gonna be an interesting year moving forward. And then on top of all that with the shortage of materials comes a extreme increase in materials. So Kel has just got done with the study because they're looking at some, many millions of dollars of projects and their consultants have told them if you could hold off two to three years on these projects prices will come back down. But it's, we don't have that luxury. So there's, it's gonna be a challenge moving forward, but not just from the staffing levels, but from procurement and finding contractors and purists. Well, that's an interesting comment about that so Cal was told that maybe they should put things off for a while. It certainly argues for coming up with some kind of capital plan that goes out for five years and prioritizes those things that we must do now in terms of maintenance and what things that we could kind of do when the economic conditions are most favorable in terms of hiring companies and getting supplies. So hopefully that that's something that will, I mean, I know that you're getting beat up on that, but from a number of us asking for that. So, but I think that would be really, would make me feel better about all of this if I had a better idea of how it was gonna go over a longer period of time. And we can discuss that a little bit more at the engineering committee because that's one of the concerns. But some of these projects, like our raw water supply lines, we're losing a considerable amount of our water supply. And as you know, more than most that we're relying on the Santa Margarita and the Lumpi aquifer to make up that shortfall. We need to move as fast as we can to get a lot of these CZU fire projects behind us. There's so many different faucets that we need to recover. And before we didn't have money to do projects, now we have loans and we have money to do projects, but we can't get the projects. There's always something, but we'll move it ahead. Okay, yeah, thank you. Lois, you had your hand up. Yeah, I wanted to ask Rick a question. Are there deadlines on the FEMA? Do those things have to be done in order to get FEMA money by a certain deadline? Well, there are deadlines with FEMA on certain projects and in certain categories, there's several categories and some of the temporary work and the emergency response, it has a very short deadline and we're making that. The permanent work, like replacing the five mile and so forth, they have deadlines also, but a bigger concern on our last Stephanie to talk about this is about the loan projects and about the deadlines with the loan projects and I'll let her explain regarding that, Stephanie. Correct, so any of the projects that were identified as being financed through the loan do have, they're supposed to be completed within a three year period. We did specifically select projects from the FEMA listing that we knew would be the projects coming up quicker. For example, we did not include the five mile pipeline in that loan because we knew that was a project that likely could end up extending past that deadline. So as long as we're still moving forward these ones that I believe a lot of them are the ones that are currently moving forward right now already. We should be okay from the loan aspect. But there are deadlines to answer your question, Lois, that we are on top of the deadlines and are concerned about. And Stephanie, that's to make sure that the loan remains tax exempt, correct? Correct. Rick, are we also, I mean, we do wanna get the raw water pipeline back on quickly, but have we also been leveraging Fall Creek? The numbers that are coming out of Fall Creek seem to be much larger than historical. Yes, to answer your question, Bob, we are leveraging more water out of Fall Creek, moving it into the North System. We are also closely watching the bypass requirements at the Fall Creek. There's several bypass requirements, Fall Creek itself for fisheries and then there's the big trees, but we're really centering in on the actual Fall Creek and we're looking very good there. But we are moving water up and we have notified the State Water Resources Control Board regarding the increase in use there. We are awaiting to hear back from them as well, but we have notified them because there is the point of use requirement with Fall Creek. Right, thank you. Let's go out to members of the public and we can come back and have the Board ask more questions, but let's go ahead and do that. Yes. Hi, thank you. Can you hear me? Yes, we can. Can you hear me? Yes, we can. Go ahead. This signal's really glitchy. Thank you. First I wanna say, I'd like to have the $95 water bill that's being discussed. Mine's almost double that. And I also, I agree with a lot of the things that are being said by various Board members and by directors and by Rick, but I also find that overall, we still have a problem and the problem that we still have for whatever the reasons, I think Lois pointed out there was a period of time where the District had a large amount of money that basically didn't amount to what it should have and we need staff and if we wanna accomplish a lot of these tasks and staffing, I've negotiated a number of them, they're not necessarily what they're worth in terms of the cost, but the bottom line is we still have to run this water district and we can't see, we can't have the only solution to the problem be to continually go back to the public 5% a year, year over year, we think that that's the solution. It's just not a solution. And so it is going to take some looking very closely at what is spent and what our priorities are and figuring out another way. I mean, I'm concerned that, we look back and we say, boards have approved these budgets in the past. Well, that really very well is likely the point why we're in the problem now and it may be that this board and future boards have to make some tougher decisions about the budget including making some policies like we're not going to spend more than 3.5% in operating circumstances and we're gonna still try to move forward. So I hope this board will not be continue the pattern that has happened in the past of not making those tough decisions and finding a reason not to hold the line so that the public is the only one that's really suffering. Thank you. Thank you, Beth. Cynthia? Yes, I have two questions. One, the first is what happens if the rate study and staffing study conclude that we're not paying enough to our staff and that we should offer them more salary and benefits and that we need more staff? Second, has anyone compared the rates of City of Santa Cruz? I saw that they are projecting an increase in rates of 10% per year in order to complete the capital projects they have in mind. So in my neighborhood, two houses just sold for double what the price was several years ago. And I don't think you can say, I don't wanna pay more than such and such amount for this house. It's gonna depend on the market. Rick's just laid out the condition we're in where there's a material shortage because of the pandemic. There are shortages of labor now. We don't have control over all of these conditions. We don't have control over pricing and we're gonna need people to do the work. So it's nice to have this idea. Some people can move out of their house and move into an apartment and save money that way. But when it comes to water, we're gonna need the water to live. So thank you very much for all your thoughtfulness. Thank you, Cynthia. Are there any other comments from the public? I don't see any hands up. So we'll go back to the board and let's see. I just wanna check. I can't see everybody all at once. So Bob? Yeah, you know, I've heard this. I've heard this note. There's sort of a couple of different themes I think around water rates. And this is directly impactful on the budget because of where the budget's going, the operating expenses are going. And one thread is sort of along the lines of, water is actually really cheap when you compare it against other things. I mean, even on our recent questionnaire, our quiz on Facebook, one of the questions said, well, you know, the water only costs 350 a cubic yard. And if you buy dirt, it's 1850 or something like that. So, I mean, the clear implication of that is that, you know, water is really actually pretty bloody cheap when compared to other things like dirt. But there's this other thread that we have to also be cognizant of. And that is we are not a wealthy community like most of Santa Cruz and Scots Valley. Our median household income is well below theirs. The housing prices are well below theirs in some cases, half. People live here because it's A, beautiful and B, more affordable than some of the other places they can live here. And certainly the new census date is gonna give us an update on this. But, you know, about 30% of our community lives on 30% below median household income. So you start talking about $1,200 a year water bills, that starts getting into the 1.5 to 2.5% of income. This is a serious hit and that's gross income. That's not net after taxes. So we can't just sort of, in my view, decide that we wanna go down one path or the other. We have to be looking at both of these threads at the same time. You know, water is not dirt. Dirt I order maybe twice in the time I've lived here. Water I order from the district every day because it's essential to life. And the notion that we should be paying a lot more for our water because dirt is so expensive just doesn't sit well with me as a message to send to the community. I hope we consider, we continue this conversation. I know we're not gonna reach a conclusion tonight, but I very much appreciate the board's willingness to engage in this conversation, to look at what past boards have done. And I think a lot of that was due to the year to year nature of what they did. And to really start looking at this perhaps out of the box with some fresh eyes. And I wanna support that and be part of that process as well. Thank you. I just wanna say that I appreciate what you're saying, Bob, about the sort of income distribution of our valley compared to other places. And one of the things I feel strongly about is that we really need to, in the next rate study, revisit the idea of tiered rates and creating a situation where those people who are kind of living within the 50 gallons per day kind of limit should not be having to pay big bills and let those people that are causing us to have to invest in new infrastructure because there's greater consumption should absorb more of those costs. And I think that we can come up with something that's more or less revenue neutral that will help that 30% of our population that would benefit from lower rates for them. Lois? I wanna go back to the remarks about cost. When I moved here 50 years ago, Lompico was the place to go. Cheap, cheap, you don't have any money. You moved to Lompico. And now I look at the houses by me that have sold recently. I wouldn't be able to afford to live here if I had to buy my house to buy my house. Today, if I bought the house I'm living in, I couldn't live here. So prices have gone up in the valley a whole lot. And there are still people living here like me, 50 years, who don't have the money to buy another house here in the valley. And if I sell my house, well, maybe I could buy one. I don't know. So if things change and prices here where I live have gone sky high. Jamie? Yeah, I think that the context that is missing from the discussion is about where is San Lorenzo Valley water district in terms of its cost increases and rate increases as we are compared to just the rest of our peers in the region or other water districts of similar size. I worked in the water industry. I worked for San Jose water. It is a universal condition. I mean, if you go Google San Jose rate hikes right now, you're gonna see all kinds of anger about the ongoing rate hikes of the last several decades that San Jose water customers have experienced. And I'm not saying by any means that we should be inefficient with our funding or that we should allow rate increases to take place without any governance. But I think we are suffering from the condition of past board decisions as director Henry points out that underinvested in the system at times when capital would have been less expensive. And now we are having to invest more heavily in the system at a time when capital is obviously more expensive. And that's been the condition for the last few years. In addition to that, our operating costs are going up like many other water companies around the country because our infrastructure is aging, which means the older infrastructure requires more maintenance, which means more hands to do the work, more, you know, widgets to repair things. You know, so, so as we begin to modernize our system, the idea is that you start to bring in more money because our system, the idea is that you start to bring your operating costs into better balance because you are able to operate more efficiently and without as many unexpected costs due to poor maintenance, right? I mean, you know, I'm sure Rick, I'm singing a song right now. And so I think that if we're going to have a conversation and definitely as we look at the rate study in the future, we really need to look contextually at what we're experiencing and how our neighbors in the region are also experiencing these same conditions because the fact is, water infrastructure has been under-invested, not just in the state of California, but in the entire country. You know, we are all dealing with the same problem and we are dealing with it at a time when climate change is affecting the amount of supply that's available to us and at a time when the state is increasing the regulatory requirements on water districts which also impacts our costs in a way that we have no control over. So, you know, it's a really complex picture when you try to compare us to what has happened over the last 25 years and I think it's really important to consider what is happening to our neighboring agencies as one of our speakers so rightly pointed out. I think Jamie's absolutely right. The context is very important. I'd like to add some additional context to this as well because part of the context also has to go to how the community is sold on rate increases. And if you look at the last two Prop 218 processes there were lots of promises made about where all the money was going to go and all the infrastructure that was going to be fixed and this, that and the other. And I think Rick's even talked about the fact in the past where the probation tank was sold, you know, twice to justify rate increases. The fact of the matter is that there was no mention in those contextual conversations that if not the majority, certainly a sizable plurality of those rate increases and I think it's actually the majority we're going to go to operating expense increases. And that goes to setting the context for our community about what they should be expecting. In addition, if you look at the 2013 Prop 218 process not a single thing that was promised relative to infrastructure actually got implemented and out of the 27 rate increase until the new board took office in 2018 was there anything other than the probation tank being addressed and on top of that the loan process that we were going to go down was this sort of unbelievable process with the Department of Agriculture that would have just run us around the ring around the Rosie like crazy it just would have enriched the consultants WSC who was pushing it. So I think there is a lot of context that needs to be brought forth in any kind of discussion around rate increases including emergency rate increases like being proposed for the CZU fire had we not added a headcount just kept headcount the same we could have dropped that surcharge by about 15% had we found a couple hundred thousand dollars out of a nine million operating budget in savings we could have dropped it another 20 to 25% this may not sound like much nine dollars and 67 cents may not sound like much but the people that are living on the kinds of income that many of our community members are an additional 120 dollars a year more or less is a huge number that they're going to have to find and that's on top of the 5% rate increases forever that if you look at the trim lines from the last eight years that we're going to be seeing going forward so yes context is very important but and you're talking about macro context which I appreciate but we also have to deal with micro context and the expectations that our community has had set for them that have simply not been met by previous boards we have a resolution that staff has suggested that we adopt and if it's alright I will read it and then we can go out and see if anybody wants to make a motion about it that is that the biennial budget for fiscal year 2021-22 and fiscal year 2022-23 will be adopted but the district manager is hereby authorized and directed to implement sub budget in the amount of 34.1 million dollars and 28.8 million dollars respectively for those fiscal years I'll make that motion I will second it we have a motion on the table is there any further discussion from the board if not I'll go out to members of the public seeing there's a little flash of a hand there I I don't see anybody with their hand up and not hearing anybody then we'll come back and we have a motion on the table Holly would you like to take a roll call about this President Mayhood Vice President Henry aye Director Ackman yes Director Fould no Director Smalley yes with that we don't really have any other items on the agenda tonight since we're not going to have any other items on the agenda tonight we will adjourn one so with that we will without any objection we will adjourn for the evening and we'll see you on July 8th all right thank you good night good night everyone good night