 Test will call the meeting to order right now director Balboni present vice president Jaffee Vice president Jaffee We can see you, but your microphone isn't working Vice president Jaffee Vice president Jaffee, can you unmute yourself vice president Jaffee can you can you speak? I am not able to hear what's going on Josh. Can you hear me? I can hear you Can you hear them Josh? No, it looks like they're muted We're muted very strange. I don't know Makes you wonder about Looks like you're muted too Yeah, I just muted myself. I can unmute. Okay. I see Knowledge is always what is cracked up to be yeah Yeah, vice president Jaffee. Can you hear us? I Can now okay. Thank you director lehu here director Lather Present and president Christensen here. There is no public hearing today This is item three or on item three with the board members Any board member who wishes to remove an item from the consent agenda should now Yeah 4.7 What's on top I have some comments and then just On 4.6 if sometime staff could address when we as a board will get an update on the optimization study I'm not pulling it. Just okay eventually. I was gonna pull 4.7 Well, do you want to pull it or not? Okay, okay. All right Then anyone who from the public who would like to comment on the consent agenda. This is the moment to do My name is Becky Steinbrenner. I have comments on different items on the consent agenda First of all, I regarding item 4.1 approval of the minutes in all of your minutes It always says there was one public comment to public comments but there's no indication for the public as to what the comment was the topic and Because the board does is a bit behind posting the videos of meetings. There's there've been nothing posted for October at all The public has no way of of going back and seeing what were those public comments So I would request that you add at least a generalized content topic of what public comment is Regarding the production reports, I note that In it's on page 150. I think that's part of that. There was a huge spike in Water consumption for the month of October and I wonder why that is Water revenue on page 148 shows that is very high nine million dollars, so I Guess the dollar amounts good, but what caused that big spike Regarding item 4.5 in general, I am very concerned that the public and your board Have not repeat received Timely Financial status reports here. It is a whole collection from July through October And I did see that this has happened as the result of Mr. John Cole's request That that information be put out. Thank you, Mr. John Cole Because this has not been forthcoming and transparent Thank you I'll move approval of the consent agenda minus 4.7 Seconded Director Balboni. Yes, vice president Jaffe Yes, but I would like to comment after the vote Director Lehyu Yes Director Leather Yes, and President Christensen. Yes your comment Yeah, it's just asking staffs How long does it typically take to get a video posted online So CTV is who? Posts the recordings on YouTube once they're on YouTube we can link to them to our from our website and Typically what we do is once the minutes are approved We then link to the video because it's a cut you can do both At one time updating the website So we rather than post it right away. We wait for the minutes to be approved at the next meeting That's the current workflow, but we could check we could have CTV email us once They've posted on their YouTube and notify us and then we could post it. Yeah Well, in a way it makes sense to to have them come on at the same time Because you know After you see the minutes Even that would guide you on where to go in the meeting So I don't have a problem with that. It's just if if there's some hold up Then I Think I think that we'll have to consider doing something, you know a different workflow and Then the the financial status reports I Think this is atypical to get four in a row So Is that that's true Leslie, right that that this is just an unusual situation. That's correct. Yeah, normally you get the monthly Okay, all right, just want to check on that. All right. Thank you Number five oral and written communications. This is the opportunity for I Think we have four point seven. I think we do it at the end of the meeting Yeah, at the end. I'm sorry. That's right. We're all communications On an item that is not already on the agenda. Thank you back a steinbrunner um, I want to Make sure that the public knows that tomorrow is the close of the public comment with the central coast water regional quality water quality control board for a Reopening of the public comment for the permit for the pure water so cal project Injection and also the Pollution control permit to dump the Treatment effluent into the bay The thing that has changed Since the comment period originally closed as you know, I'm sure you know is That the water quality control board has required the amount of nitrate That the project would inject into the groundwater and thereby degrade the high quality of the groundwater Has has been required to be reduced From Initially it was at three point five milligrams per liter and now it says it will be reduced to one point six seven Milligrams per liter that's still a lot in my book For what is called an advanced purification treatment system The way that nitrate is removed from treated sewage water, and that's what this is is by reverse osmosis What worries me is that I think that the treatment is being Designed to use the least amount of electricity possible your consultants have already said reverse osmosis is an energy hog and it is and That's why a lot of people have shot down desalination in the past because of the energy use The pure water so cal project will take a lot of electricity to operate and by reducing the poor size It take to filter out a lot of these contaminants like nitrate It takes a lot more electricity So it worries me that this pure water so cal project is going to allow still a lot of nitrate to go into our very pure Eurisma aquifer groundwater and what worries me is if it's letting the nitrate through what else is it letting through and I have I worry about this lot and I would like to ask that If possible the design which is being changed again now Be even further honed in to remove as much of the nitrate as possible and thereby other contaminants. Thank you Since there's a lot of misinformation in there. Can I have staff to correct that please? Yeah, we'd like a clarification Thank you, Tom. I mean, sorry. There's just so much wrong there that I want to We don't change the poor size Suddenly our plan reverse osmosis membrane. That's just one thing I'm not having a conversation. I'm asking for a clarification for the public Sure Thank you as part of the pure water so cal project We are undergoing permitting currently with the regional board the treatment process still does have the microfiltration reverse osmosis in the UV advanced oxidation It also has a pre-treatment step with the Progressive design build and with working with the city of Santa Cruz We did do a modification to the pre-treatment which was part of the entire Public process that we did through sequel with that The water quality has changed which we have notified the regional board the division of drinking water and the regional board and EPA set the water quality standards that Agencies whether surface water groundwater or recycled water or desalination all have to comply by and so with those Requirements we have shown and demonstrated a couple of things. Yes, the water quality parameters did change with the Difference in the treatment technology and we have shown That in the case that's out there right now is that there have been changes in both nitrite Tds and chlorides the nitrate value did go down But it's still less than the background and while we do agree that our groundwater is of high quality Unfortunately is not as pristine because it is facing seawater intrusion and contamination and so that really is I think the the primary objective of the project is to stop that seawater intrusion From coming in and contaminating the drinking water wells since this is solely our source of supply So we are working with the regional board on ensuring that we can meet the water quality parameters Of the state and federal guidelines and we will be having to report that As part of the permitting process once the project is operational I'll just I was just gonna also add it's like it's proven technology a whole treatment process is still The same the only change was in the pretreatment which is before it even goes to Microfiltration go ahead now. I'll just add in addition to pure water. So Cal We have had a demonstration project for chromium naturally occurring chromium 6 in our groundwater And the state has changed the limits on that so we will be coming back engineering's plan for that now I think around a 10 million dollar System to remove naturally occurring chromium 6 in our aquifer but in addition to the Naturally occurring arsenic that is in our aquifer that we treat for in addition to the anthropogenic TCE that we won in court with litigants who helped them pay for the removal of that so we have several Ways and methods to try to clean up the aquifer. Thank you I would just like to To go on record that I Appreciate that the staff is always looking for ways to get our water cleaner and that they appreciate that the board in the past and Probably into the future will always Opt for cleaner water Even if there's additional expense involved Yeah, and that's been an approved in track record certainly with Arsenic and other chemicals the boards gone beyond the call of duty My name is Chris Kirby The financials not being given to us for the last four months is very suspect and I'm curious and I do think John Cole for Bringing that to your attention The water harvest event I was going through some of the financials You spent twenty five hundred dollars on a band How many people rate payers were there a face painter was a thousand forty dollars $540 on Togo sandwiches Complete waste of our rate payer money complete I was also going you spent nine hundred thirty two dollars on a gaming monitor What in the world is a water district need a gaming monitor for? Throw pillow, I mean it's just Disneyland hotel twenty thousand dollars a month or for one month to lobbyists Bulletproof glass in the lobby. That's awesome. That might say a lot about what's going on and how people feel What are you doing to cut back on spending is my big concern? I See nothing. You're still giving bonuses raises spending like there's no consequences Leslie said in the webinar that you've not hired any new employees, but in the financials I noticed you have some temp employees every month So that might be a way of being able to say that but getting and getting around it and she says there's an 11 million dollar Shortfall I can't find it in the financials at all By raising our rates you're making housing very expensive for people Excuse me miss Kirby this this items on the agenda. This is for items not on the agenda So when that item comes up the rates you can speak to the rates Okay, so you'll need to wait if the item okay I also can I talk about the salt water intrusion anything that's not on the agenda that's relevant in the purview of the district? Yes, you may last November the state paid for a salt water intrusion study and we've yet to see the results I think it's because it's not as bad as you people are saying it is I'd love to see the results and be and be proved wrong on that one The pure water so Cal most most customers you say it's three out of four I or why I forget what your numbers were maybe Sam seven out of ten agree with it But with pure water so Cal no we don't I sat out in front of deluxe market for two and a half hours one day Not one person was in favor of it Why are ratepayers paying 38 ex-employees health care premiums for a total of over $17,000 a month every month. Why are we paying for that? I don't understand That's not good contract negotiations for our benefit. We're the ones paying you people act like this is your piggy bank And you can just do whatever the heck you want. It's not for our benefit the ratepayers Why aren't you going to other agencies to to Combine and be and bring them into this ridiculously high cost of pure water so Cal It started out at 60 million now. It's going to be over 200 million It's on it's it's just very unreasonable you need to bring in low other local water agencies to share the cost So, okay, I'll speak about that later I have a bunch of petitions the people have signed if you'd like them to I will leave them with you before we're gone Thank you. I wanted to report on the water use conference that we attended Um For me, it was my first big water use conference. So it was very exciting and I certainly Learned a ton From lectures, but I was I'm wanting to kind of share with you about the feeling from all the water engineers in California that were at this huge conference who look toward our district as the The model the role model to follow and I was padded on the back By all these amazing intelligent water engineers saying, you know, you are the forerunners And I just wanted to share that with everyone how Super smart water engineers Are are saying that this you know, they want pure water so Cal they want to follow us So just wanting to share that and then one other quick thing is I had this great idea I don't know if it's good to bring it up now, but I wanted to think about in Starting a youth board like maybe a standing committee for youth And I thought it would be really cool to maybe focus on climate disruption and Things that they're very interested in like also emergency preparedness and get more youth involved So maybe the the district could like check into that or give me history on that We definitely can I don't want to go into it because it's not on the agenda But scott's valley has a good model where they actually have junior members on the the board I don't think they have an actual all the way they have deputized So cool model Okay, thank you one of the thing from that meeting It was not just the other water districts But it was regulators to that were all in favor of what we're doing this the state is clearly going to water reuse and A big way, I mean that so even though we're small we're we're we are leaving the way and then one of our they give an award to a Staff member throughout the whole state that you know is then in their judgment Just an excellent staff member in our Melanie Schumacher Maus, Schumacher won that award the staff person of the year for the whole water reuse Organization, so I wanted to congratulate her and we're lucky to have her Yeah, I would I was at that meeting too it was it is a really good technical meeting to learn about D cell would not do so so much bit water reuse, but really that was the beck that I got from other Participants in that meeting the state both the state and federal governments are recognized that we were Role model for other small communities in the entire California coast. We're all looking all of us along the coast are looking at drier conditions See one intrusion. We are working to solve that Yeah, it's been a rocky business to get there, but we've all been working extremely hard to get Well, let's see what's next here any other comments from the public I think it's Report that's district council Josh Thanks, President Christensen Just gonna start kind of providing you know review of some of the new legislation or the next couple of reports And then this evening I just wanted to highlight a brown act bill This bill essentially extends the brown act remote meeting rules that we've been operating under with some minor modifications Going forward Those rules have been initially set to end at the end of this calendar year So we'll continue to be able to use the just cause and emergency standard to allow Directors to attend meetings remotely So more more information to come on the exact specifics, but just wanted to note that I'm happy to answer any questions. Thank you Yeah, I didn't understand you say that there's a new law coming on So it it's a new law, but it's really an extension of the existing rules So the existing brown act rules were actually set to expire at the end of this calendar year for remote meeting access And this bill extends them indefinitely. Okay, so we'll we're Be subject to the same rules going forward. Thank you Any comments on that We're on administrative business That's page 231 Interested 7.1 conditional and unconditional will serves Approve the subdivision agreement for Aptos village these two finally, yes, good evening board The applicant Barry Swenson builder is here in the audience if you have any specific questions But hopefully the memo and the attachments summarize it accurately for you They have returned and paid the balance Of fees and that's over a million dollars and there's a receipt in the packet to document that This is just for the remaining portion of the project phase two is what it's called and there's also a revised subdivision agreement that's been reviewed by district council and actually executed and they have also the applicant has recorded and Exhibit that agrees to pay for any increases in fees as They are implemented Until up to and including when the meter is set. So if it does go beyond Another year or so then any increases will be paid for Additionally, I don't know if there's any specific questions on on this that you have but we're recommending that the board authorize President to sign this and we move forward Just to highlight if there are any changes from the previous Last we saw previously changes to the project or to the agreement to the agreement Yeah, this this agreement Says that their your fees are not Locked in are not guaranteed the lower prices. So that's the million dollar increase in water capacity fees There were some other, you know Changes that I actually don't have in front of me, but they were reviewed by Josh Said wasn't you know originally it was just asking for to extend again and we said no We've got to treat them like everybody else. They've got to come back and just do it. I Started with a new agreement, right? Right. This project is very Very dated in the end so the original agreement that was entered into Has been updated years ago and so now we're Reusing the current approved agreement that district council has approved So I can see if I'm muted or not. Sorry Hear you Okay, good So there's two years right on this agreement to get Everything in place that I read it correctly Yes But even within the two years if there's an increase in water capacity fees They'll be on they'll but they'll have to pay the difference So how do we you know having a set timeline for it helps us plan for water use? and How do we I guess it's really up to The builders to adhere to that are there any penalties if they don't Get here to that Well, yeah, the sooner they get their meters dropped the sooner they can not be subject to increases in fees So if if it goes You know beyond that there there's increases in fees that they'll be subject to I believe they've already poured the foundation so I Was told they're ready to go and I don't anticipate this to take two years Yeah For the for the infrastructure that we're talking about Okay, it's good to hear any comments from the public. Thank you Becky Steinburner. I I looked over my notes from that meeting in March March 21st of this year when Swinton Builder was looking for an extension of the variants that they got for phase one What was not really? I was happy to hear that you said we have to treat you like everybody else Thank you for doing that What was not determined was whether or not The district was going to grant the developer was mr. Jesse Bristow that was here To wave the labor charge of the district for the meter drop fee for all proposed meters They were asking that you wave that and not charge them for the labor that your your district provides Is required to provide to to check on all of this and make sure that it's correct. So Is what is the status of that aspect of this approval? I would would appreciate an answer to that. Thank you. Can we have a confirmation on that? Just a confirmation that was a question that I think Taj is probably best to address any questions you want to start to respond to respond to that Okay, page 242 of the packet lists all the fees that are that are included and there are 41 labor only drop-in meter fees for sub meters $90 each now the the normal Drop-in fee that is normally charged for regular meters includes the actual water meter This is the labor only because the applicant in this case is supplying those Submeters so we will be charging. We did collect Or the labor I'll move approval of a subdivision agreement I second director Balboney stain vice president Jaffe Yes director lehu Yes director Lather Yes, and President Christensen This is item 7.2 requests board direction regarding that you 2023 Water rate study and proposed rate structure ongoing good evening I'm here this evening to present this item and I have our consultant Raft tell us is on the line Costuck is available to present as well But I just wanted to kind of introduce the memo real quick as you said it has been an ongoing process We've been working on this since about the market We have brought you some information on the finance report and the recommendations that came out of that We're also then this evening bringing you some opera some options on rate structure for you to consider I Would like to thank everyone that has participated to date in this effort our water rates advisory committee members have been invaluable in providing insight as has various staff members This is never Something that we love to do. This is not an easy process and we take No enjoyment out of having to consider raising rates for our customers. We realize that things are difficult All over inflation is hitting everyone hard the economy has been challenging for most households We're not exempt from those inflationary pressures But we do sympathize with customers that are struggling right now We do Have some options to present to you this evening Most of the costs that we're discussing Amount to about an increase of a dollar a day per household on Roughly so for three-person household you're talking about 33 cents per person per day Or fresh clean drinking water and a sustainable basin. So that's not something to disregard at all So this evening, I'd like to go ahead and present Present Melanie and she's going to introduce the Rate presentation and then she'll pass it off to Kevin and he'll get into some of the details of the rate structure Good evening everybody again, my name is Melanie mouse Schumacher and as many of you know Leslie strome We both work for so-called quickwater district I'm the special projects communications manager and Leslie the finance and business manager and then as Leslie mentioned We're also joined tonight by Kevin coste wick with Raft Ellis And so I have a couple of slides that I wanted to at least do some introductions related to the district as So we'll go ahead and do the introductions the district's mission and our water supply challenges Then Kevin is going to take the majority of the evening's presentations to discuss the water rate study The financial plan review the rate alternatives the bill impact As Leslie mentioned we have a water rates advisory committee who has provided input and then of course information on the public I'm going to pause Yeah, we're pausing but as I believe it's a blank screen. Are you seeing it out there? You're okay. We're seeing it in presentation mode. So Thanks for your patience Now it's full screen You can see it. Well dr. Jaffee Yes before it was right now it's it's We're seeing all the slides queued up on the left side and then the slide That word That's the current slide is bigger now Tell us when it looks right Now it's good Okay, that's good. Do I see it in presentation mode or just the main slide? Okay, okay, great. Okay, great And again, thank you for allowing me to speak a little bit Ron on the project I am a long-time employee of so-called quick-water district. I'm also a resident here I've raised two boys here And have had a family here. So this community is very important to me Just a little bit about so-called quick-water district We are a not-for-profit water agency that provides water to the communities of Part of the incorporated area of Capitola and then the unincorporated areas of Aptos La Selva Beach Real de Marse Cliff and again, so Cal We have about 40,000 residents that we provide water through about 16,000 connections And as you can see from this illustration here, which is this infographic a Lot of infrastructure goes into having a reliable water Supply that can provide water to our customers 24 hours a day seven days a week 365 days a year that not only provides water to our customers and businesses that are here within our region But we also provide water for fire protection and other daily needs Change this. I think it's showing differently on different screens. So Melanie is it possible to take the presentation down correct it for Television so that they don't have a split screen Maybe take us offline while while they do like from don't know how to do that Like the Twilight Zone sorry about that everybody I could show it like that. What do you think of that? But it has this like top bar. Oh, you know what? Go like that. How's that that readable out on the right now? It's not showing but it was Readable I'm not gonna share that is readable Yes Let's see the main slide and then I see the 67 other slides But much smaller and I see the menu the Now I don't see the menu, but it's all readable. I think you just proceed. Are you able to? Advance when I just say advanced does that sound good? Okay Okay, I think we're up and running. Thank you guys for your patience I think the next slide we wanted to just address and take some time again I think we've mentioned it earlier in the meeting today But really it's the kind of the challenges and the why of what the district is doing along with our regional partners here in The Santa Cruz County Mid County region the water supply here Is locally sourced we don't receive any state or imported water here like many other areas in California? Groundwater is our only source of water for so called Greek water district as well as other pumpers in this Mid County area unfortunately the groundwater has Not been replenished by natural rainfall in a sustainable way and Because more rainfall, I mean, sorry more water has been pumped than can be naturally replenished by rainfall This has led to a condition called seawater intrusion The basin was designated in California in 2014 as critically overdrafted as well as a high priority And those two designations are because when there's seawater intrusion present and the high priority because we don't have any other water supply The state of California mandated that our basin be brought back into sustainability By 2040 there are over 500 basins in California and our basin is one of 21 basins Identified as overdrafted and mandated to be brought back into sustainability by 2040 That's really our primary why as you can see on the image on the top right That is seawater intrusion that was detected from the technology that California is doing currently of Measuring and identifying where seawater's in occurring along our coastline We've got it We knew that we were having it on both ends of the district and with the sky tem technology Which is an area just geophysical Mapping tool it located that that contamination was all along our entire coastline As you can see on the bottom right, which is the Monterey Bay National Marine Sanctuary the red Illustrates seawater intrusion. So we have seawater intrusion occurring all along the entire Bay in addition to the seawater intrusion challenges, we also must meet and Are required to ensure that we can meet the water quality standards set forth by California And as mentioned earlier, there are stricter water quality standards being set forth for chromium 6 and other water quality parameters and then of course Climate change impacts as we've seen lately with the recent droughts and atmospheric rivers And knowing that with climate changes will have impacts related to reduced groundwater supply What happens in these instances is there's more intense rainfall, but that rainfall does not mean that that water would go into our groundwater basin Why not? I'm not supposed to take Feedback so we'll address that later. Sorry. Oh Emma, I'm trying to advance that it wasn't working. Sorry So with these challenges back in the early 2000s The district was pursuing desalination as a supplemental water supply with the city of Santa Cruz in 2013 The do the desalination project did not go forward and that left our district in a place where we needed technology and the district needed to do Something in terms of the our solutions and so in 2013 there was a very public process the getting input from our community and what came out of that was a really a long-term Multifaceted community water plan that was developed with our community for our community and there are three primary tenants First and foremost its conservation and using water efficiently and wisely The second one was adaptive groundwater management moving our wells that were located close to the coast in more inland Just to help reduce the pumping right there Where the seawater intrusion was occurring and then of course it was development of new water supplies with groundwater as our only source our water supply was not diversified and was not resilient and so the board identified that those were the three Primary things that we could do to bring our basin into sustainability as we went forward with that in our community water plan We also wanted to focus on what was most important to our community members And so there were three primary values that came out of that was one ensuring high quality water to do something timely knowing that we had the state mandate that we had to meet and Three they wanted to ensure year-round reliability and resiliency next slide so since 2013 and 2015 when we were looking at our new water supplies recycled water Came to the forefront as the major water supply project to develop as part of the community water plan And that's the project that we've been doing over the last eight years One of the things with and looking at the water supply not only was it of high quality it could be timely could we Assist with getting grant funding was also looking at the value of it from the economic standpoint and so we had a Commissioned a study by UCSC professor dr. Brent Haddad And he did an economic impact analysis for us and the take-home message of this study was twofold one the water's reliability here in our region really provides almost a billion dollars an economic benefit in Terms of residential businesses and environmental And I think the take-home message related to what's important here tonight was really about what happens to our water rates If we don't have a reliable water supply and without a water supply here in our region The studies concluded that our water rates would go up threefold And so without water not only would our cost be higher, but it would also mean that our customers had to use less Next slide and then of course, I know we mentioned it earlier in terms of our community water plan But the district does prioritize and value always seeking input from our community. We're not you know a really large You utility agency we're not a private utility we are comprised of residents here who make up our board staff and Employees that work every day to provide water to our customers. So we're actively seeking feedback in 2020 We conducted a phone survey That thought input related to what was important and you can see here nine out of ten of Our customers in this statistically valid survey wanted to ensure that we were investing in our infrastructure Nine out of ten also wanted us to take that action now Knowing that we had that mandate with the state to bring our basin into sustainability And then we were very interested in knowing with the comfort level and Acceptability was in terms of pure water so Cal as a recycled water project and three out of four of our customers Are comfortable with that. I'd like to attribute a lot of that to the outreach and education of our community base and trying to understand really Why is a project needed first which is because of the seawater intrusion and then also understanding What is pure water so Cal? What is the technology? Yes, it is like desalination as mentioned earlier But it requires a lot less energy about a quarter less energy and sometimes even half because the salt in ocean water is what needs to be taken out of The desalination process here the salt contacted in wastewater is not as high But we also wanted to understand like is this a new technology? No, we learned and we went around and we communicated that agencies such as Orange County water district have been doing purified recycled water for groundwater replenishment since the 1970s and so to have that deeper appreciation of Who's done this before who we can look to the director Balbona? You had mentioned that agencies are looking at us We looked at those ahead of us and we continue to look at them to ensure that we are Building a project with best management practices Similarly like with our community recently with the water harvest festival We had samples of the water from Orange County water district so that people could taste it and we also did it with Made kombucha so that people could be could relate to that water One thing to note is that the water harvest festival was sponsored and so there wasn't any Rate peer money for bands and face peeing. I think that was a question. So I just at least wanted to clarify that Those were sponsored by community groups so that it was not part of our rate peers Yeah, no problem and then really I think we continue to always want to seek input From our community and we continue to do the which is a sentiment to why we have the water rates advisory committee And I'm happy to answer more questions on this later But I we didn't want to turn it to Kevin who is going to speak next on the water rate study Thank You Melanie good evening President Christiansen Directors and members of the public in attendance tonight. We can go to the next slide My name is Kevin caustic from aftelus. I joined you last last month And also was involved in the prior rate study We'll start with a refresher slide. We talked about this last meeting as well a rate study process this is our Generic framework for conducting a rate study so we start with a framework of Financial goals and policies pricing objectives and identifying any alternative rate structures that we want to evaluate The second step is building out a long-term financial plan We discussed that at some depth last meeting in October and we'll touch on that again tonight The third step is working through cost of service analyses Conducting cost allocations between different user groups and evaluating alternative rates Calculating those rates and calculating customer impacts We're just past that step three. We're gonna be talking At length on step three tonight and in the back portion of this rate study process is really determined by our legal framework here in California so the rate adoption process of documenting the study basically translating our mathematics and our Excel based model into a Word document to support the the study and the underlying rates That report is made publicly available and reviewed by legal counsel and the last step of the rate study is rate adoption So we have to notice all of our customers. We have to conduct a public hearing after a minimum protest period At which then the board can adopt Rates and throughout that process as Melanie mentioned as you're going to see further on in the presentation We engage the community throughout that process Next Also as mentioned we worked through a wait water rates advisory committee this cycle This is an ad hoc committee that was formed in April of this year It's comprised of 10 customers and two board members all of which are ratepayers to the district and their charge is to Receive input or provide input and recommendations rather as part of the rate study and if we go to the next slide will detail all of the All the details we work through with this committee The first and this is our first involvement Raft tell us in August on the 14th We had a rate study discussion talking about the prior rate study the 218 process Talking about community values and talking about communication strategies to customers We came back in late September and we talked about financial planning as an overview talking about the inputs and then the underlying Assumptions that go into projecting revenues and expenses and looking at different options or scenarios We came back to the committee on October 12th Talking about cost of service conceptually how rates are designed what? Alternatives might look like conceptually and then we return at the end of October with Rate alternatives these are revenue neutral to compare the current rate structure with any alternatives and looking at those preliminary bill impact analyses and looking at pros and cons of different rate structures and Then finally last Monday we met with the committee for the final time and we looked at those refined alternatives including proposed revenue increases and Comparing again bill impacts and receiving their feedback some of which you'll see here tonight So I just wanted to Convey that working through a committee is no small task There's a lot of effort that goes into it both for the committee members and for the staff This is something that is not terribly common in California though It's becoming increasingly common as we work through these rate studies with Community members and with ratepayers themselves. So kudos to the district of the committee members for sticking with such detailed information along the way So let's turn to the long-range financial plan and if we go to the next slide We'll just recap What are our drivers when we look at a long-range financial plan and these are kind of the key Items that underpin a utilities cost of service and our projections on cash needs so revenues and expenses So inflationary pressures which Leslie mentioned at the top before we even got into the presentation that a utility is no different Than the rest of us and household budgets and inflationary pressure We have pressure on sorts of supplies, but traditional groundwater Availability and future pure water sources cash reserves are important for mitigating risk. We have board adopted Reserve policies as far as cash and debt future borrowing terms and assumptions. So those come into play For the pure water soquel project and future repayments of loans net of grants baseline water sales estimates So we know there's been downward pressure on water sales and and a new baseline level of demand and then capital reinvestment that kind of covers many of these things capital reinvestment on Infrastructure that tends to be out of sight and out of mind that can be in the hard-to-reach places that might rely on specialized services specialized equipment and specialized components So those all go into Projecting our expenses and comparing them against our rate revenues From customers and if we go to the next slide These are the examples or the options that we brought to you last month the first example Had the lowest revenue increases year over year But what that did was leave ourselves open to a bit more financial risk and pressure on debt service coverage and on cash reserves The second example here provided a one-time significant increase in the first year of rates and then moderating thereafter But again, that would compound impacts to customers Particularly if there's a change in rate structure depending on the rate structure itself So the I'm going to go into the far right here example for Provided a financial look to say what if our future demand expectations from water sales increase from Our assumptions about 2,600 acre feet per year back to about 2,900 acre feet per year And we don't we don't want to go there similarly for the financial risk that It might entail so example three is what we're going to Show tonight as far as the rates that you'll see and the associated impacts And we did want to pick that middle ground just to demonstrate the rates tonight Mindful that no decision by the the board has been made So everything you see in tonight's presentation will include a 12 increase in that first year And if we go to the next slide, we'll see how the longer term plans out So again, we're calling this the middle ground because what it does is it It's not the lowest increases over the short term Because of financial risk and it's not the largest increase in year one to minimize rate impacts So the middle ground option again is 12 each year For planning purposes out the first five years mindful that we're only Going for a four-year rate adoption So five years of 12 and then what you see thereafter is five and a half percent. So kind of two segmented Steps in rate increases that would be proposed and what that allows us to do is in the top left chart Our blue line that's our calculated debt service coverage We're well above minimums and above our policy targets So we feel good about that and from a cash standpoint, which is the bottom left the total funds balance chart You'll note that even in this scenario. We're under that target We bought them out in fiscal year 2026 around about nine million when we'd rather be at about 16 million But we were covered by a year five to be at or just slightly above our reserve policy Next slide please And we can probably just skip two. So let's get to our rate design alternatives And the first thing we want to remind Everyone in attendance is the the district does have Guiding principles. These are our key objectives as we sometimes refer to them in rate setting Yes I just wanted to ask a question before you went on to the options even if Like rates were approved at 12 and that's what it was decided on the first year if You know water use went up or other factors were the case You know we can make a choice to have lower rates at any one of those following years, correct That's correct. So any any rates that are adopted You can think of as the maximum that you may implement in future years So noticing and adopting those rates for 218 proposition 218 rather sets a maximum that you can charge now Some agencies do go through a proper Financial plan update annually and say well, where are we relative to where we thought we would be Is it financially prudent to implement something less than what was noticed and adopted or not? And I just want to make sure I understand we're talking about 12 percent revenue increase Which doesn't equate to 12 percent rate increase Except off the average That's correct. We can You know divide that 12 percent Are parts that 12 percent in different ways and also our customers Always have the option of using less water For their for their bill to be less Yes, and thank you for that distinction. So when we say 12 percent, we're talking about the rev the overall revenue needs Of the utility or how much revenue needs to come from rates relative to the current rates But it's then in the cost of service and the rate design Stages where we apportion that additional 12 percent. So there's some There's some distinguishing between the 12 percent and the revenue needs in the first year and in the resulting rates In years two three and four all rates would increase by 12 percent It's only in the first year where we're reallocating costs and perhaps restructuring rates that that 12 percent is on average so as part of The rate study And earlier in the year the district board Reiterated their guiding principles and you see them here And we want to acknowledge these guiding principles because they help us With defining what types of alternatives that we wish to Evaluate as far as rate structures And folding these values into our rates and charges themselves So legal defense ability is paramount We want prudent transparent development of water rates to comply with all applicable laws and regulations financial sustainability So the district's ability to meet obligations from its own revenues fees and any other income sources And then social equitability, which we've translated into fairness in rates between customers Current customers and between current and future users of the water system So with those guiding principles in line if we can go to the next slide We have evaluated four different options As far as the water use rates And we've worked through These alternatives both with staff with legal and in several meetings with the water rates advisory committee So the four alternatives first being a uniform rate structure So that would apply one water use rate to all use and all classes So we now we no longer have tiers for residential, but we also don't have classes Between residential commercial and irrigation. So a uniform rate structure for all The second alternative is the existing Two-tier rate structure. So it's simply an update to the residential rate structure that we have which is two-tier And then we have a use rate for our commercial and irrigation accounts The third alternative is just a different flavor of the two-tier if you will where we're Allocating and recovering costs in a different manner Which results in different rates for a residential tier-tier structure And then the three-tier structure is our last and that is simply Evaluating an intermediate tier Between the two-tier option and a three-tier option So all alternatives here target approximately 50 of our revenue or cost recovery from fixed charges So that would be an increase overall That's after discussion with both staff and the advisory committee and keeping in mind the board's key objective of financial sustainability And then last but not least as I've already mentioned All rates shown here do include the 12 percent rating revenue increase in year one We go to the next slide So before we get into the the exact options one of the distinguishing features in the rate alternatives Is when it comes to basin sustainability and recovering those costs through our rate design So in the existing approach that we Worked through about four years ago now All of our basin sustainability costs for the residential class are recovered entirely from tier two from water reliability or conservation And that's that's true for the residential class commercial and irrigation Accounts recover those costs across all units of water since it's the uniform rate But the key there is that in the residential tiered rate all of our basin Sustainability planning costs at the time are recovered from tier two only In an alternative methodology, which you'll see in two of these options We distinguish basins of sustainability in two pieces One is additional supply that's required for high water users for demands greater than what the basin's sustainably yield Is and then the other component the residual is the basin wide benefit That benefits all water users all parcels over the basin Actually, whether they're water users They're using water or not to have that future water availability and as a barrier for seawater intrusion Next slide. Um, I think we maybe missed a slide here Hmm. Well, there are uniform our uniform option missed It didn't make the cut, but it will show up in the impacts. And so what we'll do we'll start at the existing two tier If I remember correctly the uniform option the proposed rate was $13.85 That would be under this proposed rate column header with a gray fill That would be true for all users again Residential commercial and irrigation would all pay the same water use rate Uh, the second this is the second option we're showing you now which is an update Uh, to the two tier volumetric Next slide and and kevin, I believe the one you said is missing is the next slide the uniform There you go. I'm sorry. They must have gotten flipped. So we'll start we'll start Well, we might as well start here and we can go back one So the uniform rate here, uh, hey, I got the price the price of the the rate, correct Great $13.85 and we get there with four components So we have our supply component That's for producing groundwater Delivery that's from meeting average daily demand conditions. So how are uh, how our users use water in average conditions keking, which is how users use water in the peak period of their demand relative to their average demand And then conservation costs for conservation Outreach and rebate programs Etc that's recovered and what you'll notice here is in all those components. They're the same rate Because we have a uniform rate that is true for all classes and all tiers So we end up with a rate of $13.85 the key here is to see the impacts to the the classes and the tiers Uh, when compared to their current rate So our uniform rate would have A sizable impact to tier one residential an increase of four dollars and 75 cents compared to the current rate of nine dollars and 10 cents Conversely tier two residential water would come down again because right now that price differential is uh Is majority based on basin sustainability costs being recovered Tier two and then commercial and irrigation would come down modestly So they basically get the benefit of smoothing the rest of the water use Demands into the rates So if we can go back up one to our second alternative, thank you So the existing two tier again is an update to to our current rate structure A two-tier residential with the first tier Uh of use up to 5.99 units per month and then tier two For all use at six units and greater So here we have a supply cost of four dollars and 33 cents the average daily demand cost of five dollars and 60 cents No peaking in our current rate structure All peaking extra capacity costs are recovered through meter charges And then our conservation costs are based on uh reliability Again tier two only for residential $20 and 50 cents and then uniformly recovered for commercial and irrigation So in our existing We see a modest increase to tier one 83 cents per unit is the the increase relative to the current rate and then tier two comes down More modestly when compared to the the other alternatives two dollars and 80 cents and then commercial and irrigation still comes down But just a bit over a dollar and those come down because we are Recovering more a greater share of our revenues from fixed charges So as the share overall to fixed charges go up the share overall to these water use rates comes Can go to the next we'll be on our Third option here revised So this is uh the same two-tier residential Structure zero up to 5.99 Units per month and then greater than six But here we're apportioning those base and sustainability costs through our supply bucket And so you'll see a supply differential there $4 and 55 cents for the first tier $8 and 17 cents for the second tier So again, what we're doing the mechanics and the cost of service analysis is Taking the share that's for high volume use and apportioning that to supply as we step through the residential classes use And then the share that's for base and sustainability is going over to the fixed meter charge So again here on the revised two-tier we sum up all of our components and the result is An increase of three dollars and 44 cents on residential tier one Tier two would come down just over 23 dollars And then commercial and irrigation in this alternative go up just a bit because now we've Again introduced an alternative recovery of our base and sustainability costs as well as introduced that peaking category next slide please And last the fourth option is the three tier now in the three tier This looks a lot like the last one with The caveat that we now have an intermediate tier where we've ratcheted down tier one From zero up to 3.99 units per month We now have a second tier four to 7.99 and then all use greater at eight units or greater would be in tier three Commercial and irrigation are going to stay the same because in this alternative Two to three only affects the residential class. So we'll focus there Tier one goes up three dollars and 40 cents Tier two we have an intermediate tier So when comparing to the existing rate structure, you have to compare a couple units That would still be in tier one and a couple units that would still be in tier two But the gist is the first couple that would have stayed in tier one go up five dollars and 48 cents The ones that would be in the existing tier two come down about 26 dollars and 65 cents So if we can go to the next slide we can do the comparison here So this is a comparing the the rates for residential water use Across the the two or three to tears and then comparing the current rates with the four alternatives So the current being shown first nine dollars and 10 cents tier two 41 23 and then all Alternatives relative to that. So the uniform again would be 1385 for all units The existing two tier remains Fairly close to the current rate structure between the the rates charged in tier one and tier two And then in the revisions the revised two tier and the three tier option tier one comes down tier two Excuse me. Tier one goes up tier two comes down and then we have a third tier for the three tier option There would still be a substantial decrease when compared to the existing upper most rate for residential water use Next slide So that's all the water use rates, but we do have the second we have the other side of a customer's bill which are the fixed charges and we have We have fixed charges that vary by meter size, but also by class We've grouped we group commercial and residential meters Into the same class the current charge I'm going to focus on is the five eighth inch meter 52 and 34 sets That's where most of our single family residential customers Connections are and that's also the most common meter size for commercial users so the proposed The existing two tier i'm going to focus on that one that one recovers slightly less from our fixed charges And so it has a lower rate, but then in propose and all the other proposed alternatives Those would be the same rate. So again No change between the water use alternatives there Simply between the water use rates themselves for those alternatives So that's the other half of the customer bill and then if we continue on we'll get into bill impacts Next slide so all these the the next series of sites will be focused on Residential bills and and really what we mean is single family residential because these all assume A five eighth inch meter connection And we're showing the monthly bill impact between a usage level of two units per month up to 12 And towards the bottom of the table what we're what we're trying to help with is To to relay how many customers fall within this range And so for the two hcf that's 100 cubic feet or 748 gallons of water At the two hcf mark we have about 31 of our 31 percent of all of our single family residential customers fall In that zero one or two unit per month range Then when we step up to five units per month now we're capturing Another 41 percent of our customers are 72 percent of all Single family and we step through that again and again Just to impress upon you that the majority of our water users Nearly 90 percent in the single family class use seven units of water per month or less When we get up to the nine unit mark, we're now capturing about 95 percent of all single family bills So what the the table itself is showing is the impact Of a proposed rate structure relative to the current So and this is in monthly terms So i'm going to focus on the five hcf here the uniform Alternative would have an impact to that user of 36 dollars and 67 cents Whereas an existing keeping the the existing two tier rate structure causes an impact of 15 dollars and 32 cents The revised two tier 30 dollars and 12 cents and the three tier 32 dollars and two cents And so we stepped through that for each of these levels of use And what you can see is with the alternatives Existing two tier mitigates the impacts more so than the others Another takeaway is that our impacts are Higher to lower volume users than to higher volume users And that's a function of the rate design And again that most of our customers In the class fall around the four to five unit mark Excellent So we wanted to relate this just a different Uh in a different fashion here Which is to take that impact that you saw in the prior slide and relate it into A cost per dollar per day So our current bill for a single family user with a five-eighth inch connection using five units a month That current bill is just shy of 98 dollars When we translate that monthly impact from the prior slide at five units You can see the impacts in a dollar per day term. So the existing two tier 51 cents Next would be the revised two tier at a dollar per day Three tier at a dollar seven and uniform rate at a dollar 22 Now it's important to notice that in year one the impact is in fact highest and that's a function of a few things The increase in the financial needs the 12 percent The reapportionment of costs and how we recover base and sustainability The structural changes between the different alternatives And all the other underlying cost Allocations as part of a cost of service analysis Then in years two three and four you see the impacts are much more uniform Because in those years the rates are simply increased by the revenue needs. So That would be like saying 12 percent in year two would affect All rates equally at 12 percent So that's a dollar per day impact that five hcf and if we go to the next slide, we'll see it for the high end Which is it not we picked nine hcf to capture Kind of that upper nine or you can get to 95 of all of our customers. So a nine unit per month bill is currently just shy of $231 For this customer that savings and it would be a savings in year one Is between about 26 cents with the existing structure and a maximum of a dollar 33 per day with a three tier Then in subsequent years they experience an increase Similar to the five unit where now those impacts are normalized based on an increase of 12 per year next So we wanted to qualitatively evaluate how these Alternatives stack up. What are the pros and cons? Relative to one another and with all of the board's policy objectives in mind And I won't I won't read I promise I won't read through all of these bullets And we have worked through this with the advisory committee as well Just to say that there are Benefits and there are all our challenges to all of these alternatives. There's no Silver bullet. There's no one-size-fits-all rate structure And so there are benefits and challenges To all of these and if we go to the next slide, we have a similar A similar table But a bit more simplified and this simply relates our four alternatives and our three Policy objectives social equitability financial sustainability and legal defensibility And I'll be the first to admit there's a bit of subjectivity in here Why you might score one three versus four should we have three and a half check marks instead? But broadly what we wanted to convey is that on the social equitability front We think the uniform charge scores the poorest the three tier Arguably the highest for sustained for financial sustainability The revised two tier the three tier are going to perform a bit better than the uniform or the current two tier where we might have more revenue risk And then from a legal dispensability front We gave them all five check marks because as I've mentioned previously in the presentation This effort has been hand-in-hand with legal counsel We wouldn't work through anything with staff or with the advisory committee or with the board that we didn't feel was legally dispensable next We also wanted to provide some of the key takeaways that we received from the advisory committee and this would have been a week ago monday And what there was consensus around so there was consensus around increasing fixed revenue recovery To achieve or better achieve the financial sustain this financial sustainability goal of the board and reduce financial risk The uniform option was not recommended by the advisory committee There was overall a preference for a revised two tier or three tier option And there was a further comment to evaluate a possible modification to the three tier option to where we could increase perhaps modestly the conservation price signal in tier three And what that would do is it would lower the price in in tier two next slide We've got a few more service rates and service charges to go through so we've talked about water use rates. We've talked about our fixed meter based charges. We also have private fire line service customers Here we're showing our fire service customers by the fire line diameter So one inch up through eight inch and then also showing the counts of those fire lines Just so we can all see where most of our customers are they're mostly at the two inch meter And then our proposed and current charges So for the two inch customer Where we have most of our fire lines a proposed charge of 15 77 versus the current $10 and 43 A monthly impact of $5 and 34 cents again mindful that this includes the 12 percent overall increase Next And then water shortage emergency rates We we don't have rates to show tonight because it's a function of the selected rate structure But we did want to Acknowledge that we are updating the water shortage emergency rates These again are supplemental surcharges to normal condition rates. They're temporary in nature They are still rates in the context of proposition 218 And so we have to adopt them that be part of our study and they have to be noticed and adopted Same as any other rate. Uh, these are because they're temporary They can be implemented and rescinded By the board at its discretion And the board can use a different tool If it so chooses or implement drought rates that are lower than what we noticed Excellent And so the water shortage emergency rates when we do come back to you once we have a Once we have direction on a base water use rate structure We will update and come back with those proposed water shortage emergency rates The proposal is to maintain the same methodology Which is a percentage increase to our water use rates at each stage We'll simply update that methodology based on our updated costs any changes to the rate structure And then just so we all know what our stages are and what the basis of the drought shortage rates would be We have five stages in fact have six stages, but stage six is open-ended So we would be adopting stages one up through stage five where we're targeting Demand reduction in those stages of five percent up to 50 percent. So that would be the basis For calculating our emergency rates Okay, and with that I am going to turn the presentation over to my colleague Gina de Pinto Thank you, Kevin So if we could move to the next slide I just have a couple of few brief slides Just so everyone knows there is public information available We want to make sure that all the customers and consumers of water in in the district service area Have access to information and so there is a special website. You can see the address there at sokelcreekwater.org slash rate study Where we have located frequently asked questions There are two videos in particular That are really worth watching the first one you can see the screenshot. It's only two minutes. It's very quick. It's easy to watch and basically a much longer more detailed one, but basically it is just to let Consumers know and the customers know that as kevin just went through rates are not Arbitrarily set. They are not picked out of thin air These videos give a real good overview of how rates are set in california We happen to be very different from most other states in the country and we do have laws that must be followed Um Other things that will be on the website other materials certainly meetings and event schedules So to stay connected to the process we have a calendar there And also links to the different meetings presentations I'll be touching on it. We could probably move to the next slide But we held a webinar last week and so If you weren't able to attend or we're curious also in addition to the other informational videos We have a video of the webinar Here's some of the information that the district staff has been issuing for customers um The first of course is the advisory committee and so I I referenced that in the outreach because very few water districts Actually have an advisory committee. So this is your peers. These are customers who are engaged and again, these are not Decisions that are being made in a back room and all of them would be probably willing to address The community speak at at the board meetings or what have you about their experience? You can also see that the district issued information in the quicksips eblast. Hopefully everyone is signed up for that There was an article in the september issue as well as the october issue I've mentioned the videos The district also promoted and held um hosted a table at the farmers market And I mentioned the rep the webinar which was last week And also a new issue will be coming up soon of what's on tap. So Information is is in the quarterly newsletter as well And as we move to the next schedule, we're going to put up the Meeting schedule for you. You can see some of the public meetings that have been held Including the webinar and of course board meetings. And here we are at november 20th And so depending on the board's actions this evening We've got december 5th held in case more information needs to come back to the board Otherwise we are definitely scheduled for december 19th And then as we move through this process and as the board does Recommend or adopt moving to proposed rates Part of the legal process is issuing the proposition to 18 notice Which is a minimum of 45 days before a public hearing And so those dates are coming up and so what we are planning to do is in between The prop 218 arriving in everyone's mailbox and between the hearing We're going to hold an open house that addresses the information in the prop 218 To actually discuss and and answer your questions everyone's questions On the proposed rates that actually are being put forward So we as we as we lock in these dates, of course keep an eye on the website because we will be Updating that information. We don't have those dates as of yet And next up. I'm actually handing it back to leslie who will go through the possible board actions this evening So thank you At the end of the memo. We have some motions for the board to consider The first one is to direct staff to proceed with calculating these rate alternatives based on that scenario in the finance plan of the 12 annual revenue increases If that's the board's decision to go ahead with that then that would help us kind of lock in What we're going to do then on rates Another motion would be to provide staff with direction regarding the proposed rate structures that you've seen here tonight and to bring back the draft Rate report to the december 19th meeting Or you could direct us to return to the board meeting december 5th With some new rate structure proposals if there's any changes that you want to make to what was brought to you tonight Or again to take no action So that concludes the presentation if the board president like to open up to public comment or I have a question for Kevin I suppose One of my concerns, you know of the current rate structure was how um the difference between you know small and large families and and um trying to have it be as fair as possible and With that goal in mind. I'm just in looking at what you presented It seems like it evens it out a little more across all customers with less of a huge jump or those with larger families with either of the Two potentially recommended one the revised structured um two tier or three tier and I just want to see if I'm correct in that assumption Yes, the the revised two tier or the three tier uh is certainly going to take an impact off of Those that have a higher level of use Um, you know, obviously, we don't know if a high level of use is because somebody has a large lot or a large family or whatnot But in that instance where you might have a larger household size Then certainly those options are gonna they'll mitigate Uh impacts from the current rate structure if you consistently find yourself using that seventh unit or eighth unit water Okay, thank you So I have a couple comments. Um First I just love to acknowledge and thank ref tell us and the district and the rate advisory committee for their incredible hard and comprehensive work Um, however, what came to me is I'd like to explore having a one-year hiatus on the rates And I'm thinking it would be so fine if we could explore the idea of selling off a fallow property I think there are some old properties on San Jose road and other properties that are owned by the district To get three or four million dollars to give us one year of no rate increase And then give the rate pairs some breathing room for one year and then come back to this. So that's just an idea I'd love to explore Um, when looking secondly when looking at the proposals, it seems to me that the fixed service charge Which is proposed. It's now at 40 percent. It's proposed to go up to 50 percent and that water use charge recovers costs Associated with the capital improvements supply Based delivery peak demands and conservation. It seems to me I just like to see um an idea of looking at the fixed rate increase b 60 percent That seems to me to follow through fairness legal defensibility financial sustainability and social equity And then third point for me is that I would like to Definitely see more information on that idea of the third tier with an increase in the third tier So that that would decrease the first and second tier um, so Those are my three comments. Thank you Question. Are we supposed to take a public comment first? before questions or after No, I just wanted to Make sure the board understood presentation um No one else has any questions. What about you Bruce? I've got many many questions, but I'd like to hear what the public has to say And I think Typically we do take public comment first And then ask questions yeah that's I don't think necessarily I wanted people to have a I haven't bored clarify any questions they had about the presentation, but um if Do you all are satisfied then I I think that's before any action or serious discussion But I think if there's questions on the presentation, I think it's totally appropriate Okay, I've got quite a few if that's how we want to proceed um It would help me to go back to slides So I don't have the slides in front of me, but Maybe just One of the slides that shows the breakdown between supply And the other factors Let's do it. Let's do it for the three-tier structure If you could It's pretty early on I think it's slide 24 Okay This is two-tier Three-tier here we go So could you explain How these dollar amounts And exactly what we're talking about for supply delivery keeping and conservation We're we're derived Yes, so so our supply bucket Contains all of our costs around Producing our traditional groundwater sources and then We treat the portion of pure water costs that benefit Supplemental supply So for large Water users we treat that as though it's a second source. That is our second source And so then we differentiate it between the the tiers. So we Look at our customer billing data. We know exactly how much water use Is used by all of our customers in aggregate by each account by the class in each month And so when we constrain that water use to just zero to 3.99 units We say how much groundwater do we have available? How much demand is there in the residential tier one class? Is there enough to satisfy it? Yes or no And so that becomes our first source Our first rate of supply then in tier two you see that step up because now we exhaust our traditional groundwater In tier two and we have to blend in some amount of The second source of supply and then in tier three we go to entirely Supplemental supply from pure water. So that's how we differentiate the supply costs The delivery costs again are based on average. Could I ask some questions on that first? Yeah, yes Okay so for pure waters Soquel It's meant to Not only provide more water for use but also to recover the basin So was there um Some Assumptions on the proportionality Of what's needed to recover the basin versus what's available for use Yes, thank you. So 40 percent of our 40 percent of total pure water costs are attributed to The large volume water users and what we do is we step through and say How much water demand do we have? How much water will come from pure water so we know those And then we step through the actual customer customer demands and say how much water use In aggregate is there over six units per month because six six units per connection, which is our current basis for residential tiers That represents the the sustainable supply amount of water that any connection can use up to six units per month So we say how much water use is there an aggregate above six units a month? And extrapolate that out across the entire customer class and and excuse me across the entire district all customer classes To identify how much is required to be from supply and that's 40 percent the residual goes to the basin white benefit Okay, and delivery is the same Delivery is the same. Yeah Irregardless the PQ Is that that's based on data? Yes As well Yes, so so we step through again We look at we have our customer billing data for every account in every period And we calculate the maximum period of use the average period of use We do that for each class and for each tier and that's where you see that peaking differential that goes Lower to tier one where we have a lot of consistent use Then it's highest in tier three where you get the seasonality Of irrigation in the summertime and then similarly in commercial you see that it's kind of between the peaking In tier one and tier two residential And then irrigation is highest as we would expect tier three Tier three residential peak and irrigation's peak are almost the same which That's kind of a check for us Because those are both seasonal demands Okay And then conservation on perplexed on So How do you assign conservation? So conservation For commercial and irrigation we apply that across all units of water And then in the residential class we recover that only from tiers two and tier three We basically say that tier one water use is not That that use up to four is not what's causing us to incur costs of conservation programs And so you see that 84 Sent rate in tier two and tier three because what we first do is identify how much Conservation do we have in total? How much do we recover from the residential class? And then since we're apportioning it only to tiers two and tier three. That's where you get the 84 cents Okay, so there was some Implicit assumption that residents should play pay for conservation more than commercial and irrigation So it's it's not more it's so if we applied if we applied Conservation costs across every unit of water in the residential class That unit rate would be 24 cents just like commercial and irrigation The difference is that unlike commercial and irrigation we are only recovering the residential classes share of conservation costs From water use in tier two and tier three Okay All right So that that gives me a better idea um So We might as well just keep this up. So how did you determine the brakes and the tiers? Why did it was 0.99 and 7.99 a break? So, uh, we stepped through a demand analysis So again relying on the district's actual customer billing data And identifying logical break points so I think it's important for everybody to know that Proposition 218 California law does not define how you set tiers how you identify tier breakpoints But we want to have a logical method of doing so And so most common is to either look at demand patterns Efficiency standards or sometimes a combination of the two And so in the three tier for example, well, let's let's if I can we'll go back a few So you're existing your existing two tier is up to 5.99 and again That's based on said and if we take the sustainable yield of the basin of 2,900 acre feet We divide that across every connection and every month We have about six units a month that a customer could use. So that's our logical breakpoint Existing and that's the breakpoint for a revised two tier in the three tier We said well, let's see what happens if we enter if we have an intermediate tier And so tier one we defined up to 3.99 by looking at your demand patterns And what we see is the residential Single family residential class In the winter period uses on average about three and a half units a month. So what we Commonly do is round up to the nearest whole unit now you have Uh, you have an approach where you it goes up to the You know 99 out of 100 and before the the charge rolls over So that's basically your winter Your customer's winter demands rounded up to the whole unit up to four Similarly with with tier two we said let's look at Peak water demands peak summer 75th percentile of water use in the class And that's on the order of 7.37 and a half units per month And again, what we do is we round that up to eight So those are that's how we define the tiers But there's also an argument to say it's based on efficiency standards You could you know, you could back backwards calculate and say 0 to 3.99 hcf per month Is basically the efficient indoor needs of a family of of two a two person household And similarly eight units a month is the efficient indoor needs of a four person household Now your customers are more than efficient. They use closer to essential needs And your household occupancy or your average household sizes on the order of 2.2 to 2.5 people per household Okay So i'm thank you for the explanation kevin Welcome So you did bring up the efficient use So were there any rate structures that Just based it on What the an efficient Use of water is numbers You know for santa cruz county Where it's something like 30 35 gallons per person per day, right? Trying to think if we I know we looked and I might have to lean on lindy roth who's online as well. We looked at our demand patterns But we also wove in efficiency standards to kind of see Where do your customers fall on their actual demand relative to different standards? And so, you know everything from essential indoor needs Down towards about 35 37 gallons per person per day Up to the current efficiency standard, which is 55 gallons per person per day And mindful that in your service area You have some communities when we look at the census data that are about 2.2 people per household and up to about 2.5 And so, you know to to define it, you know, you have to so you have to pick Say, are we talking about efficient or essential or something? In between or or efficient in five years if we go down to 45, which your customers are kind of already there And then what do you pick as a household size as well? And so, I mean that that is that's a common approach for defining tier one Now tier two we normally get more into the seasonality because Tier two often reflects seasonal demands or some irrigation needs But certainly your your efficiency standards and household size come into play and then in defining tier one Yeah, so it looks like Tier one if you had a the 2.5 or 2.6 average number of people per household That's uh would be 3 000 divided by 30 so it's about a hundred Gallons per day for for tier one use if I've done my math, right? Yeah, let's do the math so 3.99 times 748 divided by 30 31 Yes, thank you and divided by 2.5. So you're right at 40 40 gpcd Okay And and that's reflective because so that's a that's again a nice check because to say that This four gets you to 40 gpcd, which in most communities would seem unattainable But when we look at the average winter use of your class your Your customers are there or even slightly below Okay I've got more questions. I don't know if other directors wanted to ask the questions at this point or whether you want me to continue on Well, a lot of the questions you brought up or brought up at the rate committee at the rate committee meetings That's one of the reasons I wanted to bring this out in front of the public Okay What let me just ask one more if you could you showed an example with five Units what the effects were the different rate structures It's a bit later in the presentation. I think not too much There we go so You want the monthly dr. Jaffer. Do you want to impact per day? Either one's fine These are these are per month per day. So I'm just curious what happens say Three It is the same story basically that The dollar per day impact Is very similar for year one being highest And then the subsequent years being lower And they're not being except for the existing structure Not being a big difference Yes, but I'll say that yes, it's true for Having the largest impact in year one and then having similar impacts in years two three and four That will be true at any level of use because the cost of service and the rate Modification only happens this one year But if we go if we go back to the prior slide perhaps The impact is going to be it's going to be slightly higher on a daily basis At say two or three units because we're again, we're recovering slightly more from fixed charges We have the addition in the revenue needs 12 percent And we're now recovering some of our base and sustainability From everyone and so that kind of compounded effect means you're going to see a slightly higher increase On the lower end and slightly less as you go up the usage scale And I may take the opportunity and then you'll see savings above say seven or eight units per month I may take the opportunity here too to address um director balboni's Comment about going up to 60 fixed When you increase the fixed charge the impact to the lower users becomes more prominent And then the since you have this slide up director balboni also talked about the Decrease in a higher amount of water use and explain that to me it yeah, so that's a that's again a function of The revisions or the possible revisions so the existing Maintains things fairly similar to what it is the uniform The higher end is going to have savings because now they're just paying the average rate There's no tier two and similarly in the revised tier two and the three tier that highest tier comes down because we're Where right now we're recovering all of our base and sustainability costs from tier two Now we're spreading it across both the water use rates and this basin wide benefit across all users Yeah, no, I I agree with the logic that Everybody uses the water and we need to have A sustainable basin So everybody should contribute to that So All right, well Thanks for answering the questions You're welcome We should open it up to the public You have to come to the podium Yeah, you need to be recorded. You have to speak Make one comment and I would like to commend Your newest member miss balboni She is the only one that mentioned Something tonight for the reason most of us are here and that's mitigating the rise this whole hour was How can we stick it down? What's a better way to do it? She mentioned ways of perhaps deferring on saving money. That's what we're really interested in. Thank you In president christensen, we're glad to respond to some of these if you like at the end of all of them We can go in between but I'd recommend let's listen to what they all say. Yeah. Yeah So i'm not very good at this so I actually pre-prepared something tonight, but before I start I have to admit I'm also frustrated because Much of what you guys have been saying is that you care about what we have for feedback and all I've heard is about raising raising our rates so I'm here to express my concerns regarding both the recent and proposed rate increases I belong to a low-income family of six. My husband is a full-time worker And I am currently an online student at arizona state university Like many other families. We are struggling to get by given all the recent increases due to inflation We're conserving as much water as we possibly can no longer washing our cars at home and doing most of our laundry at outside facilities Placing our household and of six just above what a normal water efficient home of four would typically use based on your company's standards And are still paying an average of 230 dollars per month This has become a huge hardship for our family and we have needed to borrow money at times in order to make our payment I'm concerned that there are no programs for low-income families or elderly customers on fixed incomes The only offer you have is a once a year forgiveness. But what about the rest of the year? Why are there no programs similar to egenius care programs that are designed to provide a reasonable discount in order to make paying for Utilities possible for everyone Have you considered removing the 52 and 34 cent service charge for low-income and fixed income families? Why is there no consideration for the amount of household members in the tier system? It seems far more equitable to allow each member a certain amount of usage before tier two charges begin It seems unfair to have a household of six beginning tier two at the same rate as a household of one All this is this is a municipality. We have no other options other than to comply with this immoral and unethical gouging of customers I like every other renter face eviction if utilities become shut off if we are unable to keep up with your ever increasing rates What do you propose we do? I have recently been made aware of the cost of the pure water so-called program and how I guess my time is quickly running out No one has proposed pay cuts, but rather taken raises and retroactive bonuses on jobs that have not yet to be completed Maybe we should run for a seat ourselves with the amount of money we would be making then Possibly we might finally be able to pay our water bills My name is Nicole Malcolm and I have some questions about we've talked a lot about rates and how How we're going to manage this space and but I haven't heard anything about How we're really going to capture some of the rainfall in the good years Rather than letting it just run into the ocean And I've heard talk of it before but I don't know if that's been studied Or if you're planning on studying that Or if there's some viable option in some fashion I know some of the waterways have to have clean water going through rain water Going through but it seems like we've got an awful lot of mountains around here and I myself have lived in the bay areas for 68 years It's unfortunate that we haven't really managed our water Or our population need of water So I'd like to see you know levy specs and I'd like to see more reservoir basins And has anything been done around that because I think we have to think outside the box And manage what we get And manage ourselves when we don't have the excess The other question I have is around so my second question Is with regard to new builds 80 years and sprinklers now required in those new builds And what the costs are for those kinds of hookups My third question is whether or not the rates that were presented tonight Has actually considered inflation As as we here we are and it's not going to stop unless something really changes So is that captured also in this study and in the numbers presented? So those are my questions This is all on top of a 9% for the last five years, which is about 54% compounded I don't understand Why this district is not cutting back costs You're giving bonuses to people on projects. It aren't even finished yet Usually bonuses are given at the end of a project if it comes in under budget And before the time and you guys are giving bonuses retroactive You're giving raises retroactive Come on Why on our backs? I was sat out in front of deluxe for two and a half hours a couple of Saturdays ago So many older people came up and said I can't take a shower every day That's sad They can't plant their garden. They can't have flowers or vegetables. That's sad. Are you happy about that? They cannot afford to take a damp shower It's wrong As you are making a ton of money as we're paying benefits for x employees at the tune of about $17,000 a month I don't understand that We have to run our households within what we get And within reason and It just it doesn't it seems like you guys are being so irresponsible You're making housing more expensive. Everyone says we need affordable housing. How are these people on fixed income supposed to do it? I'm not I'm not retired yet. So I'm not on the fixed income But when it's just unreasonable of you guys to expect people to take after 54 percent raise to go up another 12 percent every year It's it's unreasonable Go talk to these senior people that are having a tough time not taking a shower every day is Unhealthy, it's it's not good for people's mental I'm sure you all take showers every day thank you Hello, my name is Becky Steinburner and um I am very worried for your rate peers. I've been for a long time Um, I wish that these slides could have been made public on your website before tonight's presentation It was a lot of information and I don't know how you expect people to absorb it in a short time So please put those up on your website and do so in advance of presentations in the future um The water rate advisory commissions were also not public They were before when you did this, but they were not public meetings this time That would have helped your rate payers to be able to attend those and uh, just listen in So my question is um, what is the cost per unit of the pure water so-called water That hasn't been explained and yet it's being factored in as part of the sustainability cost and Certainly the debt burden But we have not heard what the consultant determined is the cost per unit of the pure water so-called source I'm I'm really um disturbed to hear and and please correct me if I'm wrong That um, the impact will be the highest on the lower Water user rate payers Well, that really speaks to those rate payers that um, as Kirby just talked about that have conserved all they can They're on fixed income and even our seniors and now they're going to be bearing the brunt of it to Be equitable um, I I really questioned that um Why you did not even ask the city this past winter when they had a lot of rain You didn't even ask the city for uh surface water to put into the aquifer and help out How will you how will this change if direct potable reuse is illegal? And um, is this really legally defensible under the new case of patz versus the city of san diego And san Juan capistrano that was already decided. Thank you Hi, my name is tony crane First meeting in a while. So I don't feel like I'm totally prepared for this but Like property taxes if you guys consider trying to make it socially equitable for existing users Where somebody because of the mandatory development that we're Being that's being put upon us That people who move into the area Uh at this time pay a slightly higher rate um to keep those people who have been here a long time um at a lower rate so or even As much as I hate to say it some sort of fee at the time of purchase um within the district within our district That would help supplement that So like a property tax where you're you're in and it increases just a little bit Each year but those people who then move in actually pay at a higher rate based on You know inflationary brings us things go on Has that been considered? Is it viable? Thank you Hello, my name is anthony. Um I'm just here to ask to please reconsider increasing rates that we already have a hard enough time to pay The rates have gone up nine percent in each of the year in the last five years and I just don't understand it but uh so Basically, um, I my household we have six and we're using the average of the family of three or four but still being pushed into the Tier two very quickly and um So I was just wondering if there's another way we could Maybe raise some money through grants get a grant or raise money through something and take this already heavy financial burden off the customers Um Also might consider a fixed income or lower income households also something that was mentioned by miss shumacher I believe was how do we not outsource or why we don't outsource for water and we depend on rainfall? um, that's understandable about the rainfall, but why don't we read outsource, you know just to but um um also so We didn't vote Or for you guys to raise our rates and fees We already have a hard time as it is and the board numbers have run their campaigns claiming they will consider us Great payers and lower the amount we pay for some service and consumption and uh, we as community members trust that Those of you who we voted for would make good on your promises To us in the community and that is not happening That's all right, if you'd like um We can take a minute to respond to some of these thoughtful questions Would you like us to do that? So i'm gonna ask my colleagues here. I know noni you were taking notes Leslie you're probably listening so I'll just try to go through the way I heard them if that's most appropriate and forgive me if I miss somebody's specific comment Trying to take it all in so the You know there's two sides of the equation. What is what do you have to do to pull money in but also? What are you doing to to save money, right? and You know, that's that's a legitimate question because it seems like you know governments looked at is just spend spend spending they don't really reflect on how to Uh be more efficient save money and that sort of thing so I'll I'll throw out a few things here I'm going to start big and then try to give you some specifics This is by means not all but it's what I'm trying to do It's just give you a little insight into how we work. Okay, because it's impossible for me to To give you everything but What we do but from the very beginning staff is one of our largest costs. We have held staffing Constant for I know last eight ten years. We had a little blip and then I ended up cutting three people So that that's the the the big picture we Periodically come back to the board and these are in different memos Looking at this specific topic. How do we how do we save money? How do we become more efficient? And so the I'm going to give you some some things here so A couple examples that I'll just put in just to give you the the real touch points So I think probably Four years ago as we were building pure water. So Cal we saw a moment in time where we could save about 200 grand If we had a board meeting early or we were able to get to the board and pre purchase that building Before the price inflation cost went up somebody mentioned inflation We were able to do that was going out a limb a little bit because that big blue building that you see down there at Chanticleer we were able to purchase that it's not so much the savings there what I'm trying to get to you But it's us monitoring that seeing a moment where we can actually save some money and so we we jump on it That's just one one little thing We have written we have a leak adjustment policy and whether you agree with this or not It we've written off. I think about 200k a year and trying to help people who have leaks and that the bill gets very high that's not necessarily Savings but it's a way to look at it We've negotiated with our meter vendors And repeaters that which have saved about 25k We charge we've changed out all the large meters ourselves instead of contracting it out, which is another 100k we look at every position and I can tell you staff goes through agony on this anytime Somebody retires or steps out. We stop we put the brakes on everything and I say, okay Let's take a moment. What's changed that we don't what we what are we doing that? We don't need to do and we what do we got to do in the future? So just recently we had somebody retire We repurposed basically that position to something else that we need that we know we were going to need in the future So we kind of eliminated a position but fill that one that's coming up so Those Are a few and somebody mentioned we have some temporary Employees how many do we have to To we do we try not to if we think we're going to just need somebody for a short time We try to just hire them for two to three years because we don't want to keep them on the payroll long term, right? So it's another way and usually, you know, there are people out there looking for that So it's a it's a good deal for them and I think a good deal for our customers Um I don't know if you've been following us. We looked we did about a year long process. We had another I don't know if it was an ad hoc or public committee at uh, how can we work with the uh, city of scott's valley or the Water district of scott's valley. Where can we find cost efficient savings? It's kind of like they did with the fire department, right? So is it our hr? Is it we can share equipment at a certain time? And that didn't pan out that we tried and really what we saw was scott's valley probably got a much better Cut out of it and then so cal would have there are customers. So we didn't do that. But the point is is we We we evaluated that Um, and there's there's those are just Some examples on that particular question We continue to to look at cost, but did you want to add anything? I'll move on to the next question Okay, so It is foremost in our mind and I'll tell you somebody mentioned we're like a monopoly We we kind of are but you know what I constantly say we cannot act that way that is not who Who we are, you know, that's not in our dna because we do have control of the of the water so to speak We constantly Are mindful of that and I and I take that to the core. So the second question That I heard family is six Larger families as you heard tonight the two new I heard two of you family is six The lady who came up first and then I think anthony maybe you or somebody These rate structures and dr. LaHue we Inferred from it. It's a balance when we we have to collect so much money to do to do the Work that needs to be done We don't want to end up like the basin that you see up in Salarins or where the water district just folded, right? And you see that you see that around so our board's been consistent about periodically just keeping keeping it moving investing in infrastructure, but the Where was I going with this idea the oh the this rate structures are meant That the ones that the the water rates advisory committee is looking at to try to find Help those who probably need it the most the assumptions made the larger families Need the break the most and that's what these rate structures that are being recommended by the water rates advisory committee Are proposing to do it the larger families. Okay, you can be fixed income in a larger family. That's the double whammy, right? So that's that's the idea there The pg&e the care we do have that we do have items That we try to the lee whop and programs that are funded by the state But we're not a private entity like pg&e is the real nexus and this gets to somebody else's question about the tax Is we have to show A nexus we can't have one customer class subsidize another so you can't say well certain people are wealthy or Let's let's stick it to the businesses or whatever you just can't do that by law We have to show in our in our record that There's a there's a scientific nexus there So now i'm telling you all this but it's I'm trying to do in a way that's not defensive. I heard somebody just speak in the public It's just i'm just trying to respond and give you honest answers to your questions here So regarding the rainfall in a good year Uh, great question. It's crazy. We get about 30 20 inches of rain here up in the mountains They get about 80 at least in the bonny dune, right? So where's all the water going? Well Two things we've we've evaluated all these options Uh, the the there's a couple fundamental things when it rains Usually rains in a very short high intensity short duration So it's you have to have very large vessels to capture that it doesn't it's not cost effective The city has a reservoir they've had And it's the it's the only thing we have like that now We have looked at the city and we have an ongoing program We started it about eight years ago to try to transfer water with the city of Santa Cruz I would say with anything they've probably needed more water From us and they were able to supply us so that hasn't been as turned out as hopeful as we wanted The other thing we did is we had a study done again about rainfall Andy Fisher up at UCSC and this is on our website. I'm sure about where can we recharge our basin Where can we make big catch basins and let it infiltrate? We don't have a good basin for that for the majority of our basin. It's like a pancake layer So there's sand there's there's a clay layer sand clay So you can't just stick it on top it won't infiltrate down and the aroma shreds sands There's a little bit more opportunity for that But we've only been able to find very very small like one percent of our of our recharge But we have looked at that option extensively 80 years Somebody said about the cost of those it's a That we're driven by the law on that for the most part some 80 years So ones that are have existing structure and aren't too small The vast majority of them get don't have to pay a hookup fee And then new ones do currently so I will say that How I can't make do with that question Why are we not cutting back on cost? Just can't understand that. I think that was you miss Kirby. I've given a A couple examples there the Somebody in line with that asked well if you can't cut back on cost How can you get other revenue are really only source of revenue? Are is selling water and here's the crazy thing about selling water? Okay, this is a kind of a tough concept Whether we supply 100 gallons or 100 million to you Out there our cost are about 97 percent the same and that's just to have water ready for you to use Again, so when water use goes down That's our only source of revenue But yet we still have incur the same cost and it's a function of what they call a high intensity capital Endeavor such as a water agency And it's our nemesis who's out there saying who has a business that says don't buy our product, right? And then when you do don't buy it our revenue, which is all we have goes down except You can go out for grants and loans and that's where we have been exceptionally successful Greater probably than I would say Many fold over than any agency our size relative to our thing and that's because of the staff the board Going to places driving to places attending regional water boards state water board meetings Talking to the federal bureau of reclamation and hear the numbers help me out with the numbers The state water board the most prominent figure in the state of california the state water board 50 million dollar grant for our project nobody our size gets that then they went back and solved some escalation going on our project How much did they add melanie? Another 13 million it didn't stop there. They even offered us a low interest loan to go beyond that Then we didn't stop there we went to the federal government We went back to dc. Yeah, you can say oh what cost of flight of dc it does but these are calculated risk To say we'll put this much money in to get this much money and the board even questioned at the very beginning I said I think I can't guarantee it, but I think it's a good Good, I don't want to say gamble but a good use of of rate payer fund So we've I don't know how much we spent but you know imagine three or four people flying back 30 million that just happened last week 30 million they only in one small span have ever given out more than 20 million You know and then this year we hit we hit the jackpot with 30 million So that didn't stop there. So then we go to epa us epa and we know we we want money to fund the the pure water this is for pure water Soquel project and At the time we're trying to borrow they they do they do loans they don't do Grants the others are grants just free money except you got a mantra and stuff like that 88 88 let's call it 90 million 89 million roughly and 1.3 1.3 interest And I and here's another insight to us when we were watching that a couple years ago that interest rate It was a struggle amongst us three. We were watching this interest rate. I mean by the hour going okay it's going down it's going up and The argument here was hey, it's going to it may drop down to 1.2 Wait to lock in the argument here is going to go up Quickly so lock in so we locked it in at one point. What did you say to 1.3 percent interest? Look where the interest rates are today. They're around seven eight percent something like that So that saves millions and millions and dollars on top of of the other money so You know we are we we we should We put ourselves out there. We struggle to do what we can and and yet I get it It's not easy. You're looking at we're looking at rate increases and it's it's tough, but You know, there's a there's a project down south. Is it Grover? Grover Beach. Anyway, they're looking at about 20 25 percent there's another Outfit out there and what they're why their rates have to be so high It's because they haven't invested over time a long time ago about 20 years ago Our board saw the need for a project like this and they said start investing in that infrastructure now So we don't have to spike rates like 50 percent like some of these agency have to do Another way we're looking at revenue is the mid county groundwater agency had to be formed as an umbrella agency Over this agency, which we're a part of the county the city of Santa Cruz central water district and free private well owners and the ideas they are that they're responsible for the basin being in basin Are in uh reaching sustainability and by 2040 Otherwise the state will come in And they've set it to my face and they will cut everybody back. They're not going to institute a project cut everybody back And when that happens, we get even less revenue and rates go up more It's like that that If you maybe I don't know if we can pull it up But Melanie showed you a diagram an economic study done by Brent dr. Haddad up at ucfc and what that study said without the supplemental supply that's costing us Some money, right? It's a two. It's a basically 180 million dollar project. We thought it was going to be about 190 90 or 100 million that project Is actually cheaper and we have a slide if I need to show it to the rate payer than when we originally projected Even with it almost doubling costs because of we got more grant funding and rates to offset it Now, where does that happen? The what we told you the project was going to cost is actually going to cost the red payer more I know it went up. We were struggling. We were looking all kinds of sophisticated Monte Carlo curves and dealing with inflation. It's going up covid hits us It's going to cost the rate payers less. Yes with it with because of that funding The other thing I was going back to the mid county groundwater agency Part of the endeavor that's going on there now and somebody mentioned this and believe me. This is not lost on us is We pump I don't know out of the basin. Maybe 60 percent of the water So we're saying hey, yeah, we're solving the problem Yeah, and that's why the state is recognized as you heard this This was no joke at the meeting people are like you're the model This is why the state and the federal government they want us to crack the code on being a sustainable community That's a smaller community and we're the first to do it And that's why they're investing in this But we're also saying hey, there's a lot a lot of other pumpers over a thousand other pumpers. There's caprio There's the golf course. There's I can name them and there's a there's a lot of private pumpers too We're not asking them to pitch in we're considering them de minimis But we are going to look at and say hey if you're part of the problem We think you should be part of the solution. It shouldn't all weigh on our our rate pairs And so there's there's an endeavor to uh go to that you will see that if you go to the nga Make county groundwater agency meetings. You'll see that play out next Two weeks whenever the next meeting is and it'll probably take a year or two to get through that process um The oh, yeah, thank you so so much the property tax thing I wanted to touch on that that are the the having somebody else pay more I don't want I'm not a lawyer the old caveat, right? But you can't again. I think that crosses the bounds of prop 218 where one customer class offsets another customer class, but still Take it under consideration. We'll go back Melanie mentioned the optimization study. That's another big thing. Oh, we got another 6 7.6 million dollar in grant funding The mga did of which we paid a lion's share so We we took about I don't know two two million Of that and we're trying to look at how with the city of santa cruz can we optimize? Uh the water situation so whether they have excess water or whatever But one of the big components is is when they're when it gets times a drought they don't have water And so a recycle system like pure water soquel is we can run constantly and put have a around the year Source of water. So here's the here's the cool part And this is why I think the federal government gave us 30 million dollars Is when they said why should we give you water? I said well, we're critically overdrafted. Hey a lot of other basins are hurting too Uh, we're trying like heck. We're doing this x. So are the other ones. Well, our bores said Go ahead if you're going to build this project make it in such a way that the rest of the community Can benefit from it if they need to because we think they were going to need to So all that traffic you're stuck in the road part of that's us a lot of it probably nine There's like nine projects going on one of the projects is pure water But that the pipes instead of being this big They're this big and the reason are that big is so the plant can double in size when you go to the facility There's three pumps. It has room for three more pumps So the everything below ground Is doubled in size and everything above ground is able to fit Double capacity. So this optimization stay. We got a 7.6 million dollar grant of which we're using 2 million. We're working with City of Santa Cruz to see how we may optimize those those projects to the benefit of us But to the benefit of the whole community, right? So that's another way We're trying to Save the customer money Yeah, I think I'll I'll stop there. I don't know if I missed any questions if I did I'll be glad to answer them But I tried to write most of them down here Thank you Yeah, I'd also like to just Well, this is a our overdraft problem started You know, we became aware of this 30 years ago 40 years ago even and Searching we've been searching for a solution. The district has been searching for a solution for that long And we are now within reach of a project a viable project that will provide the first supplement supplementary water To our district in 50 years. So we this is a new source of water We're doing everything we can to make sure the state requires us to make sure it's purer than the water That we inject will be purer than the existing water or equal to it Which is one of the reasons why we cannot automatically inject San Lorenzo water into our aquifer that would be contamination issue so Yes, just just keep in mind that there are very strict laws about What you put into your groundwater Anyway, uh We are now within reach of that we The whole district has worked and struggled hard to pay for it With the least expense to our customers I'd also like to point out that The state has uh And lesley strong has been working with the state to Provide a way for People who have limited income to pay their water bill is support for their water bills and uh Not that many people have looked into it, but you should You have that issue. There is a low-income household water assistance program available to low-income customers And anybody that's interested in applying can definitely contact the district and we'll get them on the right track Do that is it on the website Yeah, it is and Yes, you should there's a lot of information on our website actually, but It it might take a long time to plow through it, but it's There's a lot of information. I have some other things. Does anyone want to talk? No, go ahead. What? Yeah, is to your comment. I That would be really nice. I'm not sure we have we Due to an increased conservation. I think we You know, we're nine nine million dollars in the hole and i'm not sure we have saleable property that is equal to anywhere near that amount of money any kind of a property sale We can certainly look into that. I think besides the property sale. There's Uh, also potential legal ramifications because I did explore that in the last day or two You heard that thought One thing they can be done though is that can go on as the process goes on I mean the process can go on and if something does come to fruition like that because it takes time As mentioned before and as the board has done before they can set the rates and say hey, we got you know x million dollars and We don't have to raise rates as much as we thought and and the board has done that before actually we Maybe perhaps should have done that in the last three years that because we We didn't have the uh sell as much water as predicted by our budget And uh, but we didn't raise the rates above what we had the 2018 process said we could do that I don't have a conversation I mean we don't we don't speak from the public like that It's the board's chair to ask if you want to if she wants you to come up to the mic So for one you're not on on the television being recorded and so to the audience watching it It doesn't make sense. So but again, that's the board's discretion. Yeah, you won't be heard on the Yeah, yeah, you're not in the public realm No No, but we are commenting on the public President christensen There was also a question maybe we can address it which was um, whether or not inflation was included in These proposed rates and maybe kevin or or leslie can answer that Yes, we did include inflation in the proposed rates Um, we included in inflation at a slightly higher amount the first two years of the rate study And then dropped back down to a normal two to three percent general inflation rate for the following couple of years Sorry, I thought we were looking at the rate structure in order to figure out a way to balance it to make it more equitable if we like For people that have bigger families or other Uses we're not determining the rates right now Well the depending on if you were If you were interested in choosing one of the rate structures that was presented tonight There are rates available for those structures We did we did share those with you tonight. That was just a Even like if we're using What we're doing now what we'd have to do with yeah, that's that's a 12 annual revenue need right that was just a And a number to compare the rates We did we did do that with the rates with the rate water rates advisory committee as we looked at rate structures Rate structures with zero increase in rates so that we could do that comparison The rates we presented this evening included That 12 increase in revenue need for each of the four years So are we choosing a rate structure or are we choosing a rate? You're choosing a you're choosing a rate structure if there's no Adjustments to that structure then you would also be looking at these rates. We're not approving the rates We're approving a rate structure rate structure And and then the rates themselves and the draft report will be brought back to you at the december 19th meeting for final approval Because I think things are like Getting convoluted. We're not approving rates tonight We're really directing staff to go back and tell them whether they need to come back on december 5th with some other alternatives to look at Or whether we're happy with one of these four Rate structures, correct. We're not we're not making any other decisions tonight Some of the rate structures will be reducing people's monthly rate Because they're using a lot more water than others Correct the couple here this evening that had the large family would probably see a reduction in their Yeah, they would see a reduction people that water their lawn and You know have dogs that don't like Fake lawns can we'll have a rate we'll see a reduction Depending on the rates right So it so you know the feedback Should be coming from people saying which rate structure they'd prefer Rather than saying don't raise rates because we're not looking at raising rates tonight We're looking at what rate structure. We're going to use because some people will benefit and have A lower bill Based on which rate structure we we choose so I mean I'm sitting here listening to all that and I'm going wait First you got to decide How you think we should be doing the rates to benefit some people and it's going to be a detriment to others I happen to be in the very low end of the rates Of the water use so I'll be paying and I don't have a problem with it more money If we pick one of the other rate structures So, I mean that's my comment. I kind of I think we've lost track of what we're doing tonight. Oh, I don't think so. I I think we I wanted to hear what everyone was thinking about the whole we're going to hear it again and I'm I'm not undoubtedly But but it's still it is still information and I did take lots of notes so I would think that inflation Definitely affects all of us too and as ron mentioned a lot of our costs are staff costs and our staff You know has to deal with inflation just like everyone else. So we So I'm not part of it. We really Really want to make sure I mean we can't change that part of it Um, I don't think it's a bad exercise to have each department. I mentioned this years ago Look and see You know if they had to cut back by five percent or ten percent, where would they cut? So they're prepared to do that if we end up I mean, obviously taking Taking care of our groundwater basin is our number one Goal and it's going to cost some money to do that and we've come a long way and I'm I'm very thankful that we have worked this way, but and it's not going to It's not going to make the cost go away, but I do think we should try and be as efficient as possible um I also as far as this rate structure um When I First of all, I think It would have helped me too to have the slides ahead of time Just for future meetings because because there were all that specific information on the different options wasn't there and I like to study that but One of the things that bothers me and I understand the desire to cover more of the Fixed costs with a fixed, you know service charge But I Bothers me the amount that looks like it's going to affect the lower users the amount on their bill and I'm not Yeah, and so I'm I'm not sure I'm comfortable just saying okay. Well, let's just go with 50 percent I want I think I want to see the numbers Leaving it where it was too and see what the difference in effect when everybody is Because I don't you know, it's just a large dollar Increase for some of the lower water users that have been trying to do their best I understand we all got to cover the price of the sustainable basin And I'm happy to do my part, but I just I want to see that options Include when that doesn't have quite a Significant impact on those lower water users As far as the structure Yeah, it's it's really a dilemma because At the last rate the last time we had a rate meeting We were limited to two tiers that was in previous rate meeting rate studies We Yeah, one point and that provided for that gradations, but um, so the concern was for larger families Getting stuck with a higher cost of water. So We're trying to balance all of these considerations in this rate structure And that is why the rate The rate committee members the citizens that were volunteered for that committee anyone could have volunteered As long as they were in the district But anyway, uh, that's when they chose the three that was their preferences the third the three tier was to let Know the rates increased gradually for you know most Over 70 percent of the users so So can I talk? The the reason we went up to 50 percent is because we came in short because of low water Water usage and we're trying to make sure that the district doesn't go You know doesn't go any deeper in depth because of people using less water And that's why it went up to 50 and that's why you talked about 60 percent because that way we have a more stable income So that's what was discussed in in the In the Meetings I wanted to add one very quick point is just that um, I mean of course I'm in the lowest user group too but The thing is is that 70 percent of our users are in the lowest group Wait And and that is why it works To put a little increase on the 70 percent To raise a lot of money Yes, so big picture First of all we we do have to be solvent we have to meet revenue Needs to keep certain ratios at certain levels Those are givens how we do it We have the flexibility In both rates structures on how we apportion The needs We also have The possibility and I support What tom said about you know, let's look and see if if there are ways to cut Um But Putting things in the the real big picture. There are some just huge huge Um Decisions that have been made by the board that have saved Our customers an incredible amount of money one was refinancing some Um some debt when the interest rates was low That that's uh saved a lot of money has saved about seven million dollars. Dr. Jaffee How much was that seven million? Seven million. Yeah so And I think that we Unfortunately Do have to raise rates I'm a a rate payer I don't like paying in higher rates for water I don't think anyone does I'm open to solutions that would make a significant impact Um on decreasing the costs For the district um But actually I think we're at a situation where we have an aging infrastructure And we have to maintain that and if we don't It's going to cost us a lot of money down the Down the road and I'm talking near for teacher not Decades away. I'm talking years away Where if we don't maintain this of our infrastructure we will um have To respond quickly and inefficient Inefficiently to main brakes Etc And so we We have to do that The pure water soquel Uh project To stop seawater intrusion Or to slow it I don't think it's an option not to do Something It gets mentioned that we should just get water from the Santa Cruz They're not giving us any water. They have very They have they have problems of their own And they have very strict um A strict set of rules for when they will give water and they haven't Being able to uh give us water Many of the years that we've had an agreement with them So But I do agree That uh We as a three-tiered system gives us more flexibility On on how we Um can Raise the revenue And adhere to As much as possible to The fairness equity So I I support that Um at one point we had five tiers I Maybe a dozen years ago or so um So in terms of a rate structure That that's what I'd like to see us uh use And then work out the details On how the Um the cost or portion um That Do match The cost of the water and Also At the same time Um have a fairness overlay on them So That's where I'm at with all this So what we could What we could do is we could I'm I'm listening to to the feedback What we could do is we could bring back um At the how hold a December 5th meeting we could bring back some Rate structures that showed The same Fixed versus Variable allocation that we have right now Which I believe is about 46 64 46 54 sorry We're about 46 fixed right now Yeah We started out 40 but over the last three years of the rate study Because we've brought so much less in on the commodity side The reality of it has been that we're closer so we can either Do what we are doing right now, which is about the 46 fixed or we can go ahead and drop it Back down to 40 Or we can do both we can model a 40 and a 46 Yeah, I'd like to I'd like to see that okay. I don't know what the other directors think We'll be back to not having the funds come through because of water use We will we will be putting ourselves in a position where if water use decreases substantially Then we will not have collected the revenue that we needed it correct And I I think that's not prudent to do that I mean one of the goals is financial sustainability, which we have to have right We have to meet our cost another one is the fairness thing. So I'm just I'm There must be a hundred percent Everybody pay that I'm just talking about the increase in one year Well, I have a question I don't know any of the other directors or people in the audience. We're thinking this is Is there a way To ramp up Rather than have as big a you know, 12 percent the first year, I guess that comes from the Fixed portion of the costs Is there a way to ramp that fixed portion up? I know it's complicated but instead of saying you know, it's 50 percent From the start in all four years Is there a way to I'm gonna have to go up from from less. I'm gonna have to defer that one to kevin Or josh, is there a way for us to begin with 40 percent fixed component and raise it over the course of the four-year study? Perhaps I'll take that first and then Josh can weigh in we would not advise trying to phase in that increase because It needs to be based on the cost of providing service And so unless we can demonstrate It would almost be like we're doing the cost of service every For each year of the four years um, I think the alternative that would That might get to the same place Or a similar place Is instead of talking about 12 percent Revenue increases each year That those would start lower and then have to be higher at the end of the term But that also has cash timing implications. So I would say no on the phasing in Okay, but you could potentially look at a lower overall revenue increase in the first Year Which means they would then have to be higher in future years But we also, you know, we need to work with staff to see what's the impact on debt service coverage and kind of minimum cash balances We were to do that And I ask a question didn't we look at that already and but as a committee and it was It wasn't sustainable. I don't know right. It wasn't sustainable because we did look at that But I think what we looked at was the 10 percent kind of uniformly. I think what You know, there's a world where the first year is Six or seven or eight percent, but then what we have to be mindful of is year two might have to be 15 or 16 percent So all you're doing is trading you're trading one year for the the other Yeah, and and ending, you know, your endpoint After four years gets you about the same place Well, that's the revenue requirement end of things That's correct. I mean unless you reduce costs or increased water use which, you know, who knows how that'll go so If we were to bring back um, the three-tier structure Do you want to see the modified two-tier as well or are you okay? So the modified two-tier and the three-tier structure with a different Allocation between fixed and commodity charges, right? Okay, we can we can bring that back for a review If you have any other great ideas of how to soften the blow I'm I'm open Well, there was that one proposal about um Doing the three-tiered But increase in the third tier We could move some of the conservation costs. I think that's 84 cents per unit from tier two to tier three And that would increase tier three by 84 cents and decrease tier two by 84 cents So that is an option as well It sends a stronger conservation signal to tier three what we're doing is we're recovering all of our conservation costs from tier three users That we should look at that too. Okay We can look at that as well Yeah, it has to be justified as well Right to have this information before the meeting that'd be great. Okay So it's a little I felt a little bit like oh first time I've seen it Okay, so I was on the committee. I'm sure you didn't feel like that, but for me So for the motions, I believe the first motion We have is whether or not the the directors want us to proceed with the 12 annual revenue revenue need To be oh that with that. Oh, that's right. I see it Is what is that the scenario that you prefer we move forward with rather than the 25 percent? And then the seven and a half seven and a half seven saying overall over the four years Correct It would be 12 percent Right, we had we had the option of what's needed, right The 12 percent is what's needed correct You also had the option of 25 percent in year one followed by seven and a half percent Well, that's that's not a good option. Okay, so the 12 and a half percent or I mean the 12 percent You would like to make a motion for us to Continue with that finance plan scenario. I'll make the motion second and We certainly can do this by motion But if if the board would prefer to just do it by consensus direction that that's an option as well I just wanted to throw that out there Yeah, I think that's a good idea Because I'm not solely Well, I was just reminded Yeah, our last race study called for a nine percent increase and really It was hardly noticed in our income rate increases that consistent We wanted to let prevent that from happening So then the second level a lot of use Yeah Well, as you could see it you could see it in the Production you know the production it was a lot and decreasing it was much less than what the budget was based on So the second bullet point would be to provide us direction regarding The proposed rate structure and have us return at the december 19th meeting But it doesn't sound as though we are ready for that yet No, I don't think so. Okay. So now we're going to direct staff to return to a board meeting on december 5th Yes, with some new rate structure proposals that show the modified two-tier and the three-tier break points with varying Cost allocations between the fixed component and the variable. Yes, please Possible change to the second and a possible change to the conservation pricing on tier three In can you do like 40 percent 50 percent 60 percent for the fixed? and then I know that in our meetings you had Shown how that's going to affect us as far as our ability to maintain the proper amount of Revenue average. Yeah, we can we can model that 40 percent 50 percent and 60 fixed Okay And and so we're no longer considering the uniform rate or the existing two-tier We're looking over now at the modified and the three-tier. All right. Okay. We all agree on that. Okay. Yeah And that was the that was the consensus of the water rates advisory Yeah, they did I I want to thank them for for all the work they've done. Thank you guys I have a marching orders then Yeah, so is it clear or do you need a motion? I think we're going to pass on the motion. I think we are I think we're clear understanding on We're going to go more in depth on Focusing on the the options related but sticking with modified two-tier and the three-tier Structures, but just looking at tweaking those to see and get You know how many more Financial concerns And I and I did hear That people are not happy with the increase in in water rates And I heard especially There are people low income Where the water rates are really um having an effect on them and so Leslie, I I know you've Worked hard to get the the word out that there is a program but I'd like to see That become more prominent We can do some on our webpage Okay, and in our email blasts, etc Was it a dollar a 100 cubic foot a month? Is that what the increase looked like? The increase uh-huh was a dollar roughly a dollar per day per household per day per household Not regardless of what range you ran That was at five units about five units a month. You know, it was broken down to the so it was like 30 dollars a month Right. Is that enough information? Is it enough information for everybody here? Is enough information for you And there is going to be a workshop On this or an outreach Correct, there will be an open house After we mail out the prop 218 notices, we will be holding a public open house for customers to come in and and ask their question Okay, we finished with this item now Everybody's had a section. Okay, then we have to go back to the consent agenda Item 4.7 I pulled it so I have some suggestions I don't know who's Why don't you go for a time? I've only got one Well, I figured I mean You know one one of my things is just to try and make it more accessible to the audience Um, so on page three, which it's hard to find, you know, but it's the one with the Um starts with skater upgrades on the top and rates at the bottom and That's the page three, which is I have it as He's 193 of the 193 of the packet Um, so With skater upgrades, it doesn't really say what the purpose of it is So it's great to say that we're doing this but And and at least that acronym is defined Which you know is important for me But I don't think people understand that that's so that we can monitor all of our systems And make sure that they're all running smoothly just something simple explanation about what the purpose of it is Um, would be great. Um On the next paragraph, I don't know if everybody knows what o and m is Okay, so operations and maintenance should be Defined On the same column water distribution modeling, it's just um A little bit technical and maybe I think it needs to be put in words to explain to people what it's actually doing And then underwater smart I thought while you're describing it Is encourage more people to sign up explain it a little more and why it helps them and Just encourage them to sign up at least Um, and then finally on the next page um I feel like there's another opportunity to explain the problem. So I thought the Explanation of seawater intrusion should be at the top Um, and then connect to how pure water sokel is going to solve that problem Does it explains planes it but I just I don't know. I just felt like it doesn't Kind of you've gotten the the description of seawater intrusion, but not how the Swipwells will actually Stop that you can have a little diagram that just had that Just an opportunity for explanation. That's it. Lucy had something So you were talking about hydrology 101. Yeah Yeah, that that's the comment I had as well Um, the first sentence needs to be changed seawater intrusion Is a condition whereby groundwater is withdrawn at a faster rate than it can be punished by rainfall You know that's There's more to it than that so it's That's one of the causes but it uh It should be mentioned that it's a coastal aquifer and um And it's it's a causation not a condition so I'm happy to If somebody reaches out to me to provide an alternate sentence, but I don't have it right now but it That needs to be changed. I'll take responsibility for that and amend it and if we Think we're even close to not having it right. We'll send it out to you for review I'm sure I'm sure you can modify it. Oh, yes Or is that informational? I believe it says direct staff make changes. It's not emotional Yeah, yeah, so we've done that We we can And then we should have public comment as well on this if there's anybody left There is a person here. Thank you very much That's what he said Becky Steinbrunner. Thank you. Um, you know when I hear people talking about the The flyers these what's on tap things that come out to them a lot of people don't even read them Here is an opportunity On the front page to put it very clearly that your rates are going to go up And put it in that simple bold term Here is another opportunity to provide people with the information That is available for those who are struggling. You heard people here tonight that say they have to borrow Sometimes to pay their bill So a lot of people don't know and yes, maybe it's on the website But how many people actually go digging around on the website? It's not the easiest Website to manipulate to maneuver. I'll tell you that So, please use the very front page of the what's on tap to clearly let people know the rates are going up Let people know there's financial assistance that helps them right now and available if they apply. Thank you I agree, Becky It's closed now. We're ready for a closed session Oh, no Okay And then said President Christian, we should avoid public comment before closed session Pardon me. Oh, that's right. You're allowed. All right. Excuse me. I almost forgot. It's all right. We're all tired Um, I again, I just want to say that I have not wanted to take any of the legal action And I know that it has cost the district great payers to take this legal action, but Um, I do believe and continue to believe it's important It has fixed me that, um, Best best and Krieger, I guess with the authorization of staff has very frequently flown up from Riverside for the day and just even last week for 15 minutes When um, she could have been online like Most of the other attorneys were So there's a cost cutting thing that could happen But I want to say that, um But I want to say that, um Had the district Done, for example, the final anti degradation analysis sooner than march of 2023 Um, some of the some of the costs could have been reduced. I mean this recent change in micro filtration and That has caused, um the Central coast regional water quality control board to put it out for comment again because There's been a modification to the system Had that been done in the beginning as is what is the law It could have saved some money for the right payers. So, um I'm sorry that I've had to take this action I've learned a lot And I've done it only for public benefit and never As a vexatious Effort, it's always been in good faith for the best of what I see of the environment and for the right payers. Thank you