 Okay, welcome to the December 19th meeting of the Soko Creek Water District. Let's do a roll call. Director Balboni. Present. Vice President Lather. Here. Director LeHue. Here. Director Christensen. Here. And President Jaffee. Here. All right, so there are no public hearings. This is the opportunity for board members to remove any items from the consent agenda they want to remove. Are there any items that anyone wants to remove? Not any. Okay, that brings us to the consent agenda. Public comment. Oh, public comment. Thank you. On the consent agenda. First time. So. There we go. Good evening. My name is Becky Steinbrunner. I would like to comment on some of the consent agenda items. First of all, item 4.1, the minutes. I request that your board include a link to the community television video of those minutes, of that meeting for which the draft minutes are given to you. That will help the members of the public to review what was actually said and to verify the minutes are accurate and to learn more about what happened. So I request that you include a link to the community television government on demand. I have noticed that the links to the meeting videos on your website are often quite delayed in appearing, but you can get them the very next day or even the same day on community television. They do a great job. Item 4.3, the MOU with SCIU 521. I noticed that last time I had seen something in the financial report about in 2024, there would be a 5% increase in salary schedule. And after I finished speaking, it was declared that was misinformation. But I see it now in the MOU and please correct me if I'm wrong, but it says 2024 on page 23, a 5% increase in salary schedule. I was quite amazed to read that your district pays people $1.50 a day to ride their bike to work. And that's very nice, but it is totals up to $360 a year per person for the district to do that. And I wonder how that is reported in your financial business. There is no water demand offset accounting for Barry Swinton Builder in the Aptos Village project. Was it a two minutes? And that is item 4.8. Okay, I did write your board about it and I would like a response, please. Thank you, Becky. All right. Yeah, let's let's keep to the time limits, respect everybody's time at the meeting. All right, so now I'll move approval of the consent agenda. All second. And we can do a voice vote. All in favor. Aye. Aye. All opposed. Passes unanimously. Okay, that brings us to oral and written communications. So this is for members of the public. First and then for the board to talk on matters of interest that are not on the agenda tonight. Is there are any public comments? Thank you, Becky Steinbrunner. I do note on the agenda materials in the separate. Sorry, communications links that there is some very excellent communication from Mr. John Cole. And he is asking you to put in with your rate materials of a simple protest. I asked you to please pay attention to that regarding the way the meetings are run. I asked in an email to miss Western whether remote participants can speak. Are there remote participants? It's not clear. In your board pack agenda materials. If remote participation is even possible. It talks about written communication guidelines, but nothing about remote participation. So I would like that made very clear if there is none, then make that clear, because in these times when we're all still scrambling all over the place after COVID. Meetings are remote or hybrid. Others are not, and it would help the public immensely if they could look at your materials and know what is possible. I didn't receive a response from Miss Western. I am not able to drive at night anymore and I'm very grateful that a friend gave me a ride because otherwise I would not been able to to be here or to present comment I think. So please do that and again please put a link to the recordings to the community television. I want to, in closing, recognize, well there is one more thing about the agendas. I request that you put hyperlinks on the agenda to reports. This was actually requested by Director Hu of Santa Cruz County Lafko and Mr. Serrano did it. And it is wonderful because you can look at the agenda. You can click on the link and go right to the report or the item or whatever it is and you don't have to wade through pages and pages. And some people do not have the computer ability to download large files. So please consider that. Now in closing I want to just say something good and every time I go by the garden out in front of your office I think of Vi. And she really was a great person and I miss her and I'm glad the garden is there to remember her. Thank you. Thank you Becky. Does staff want to reply to anything? No. All right. Anybody? I just wanted to quickly report on the meetings that I attended. Is that okay? That's perfect. Good. So on 1212 I attended the flood control and water conservation zone 5 meeting. It's part of the Board of Supervisors meeting. And we passed the consent agenda and we approved a rate study to go forward for a possible storm water fee. And that's it. If anyone wanted to report on the MGA meeting on 1214, that might be helpful too. If anyone wants to do that. Anybody want to do that? Or are there any other items from a director? I actually just wanted to follow up on Becky's comments. I do think the easier we can make it to have links and agenda for either reports or, you know, links to the actual video. I think that's a good idea. As far as MGA, you know, it was a, you know, it was a big agenda, you know, with a lot of items. I'm not sure which one I want to focus on, but Carla, do you want to add anything? Yeah, I was actually, I was going to comment on the MGA, too, because there was a big, just the other day. And I had the article in my hands that I left it at home on my rush out to Gore. But it was a huge article investigation on water and water, controlled groundwater and the slow pace that California had taken. But they specifically commented on some MGA's that were not as successful as our MGA. You know, people are very respectful, civil. It was one up in Northern California where they were trying to control some farmers who had been overdrawing for decades, probably ever since they started regulating water. And in their, and the farmers response was to sue everybody else. And there are carrot farmers, and it's just really a contrast between what we experience here. You know, this very cooperative, cooperative environment for the MGA compared to some other places in California, just remarkable. And we were getting prepared to do actually already the five year periodic review of how we're doing of the groundwater sustainability plan. And so that was, you know, we definitely made progress. We also gave a word of thanks to Rose Mary Menard for all her help on the MGA. You know, since I was on it from the very beginning, it really has been a very cooperative group and seems like it's going into the future well, you know, so I can remember right now. And dealings with some difficult issues still to come the way we have our own. Featuring. Yeah. And that's one of the issues. So I just think I'll be happy to provide the link to that article. It's just a few days ago, but I don't remember. One other notable thing I think just to mention real briefly is the seascape area chlorides are increasing in the monitoring wells there, specifically SC A2 and SC A5. And so that's being investigated. And that's news. Okay. Jeff, if I may make a comment regarding access to the agenda and stuff. Can you comment on that? Sure. So if you go to the agenda center and click on the meeting date, it'll have the board packet. And if you hit the three bars on the side, it'll give you a bookmarks tab that'll link to each item and report in the board packet. And then regarding the videos and a meeting link or a link in the minutes, we do have a link. It links to our agenda center. And that's because not all of the districts meetings are hosted on CTV's YouTube channel during zoom. We hosted those and posted them to the website. Sounds like it took care of it. Thank you. Perhaps you could put a little, a few sentences in where they, where you see the agenda packages on what you just said on how we, people want to see more details and be more specific. All right. Any other comments from directors? Yeah, that brings us to reports. District council. Thanks, President Jaffee. Just a brief reminder, this is our last meeting of 2023. So, you know, all the legislation that was passed this year in Sacramento will take effect January 1st unless it was an urgency measure. We've talked about some bills of note, you know, and we're still, you know, frankly, given the amount that that happens each legislative cycle, still processing everything. And if there's additional bills of note will will include those in future reports. Any questions? Any questions? All right. So that brings us to administrative business then. So the first item 7.1 conditional and conditional will serves there are none. And that brings us to 7.2 presentation acceptance of annual comprehensive financial report for fiscal year 2022 2023. Appropriate appropriate appropriate appropriate funds for the capital facilities reserve. So that's you right Leslie. That's me. So I'm here this evening to introduce our auditor Jonathan Foster a partner with Davis far LLP out of Sacramento, and he's going to go ahead and give you the highlights of the financial statement audit. I would like to go ahead and point out real quick because part of this is to appropriate funds for the capital facilities reserve. And our capital facilities reserve policy allows us to take any gain in unrestricted net position and allocate it to the capital facilities reserve if we if we so choose. This year, there have been no unrestricted net gains in that position. So we have no funds to allocate to the capital facilities reserve. That's just for information. So right now I'm going to go ahead and introduce Jonathan and I'll let him go ahead and share his presentation on the financial statements. Thank you Leslie. Excuse me. I'm just getting my voice back last couple days. Leslie mentioned my name is Jonathan Foster. I was the partner overseeing the engagement. I just want to thank the board for allow me to present over zoom. And I want to thank Leslie and Ryan for all their hard work and putting up with all our questions during the audit. Let me go ahead and share my screen and get the presentation started. Are you okay if I stop the other screen sharing. Yes. Yes, a little hard to hear. Jonathan, I know your voice is horse. Can you speak just a little bit louder? We're having a hard time hearing. Sure. Can you hear me right now? Let me know if you might as my mic picking me up. We can hear you. It's just a little faint with the settings of the audio in the room. So if you could really project. Sure. I will speak in a try to speak in my booming voice. Excuse me. Let me know if you can't see the slides. The first slide up is. The presentation of the reports we issue as auditors. The first is labeled the opinion and the basic financial statements. Now this letter is within the financial statements that you have received. And within that is our opinion. We issued an unmodified opinion in the current year. Now what that means as as auditors, we did not have to make any modifications to the opinion. The unmodified opinion is actually the highest level you can receive from an auditor's opinion. Jonathan, we're just still on the first introductory title screen. And it's not in presentation mode. So we only we're seeing your future slides as well. Let me exit out. So yes, it not in presentation mode. It is but it's showing up on the other monitor unfortunately. Okay. There's a PDF of his slideshow on your computer. If you wanted to present instead. We can we can pull it up for you here, Jonathan. If that's easier. Oh, there it is. Yeah, it should be the correct slide now. Just confirming you can see the reports issued on screen currently. Yes, we can. Okay, perfect. The first bullet point explain the unmodified opinion we issued as auditors, which is the highest level opinion that we can issue. The second bullet point describes an additional paragraph in this year's audit opinion. Similar to last year when you implemented gas be 87 leases. There's a new accounting standard that was required to be implemented in the current year gas be 96 subscription based information technology arrangements. There's an additional paragraph in this year's audit opinion, which I'll speak further on additional slides. Next. Secondly is a report on internal control over financial reporting. If we had matters to report here over internal controls or compliance with laws and regulations, it would be noted within this letter. Happy to note, there were not any items to report within this letter. It is the summary of audit results. And within this letter, we just communicate the scope and timing the audit and anything relevant. We had to report to the board. The audit letter issue this year was very standard in nature. So I want to take some time and speak about some of the areas we spend time during our audit. Our team was out in the field in October and during that time we performed a walkthrough of internal controls with your staff at the district. We made sure the internal controls were operating effectively and you have proper segregation of duties. We spent a significant amount of time testing your capital assets. In addition to working with finance and tying out all your capital asset records to the financial statements. We also meet with individuals outside of finance and ensure the capital projects are appropriately reflected within the financial statements. The largest project we reviewed this year was the pure pure water so called Creek project. You'll see a new line item within your capital asset footnote as well. Now this is due to the implementation of gas being 96. You'll notice a new line item titled subscription assets. And within that there's a corresponding liability as well. So within this slide you'll see capital assets that corresponds with the implementation of gas being 96 sabbitas. So offsetting the asset is a liability which is further disclosed in note eight to the financial statements. Now these are brand new disclosures for the current year across all government agencies for the state of California and for the country. Your pension and OPEV obligations we obtained third party actual reports and made sure that appropriately reported within your financial statements. And within the financial statement highlights I'll speak a little bit about your pension liability. Lastly you'll see increases in your long term liabilities as well. And what we do as auditors we also confirm externally with lenders meaning we send them what's called confirmations. We do that electronically with your lenders and they reply directly back to us. So as auditors we confirm externally outside of the district and make sure the amounts reported as long term liabilities are actually true in fact. So I'll speak a little bit about your financial statement highlights. Overall your total current assets were fairly consistent year over year. You'll notice however large jump in your non current assets specifically over your capital assets. There was a large investment in capital assets, as you'll see further note for within no four you can see all the activity invested specifically over construction and progress. As I mentioned earlier your poor water so the project. Lastly on the bottom of this you'll see changes in deferrals. Now these deferrals are reported directly from third party actual reports. So that your pension OPEV reports are reported to to the district and these amounts get get changed annually based on how they your third party actuaries report them. Can I stop you right there for a second. Sure. The numbers are very small in this so we're not able to. I don't think the audience is able to see all the details. So if there's some number that you want us to pay attention to call it out. Oh absolutely okay so you probably can't see capital assets not being depreciated in the prior year that number was $93 million in the current year that jumped up to $149 million. Now this is the money spent directly to your capital projects. So it represents the investment the district has made in your capital activity. The next slide reflects your liabilities of the district. Now your long term liabilities as noted. Jump significantly. Other long term liabilities you can see they jump from $26.5 million to $57.6 million. Now this is due to the drawdown of various credit facilities that the district has available to them and this money was used to fund capital projects. The second biggest jump I wanted to point out was your net pension liability. Now in the prior year you reported a net pension liability of approximately $2.7 million. This year that jumped up to $7.8 million. Now this is due in no fault to the district. What happens with reporting pension liabilities is they're reported a year behind. So CalPERS reports a measurement date as of fiscal year 22. Now in fiscal year 22 CalPERS reported a net investment loss of 6.1% which causes net pension liability to jump up to that $7.8 million you see. For fiscal year 23 which will be reflected subsequently in your financial statements for fiscal year 24. CalPERS has already presented a 5.8% gain on investments. So the expectation is that the net pension liability will drop again in next year's financial statements. And the final line item is your deferrals as I explained in the slide previously. These are not numbers that are calculated by the district but in fact by your third party actuaries. The next slide represents your operating activity for the year. Now operating activities were fairly consistent operating revenues were fairly consistent from 2022 to 2023. Your operating revenues in the prior year were 25.4 million compared to 25.2 million in the current year. So they remain fairly consistent. Now on your operating expenses you'll see a large difference from 22 to 23. And fiscal year 22 reported $3.9 million in general administrative expenses in the current year reported $6.8 million. Now this does not necessarily mean that the district spent almost $3 million in additional cash outflows. The prior year included some pension and OPOP adjustments of approximately $2.3 million. So when you add these back in, general administrative expenses are fairly consistent from year to year. And what happens is your OPOP and pension adjustments are reflected in this line item within. Your current year adjustment net of OPOP and pension expenses was only about $183,000. So when you look at that difference from year over year, that difference was mainly due to your pension and OPOP adjustments. This next slide shows your non-operating revenues and the changes year over year. Now you can see here that your interest expense increased from the prior year of approximately $1 million to $2.2 million in the current year. As I stated earlier, the drawdowns of credit resulted in increased expenses of the district. And our expectations we can continue to see this year over year until those lines of credit are paid down. You also see interest earnings in 2022. You only reported approximately $2,000 in earnings compared to the current year of $250,000. 2023 represented better market conditions for the district than in the prior year, which explains the positive inflow. So overall your change in net position was approximately $30 million as compared to the prior year of $35 million. Now the final slide displays the different categories of your net position. So as you can see in the prior year, your net position went from $118 million to $148 million. Now this may seem like a fairly large number. However, $134 million of this is your net investment in capital assets, which is non-liquid to the district. So this number is calculated by taking your total capital assets subtracted by your outstanding capital debt payable as well as your subscription and lease liabilities. So $134 of this $148 million of net position is actually non-liquid to the district. So at this time I'd like to open it up for any questions that the board may have. Okay. Josh, public comment now or after the questions? Your culture. Okay. Well, why don't we have questions at this point? I think a good guide to the public comment. I will point out real quickly that in the board packet there is like 102 hundred and three page document that is our annual comprehensive financial report. So it's available for anybody to look through. And there is a lot of narrative that supports the financial schedules themselves. One thing to note, I think that Jonathan pointed out, was that our revenue, operating revenue was fairly flat. As a matter of fact, it was a couple of hundred thousand dollars less this year than it was the prior year. That's even with the rate increase. So essentially we saw no benefit from the rate increase for this year. People are using less water. People are using less water. Correct. And then the other thing I think is important to note, Jonathan pointed out the restricted and unrestricted net position figures. We did not have enough in funds this year to cover the unrestricted net position without having to draw from the operating contingency reserve. So that is something that we hope to reverse in subsequent years once we once we change our revenue picture a little bit. Any questions for either Jonathan or Leslie? Leslie, can you talk about some key numbers here that the ratios that we have to maintain? So we do have a minimum amount that we need to maintain in a debt coverage ratio. And that's actually highlighted in our debt covenants, our operating statements with our lenders. They require us to maintain a 1.2 debt coverage ratio because we never know when we're planning budget versus actual. We never know what the outcome is going to be until the year has elapsed. We give ourselves that little bit of padding by setting a minimum 1.7 ratio internally so that we've got that buffer a little bit and we don't risk falling lower. Do you say 1.7? 1.7 is our target. And I believe this year, Jonathan, it was 3.69 if I'm not correct on the debt coverage ratio. So it dropped a couple of percentage points from the prior year. And that's because of our increased debt load. I don't have any other questions. Any other board members? Okay, in that case, I'll open up to public comment. Two minutes and please be respectful of everyone's time. Thank you. In that case, time printer. Thank you for explaining some of these figures. I had a question about some of them too. What would cause on the net position? I think that's on age to seven. There's a nice bar graph showing that. I think that's where it is. The net position, what would cause it to, to change so drastically from 118.5 million in 2022 to 148.5. You mentioned something about involving 134 million in net asset investments, but I didn't quite understand that. If you could please explain what caused that, that big increase again. That would be very helpful. I also noted that there were significant deferred payments in pension liability. And that concerns me because one of the remedies that is being proposed to your board in a later item tonight regarding the rate increase is to again defer payments on the pension liability. So that it's only a 10% instead of a 12% rate increase. I'm worried that in the long term it will be more expensive to not pay that down more. And I hope there will be some financial discussion about that. The operating revenues are not supporting the claim earlier that there was an $11 million shortfall due to people using less water on page 159. It doesn't match up with that. It's lower, but not that much. Not 11 million. Thank you for your comments. Rather than respond at this point. Let's keep track of all the, all the questions and comments and then if staff or board members want to respond or respond at the end of any other public comments. Right. That wasn't necessary. I would like to express my appreciation for Jonathan for taking the time to be here this evening and walk us through the process. Thank you, Jonathan. Absolutely. Thank you, Leslie. So do board members or staff respond to any of the public comments? Just also wanted to just briefly just also thank staff for making it so we get another unmodified opinion by auditors, meaning that's the highest rating they can give us. You know, that has to do with, you know, doing a really good, clear job and making it transparent. And so I appreciate all that work. And then I want to see if I understand the difference between the 118 and 148. I think that's capital investment. Yeah, it's investment in capital assets. Absolutely. So pipeline pipeline, a lot of a lot of the work that's been done in the interim on pure water. So Cal at the Shenekler site, the conveyance pipeline, so Cal drive main replacement, all of those big projects that we've been working on over the year have contributed to that increase in capital assets in that net position. It's not liquid. It's not available. Pipes in the ground. No pun intended, right? All right. Any other comments from the staff or board or questions discussions. It is very like you said over 100 page document. But there's there's a lot in there and it sets the expense needs of the rates. We accept the report moved. Is there a second second. All right. All in favor. I all opposed passes unanimously. I recall there was that was there other things that were needed. No, okay. All right. Well, that brings us to seven point three, which is a resolution of appreciation for honoring the water rates advisory committee. Yeah, and I'll take that one. And before I do, I just also want to express my appreciation for Leslie Ryan, the audit team. You know, if you look at the work that Leslie produced, it's not only a financial document, but it's kind of a guidance document, the figures, the photos and the kind of a work of art combines, you know, their sex with finance. So thank you, Leslie. So this item seven point three is really it's all about the public members that helped on the committee to look at the rates and the rate structures and that sort of thing. We have one of the members in the audience tonight. You know, it's so important as we go through a process like this, looking at rate structures, revenue need to have members of the public that represent represent our customers and I think we had eight of them this time. Is that right Leslie. Yeah, okay, started with 10 and ended up with nine some of their pictures are shown here. And just, you know, sometimes you listen you listen all of a sudden, an insight comes from somebody. And he go wow that just alone makes it all worth it and really guiding trying to represent. Well representing their own perspectives but I think providing a good cross section of what our customer base is and would like to see. So, so much thanks for them. And there is a resolution we're glad to read it. President Jaffee or you can or we can go ahead and read it. This is resolution number 2313 resolution and appreciation of the members of the district water rates advisory committee. Community committee members Ilga Clemens, David Schwartz, Thomas pistol. Mike Conant, Karen Preston McCarthy, Danny Ward, Michael Gutierrez is here tonight. Michael Thornton and Maureen Dwyer, the board of directors of the Soquel Creek Water District at its December 19 2023 board meeting made the following findings recitals. Whereas members of the board members of the district water rates advisory committee are valued customers of the Soquel Creek Water District. And whereas interested rate pairs applied for and members were appointed in April 2023 as voluntary community committee members to the board ad hoc water rates advisory committee. And whereas members volunteered their time attending meetings and providing valuable insight input and recommendations as part of the district's 2023 water rate study. And whereas members are an important voice of the Soquel Creek Water District offering a variety of perspectives of our rate pair community and providing focused input to the board of directors on water rate structure and design based on options and objectives provided by the board. And whereas members have demonstrated a commitment to the Soquel Creek Water District and their community water supply. Now therefore be it resolved that we all join in extending our sincere appreciation for service as committee members to the following. And it lists the names that I just said previously pass and adopted by the board of directors of the Soquel Creek Water District this 19th day of December 2023. Anybody like to make the motion. A public comment sorry. Thanks Tom. Okay. Seeing no public comment. Anybody like to make the motion. I'll make the motion to prove the resolution. I'll second. Seconded. We have to do a roll call vote. That's what it says in the packet. Voice vote would be acceptable as well. All right. Let's do a voice. All in favor. Hi. All opposed. Passes unanimously. And I want to personally thank all the members of the committee who put their time into this and. It's very helpful. Including thank you Rochelle and Carla. Your time. Very interesting. It was great to meet everybody on that committee. They're really committed. Very sincere and. Asked really good questions. By the end of the. Last meeting. Very intelligent. Thank you Leslie too. Yeah. Information and the structure. I just say ditto. You can. So. That brings us to 7.4. Acceptance of Raftelis rate study report. Executive summary. And it's again you Leslie. So yeah we're here again this evening. We have Kevin caustic and Melissa Elliott from Raftelis. Here to present this evening. We're going to start the presentation however with a quick intro by Melanie and Ron again just to kind of. Set the set the scene a little bit for customers who may not be aware. Of the circumstances under which we're setting rates currently. And then Kevin will take it from there. Good evening. Good evening. Good evening. Good evening. Good evening. Good evening. Thank you for loading up the slide deck. I have the opportunity to kind of. Be the. The intro to the rate study presentations over the last couple of meetings and again. I think I'm going to have Ron join tonight and talk a little bit about the challenges that we're facing. So again, just as introductions, this is your team tonight if you have questions related to this item. So again, a couple of times before I've shown an infographic and today is maybe I'm getting to be a little nostalgic. It's the end of the year. And just, of course, I love pictures. I have a series of photos that I think help to explain who the district is and what we do. So as many of you know, the district is a not-for-profit local government agency. We are special in the fact that we are dedicated to the mission of water resources here in our region. Specifically within the mission, it's to provide a safe and high quality, reliable and sustainable water supply to meet our community's present and future needs in an environmental sensitive and economically responsible manner. These are just some photographs of some of our employees that are doing their duty and working around the community. So we're a staff of 48 lean employees. It's a number that really hasn't changed much over the years and are governed by an elected board of five board of directors. We oversee a lot of capital infrastructure here. These are just some photographs that I'm showing. This one here is showing one of our 18 tanks that we have throughout our system. We also have over 170 miles of pipeline, 20 production wells, 80 groundwater monitoring wells. And of course, we have a staff that also provides services such as sampling and water quality, answering telephones to our customers. And then of course, we have a really robust conservation program where we did a lot of conservation water-wise house calls. We also have to provide water 24 hours a day, seven days a week, 365 days a year in normal weather conditions as well as inclement weather conditions. Just in this last year, you'll notice that we made national news when we had a creek in our community blow out with a storm drain. We lost a water line and we had to put that community back into service. We also have just daily kinds of disasters that happen. This is where we had a fire hydrant down in Soquel Village get hit. And so in these kinds of situations, our staff has to also go out and mitigate and resolve issues. And then of course on that right-hand side is again our crews putting in some pipeline. Ron, you wanna hit on this part? Yes, thank you, Melanie. Well, you would think those challenges you just saw before you would be enough, but really the big one is sitting right here in front of us on the screen. And that is we have been designated as a critically-overdrafted basin, one of 21 basins out of over 500 in the state of California. So it is the most dire designation you can get by the state. What that means is that we have to have the basin and sustainability by 2040 and it's a big task. Next slide. So seawater intrusion is our big challenge and our nemesis and this map on your right shows from right there, that's our service area circled in yellow and going down all the way to Monterey. All that red is seawater intrusion that has occurred and down in Monterey it's almost getting to Selena. So that's about 10 miles inland there. Thank you, Melanie. Three miles inland down up around Bajaro Valley. And then if you go up to our area, the question we always had is we know we detected it both ends of our district right there and at the other side, but we didn't know where it was where that red line is until we flew that device shown in that picture. So the Danish approached us, we formed a technical advisory committee and they flew it. The good news is it worked. The bad news is the determination was where seawater intrusion is not already detected onshore in our monitoring wells. It is right at the shoreline about just knocking on the door to come in and ruin our well field. And our hydrologist a while back before we put in a lot of precautions and our board declared stage three curtailment said it was just a matter of a couple of years. If we didn't curtail pumping and manage it in a different way temporarily to try to slow it down, it would just be a couple of years before it decimated our main well field. So 2014 the board went into hyperdrive on that thankfully because we didn't have those results at the time. So now that we show that it's right at the shoreline it's very proofable that we did. And here's just another map showing the whole basin, the Santa Cruz Mid County basins outlined in black. And again, the red represents seawater intrusion down under the earth in the aquifers that was flown by the Danish outfits. So next slide please Melanie. And seawater intrusion and pumping it's underground. It's hard to understand. That's why it probably has impacted the majority of the places coastal regions of the world that rely just on groundwater. They've already been had their aquifers contaminated. And I'd say the ones that haven't will unless they take steps like us. So part of that reason is it's hard to see it's underground. So we wanted to present a slide or two to kind of show you what that really is. So there's a production well is a cross section and you can see the red area arrows are simulating seawater coming into that well. Now look at the height of the water in that well that little cartoon well if you will let's go to the next slide or is this the animation? There's no animation. Okay the next slide please. And so well yeah when the water level goes up a little bit it feeds water out toward the ocean instead of pulling it in. And so here you can see what the recharge wells replenishment wells are for pure water. So Cal what they're designated to achieve just like down in Orange County. So you put water in there. Some of it might flow back to another pumping well and then some of it flows out into the ocean to prevent further seawater infusion. So it's a hydraulic barrier if you will. Okay next slide. Thank you. And you know we talk a lot about cost right and cost is very important seems like costs of everything has gone up and we're all battling with it. But I think cost is only part of the equation right? It's really about value. So some can cost a lot and be a great value or cost very little and not be a good value. So I would encourage us to think about value versus just cost. And the board commissioned a study by Professor Haddad up at UCSC to do an economic analysis for pure water or sustainable water supply. And the economic study had a host of things in it. It's on our website. It basically said two main things. One, this is a big benefit, economic benefit to the region. Now almost a billion dollars if you can see it up there. And then I think even more important and germane to tonight is what would be the impacts without pure water soquel? And the study said that basically you'd have to pay more water than what we would be and I mean more money and use less water. Yeah, let me repeat that. Without pure water soquel, the study said you'd have to use, you'd have to pay basically three times more for your water and use less. So I think again, value is a big one to focus on. And next slide, please Melanie, thank you. Public engagements near and dear to our heart. There's just those a couple of things that we've been doing and continue to do. I know there's a couple, two more public forums out there, maybe more regarding the rates to try to inform people so they can make their best decisions possible. Next slide. And we touched on this, but we intentionally had this in here. Again, we can't overstate the value of having public members working with our board members and staff to provide their perspective input. I don't think we would arrive at as good a place as we have and representing the values that the board promulgated at the beginning, which was fairness and equity. So I think this rate structure accomplishes that the best way possible. Financial suitability and of course legal defensibility. So that concludes my portion from that. I'll hand it just back to Kevin. Thank you. You're on. Good evening, directors. President Jaffee, members of the public. Kevin Kostak from Raftelus. Go to the next slide, please. So we're going to talk about establishing rates, the data we use, the principles that guide our work. That's just a transition. So let's go to our next one. Can everybody hear me okay? Yes, okay, sorry. So Melanie pointed out some photos of infrastructure. I think it's important to remember what our utility revenues actually fund. So for the district, 167 miles of pipe, 16 groundwater wells, 18 tanks, 80 monitoring wells, serving 16,000 connections, producing close to a billion gallons of water a year. So that's a lot of infrastructure that underlies the utility and a lot of costs that go into providing that level of service. Next slide. So we've seen this slide before in a slightly different format. So we start our rate setting process with the rate setting framework. We talk about our financial goals, policy objectives, pricing objectives, different rate structures for evaluation. Next up is the financial plan. We look out over a 10-year planning horizon to inform our rates, in this case for the next four years. After that is our cost of service analysis and evaluating rate alternatives, modeling those, conducting impact analyses. And then we get into study documentation. So once we have a proposal, developing a study report, having that reviewed by a legal counsel. And then last step is the rate adoption procedures. So here in California, we have to send a notice to all of our owners of record, our metered connections, and hold the public hearing at least 45 days after the postmark of that notice. So we're at step four, we're finishing up step four with staff and legal. And if authorized tonight, we'll begin that fifth step. Ron mentioned the board's guiding principles. So first and foremost, legal defensibility. We've worked with legal counsel every step of the way from kicking off this study to discussions with the advisory committee, rate alternatives, et cetera. Financial sustainability to meet financial obligations from rate revenues. And we don't have much non-rate revenues. We don't have other sources of income. Your utility, keeps hearing children outside. The utility funds all of its costs really through the rates the customers pay. And then the last is social equitability. So where there we mean fairness and rates between different user classes within user classes, but also between current users and future users. Next slide. So if we step through those objectives and kind of how they weave their way into the rates that we'll see tonight. So financial sustainability, we develop a financial plan that has annual incremental revenue increases. So we don't have sharp fluctuations in rates as we step through the years. Social equitability, talking about how we recover our base in sustainability costs going forward. And also developing the three tier rate structure for residential users that you've seen this proposal. And then financial sustainability and social equitability, that's increasing the degree of fixed revenue that we recover from our rates from 40% up to 60% having that fixed revenue source. Next slide. I mentioned long green financial plan. The proposal is for a 10% overall revenue increase in the first year. So that's the current fiscal year that would be implemented in March if the proposal is authorized and adopted. And then 12% overall revenue increases in years two, three and four. So in the first year, that 10% is spread differently between customer classes based on the rate structure modifications and the updated cost of service. In years two, three and four, all customers will see their rates increase at 12% per year. We've also touched on public outreach. If we can go to the next slide. We acknowledge the advisory committee again tonight. That was a series of meetings as you'll see in the next slide where we did a real deep dive into rate setting with that committee. We have rate videos. Staff has hosted special events. We'll have more of those in the future. The quick zip E-blast in multiple months. We had a rates webinar with the community last month. We'll have another one in January and then district newsletters and social media posts and so forth. The Water Rates Advisory Committee first met in August. So that was a rehash of the prior rate setting or the prior rate study rather, the 218 process talking about communications and outreach efforts. In September, we got into the weeds of the financial plan. What goes into a long range financial plan? What are the assumptions? And the data that goes into that. In October, we talked about cost of service. We talked about rate alternatives. And then in late October, we started looking at rates. We had preliminary rates and then we came back to the committee for a fifth time in early to mid-November talking about the final rate proposal. So kind of the all in, what does it look like when we restructure rates and add in additional revenue needs? The committee provided staff, us as consultants and the board some very good feedback or input rather. So the study has to address the long-term financial needs of the district, which obviously we have ever increasing costs. Inflation pressure is we have a cost structure changes with the implementation of pure water so Cal. So we need to address those needs. And then increasing fixed revenue recovery to address that board objective of financial sustainability. The committee did not support a uniform rate structure option for water use rates. Their preference was for either a revised two tier residential or a three tier residential structure where they lean towards the three tier and we brought that to you first in November just before Thanksgiving and then a revised proposal on the fifth of this month. So if we step into cost of service rate design, next slide please. So cost of service analysis relies foundationally on what we developed the last rate cycle. We'll address some of the larger changes. So the first being the modification to how we recover, how we identify and recover basin sustainability costs. So the existing methodology that we used allocated 20% of those costs to what we call a basin wide benefit so that identify the costs of the district share of management of the Mid County GSA with about 20% of those costs and then the remaining 80% for water reliability and that was recovered from the residential class in the tier two rate that you see in the current rate structure. The proposal is to update that and the basis is to say what is the basin wide benefit as a sea water intrusion barrier versus what's the benefit of supplemental water for those users that require larger volumes of water greater than what the safe field of the basin can provide. When we step through that analysis we arrive at about 45% for water reliability that's a supplemental supply component and then the remainder being the basin wide benefit. So when we update that methodology we ensure that large volume users paid their share for supplemental water costs and those needs greater than what the basin can provide and then those who benefit from these basin wide benefits of sea water intrusion barrier both now and in the future pay for that benefit that they receive. Next slide. So another is a rate structure change but also within the cost of service analysis is to recover a greater share of our rate revenues from fixed sources so from our meter based charges and currently you recover about 40% or I should say the prior rate study targeted 40% of our total revenues from fixed sources and now we're gonna flip that 40% fixed and 60% variable ratio to 60% fixed and 40% variable. Next slide. And we can pass that one that was a duplication. Proposed rate structure modification. So for the residential class for which we have a two tier structure right now the proposal is for a three tier structure based on the units in each tier that you see here. So tier one for residential would be up to 3.99 units per month a unit being 100 cubic feet or 748 gallons of water. That basis is based on the average winter needs of your community so it's a proxy for indoor use that's very efficient. Second tier and intermediate tier from four up to 7.99 looking at kind of peak summer needs of the residential class and then tier three at eight or above that would be all water use greater than that second tier. So a new three tier structure. And if we go to the next slide we'll compare the current proposed. So again, the current structure two tier first tier at $9.10 per unit and then we quickly jump up to $41.23 cents. The proposal would update that. So now tier one, the price for tier one basically stays the same only up six cents though the use in that or the allotment in that tier rather reduces from 5.99 to 3.99. Then we have an intermediate tier from four to eight at $10 and 27 cents and then a new tier three again at $16 and 22 cents per unit of water. The next series of slides just show our final rates. So first is the series of fixed rates. So the first being meter based charges for residential and commercial users residential being both single family and multifamily. The kind of key one here is the five eighths inch meter that's where most of our single family connections are and the majority of our connections overall are at the five eighths inch mark. So you see the current rate there roughly $52 up to a proposed rate of $80 considering both that additional revenue needed in the financial plan, the structuring changes of recovering a higher degree from fixed sources and then recovering our basin sustainability those basin wide benefit costs within the fixed charges. If we go to the next slide, we'll see the same schedule but for the irrigation and outdoor use class. Now these charges are differentiated based on the peaking characteristics between single family or residential and commercial rather and irrigation users. So irrigation users have a higher peak. Therefore, they're allocated a higher share of those extra capacity costs and you see that reflected when here where you see the five eighths inch connection at roughly $116. My glasses aren't good enough to see that I suppose. $116 versus the five eighths for the single family at roughly $80. So you see that differential based on peaking again. Next slide. Private fire service charges simply an update based on the same methodology using the prior cost service analysis just updating with updated costs, updated customer demands and our updated revenue needs. Next slide. And then we have our water use rates. So again, proposed three tier structure for residential. So single family being one unit residential, multifamily residential would be tiered for dwelling unit. You see the introduction of the third tier there under the proposed March 2024 column. And then in subsequent years, those increasing by the overall increase. So that being 12% per year. And then the uniform rates, we have commercial and irrigation and those rates in fact going down in the proposal because we're updating our fixed charges to recover a greater degree there. So those charges in fact go down in the first year. And then lastly, water shortage emergency rates. We wanted to model these to have available to the district in the future. Mindful that these are always discretionary, always temporary, but we're showing an illustration here for the current fiscal year. So this would be a illustration of year one. And simply saying that in shortage, we have reductions in water sales revenues. We have some degree of avoided costs. We also have some degree of additional costs in conservation and outreach. And basically trying to recover that net difference from the rates. So for example, in stage one, tier one, you see a rate of $9.61 relative to what the base rates would be, which if I recall correctly, were $9.16, so about a 45 cent difference there. Next slide. So as far as customer impacts, what we're showing here is a single family user at five units a month with a five-eighth inch connection. That's about the typical or average customer for the district. Right now a current bill of just under $98. The proposal would see that bill increase to $127, roughly a $30 increased 98 cents per day. And the next slide shows a higher user single family bill, still at a five-eighth inch connection, but using nine units of water per month. Now with the rate structure changing with the cost being recovered more from fixed charges, this user would actually see a decrease on the order of nearly $2 per day. So just to wrap up some of the key points on the proposal overall. And first our basin sustainability costs, we differentiate between that for supplemental supply, which stays within the water use rates, and then the basin-wide benefit that goes to the fixed charge by meter size, the fixed charges are recalibrated. So now we're recovering 60% of our costs from fixed sources rather than the current roughly 40. We're introducing a third tier, so a three-tier water use rate for residential users. And then the impacts overall are gonna vary based on those three considerations, as well as the overall increase in revenue needs, which in the first year is 10%. As far as next steps, our remaining meeting schedule, so we're here tonight on the 19th. If the proposal is authorized by your board tonight, we would commence noticing customers the first week of January. We have a rate study informational webinar scheduled for Thursday, January 25th on Zoom. We'll have an open house in person at Temple Bethel on February 8th at 6 p.m. And then the study would conclude with a public hearing on February 20th year at 6 p.m. We talked a lot about public outreach. We've got a dedicated webpage on the district site for about the rate study. There's FAQs there. The rate study report will be there. The Prop 218 notice will be there. We've had utility bill inserts, social media posts, as I mentioned, the FAQs, et cetera. So I'd direct customers to visit that page. I'm gonna interrupt real quick. In addition to the outreach that was shown on the previous slide, we are going to be adding a rate calculator to the website so customers can go on and see themselves what the impact would be to their particular bill. And then the other thing we're working on will be a bill insert going out in January to encourage people to sign up for that low income household water assistance program. We'll add another bill insert on that. So those are some additional outreach items going out. So tonight, what we're asking the board to consider is to accept the draft rate study report executive summary that was included in the board packet and direct us to proceed with publication of the full rate report. Also to direct staff to proceed with publication of and mailing of the required Proposition 218 notice to authorize us to set a public caring for February 20th to consider the adoption of the proposed rates. Or you always set the option again to take no action. All right, thank you very much for the presentation. I think, again, if the board members have any clarifying questions, you can do that here, could guide the public comment. Are there any clarifying questions from the board? Yes, Tom. Yeah, two, one is, I cannot remember. This could be staff. What percentage of our overall expenses are fixed? Just for, I think it's 90. Yeah, typically it's in excess of 95%. Okay, so just, I know that I had trouble with going from 40 to 60, but I just wanted to be reminded of how much of our actual costs are fixed. And then the question may be for Kevin, even after rates are adopted, they're assuming a water consumption of like 2,600 acre feet and I know the previous rate study is 2,900. And I'm just curious if water use did go up to 2,900 feet in the next year. How would that affect the need for a rate increase the following year? Like I know it's, it could go up to 12%, but like I'm just thinking ahead and thinking, okay, well, what if water use is more than we expected? We don't know what the weather's gonna be like. Who knows? And I was just thinking, if we're maybe ahead of the game, then we wouldn't have to raise them. But I just wanted if it was up to that 2,900, where would we be, do you think? I wouldn't wanna put a specific dollar figure on what that additional 300 acre feet would be. But I'd say that the reminder is the rates that you notice are always a maximum. You have the discretion to implement something lower. And so you could direct staff to evaluate the financial plan and basically an annual update at that point to say, well, do we need the full 12% or can we live with whatever it is, 8% or 9%? I guess that would be on an annual basis rather than kind of revisiting years two, three and four, all at the same time. And then annually. And then annually, correct. Yeah, I believe when we ran the financial model the first time, we looked at 2,900 acre feet as a possible, as a comparison scenario. And it was an 8.5% increase at that time. That's correct. Assuming all expenses remain equal, yeah. Thanks. Any more clarifying questions from the board? Seeing none, it's time to open it up for public comment. I would like to just point out real quick. A number that jumped out to me when I was looking through all of these is the potential impact, the maximum potential impact, all water use remaining equal, right? Looks to be about $30. That's the most a customer would be impacted, which is actually still less than one single unit that a tier two customer currently experiences. Yeah. All right, just want to remind you have two minutes. Please be respectful of everyone's time. And speedy, I know you will. And then I think what works best is rather than respond to any questions or any thoughts after each speaker to wait until all the speakers have had an opportunity to comment. All right. Okay, John. Hi, my name is John Cole. The first thing I want to do is thank you in advance if you actually take a look at this suggested protest forum. And this is the last one you did in 2019. It would be really great. And so I want to thank you in advance if you do consider it indirect to staff too included. The other minimum I want to talk about those have some serious concerns about the executive summary. There's some statements in there that are to me, this is my opinion only, problematic with respect to Proposition 218. Well, you already know that the project is currently in construction and PWS operations are anticipated to commence in fiscal year 2025. When it's completed, the district will incur operating costs that average five and a half million dollars annually. That's not my concern. My concern is this statement. To smooth the effects on rates, PWS O&M is pre-funded in fiscal year 2024 to help offset the shift in cost structure in fiscal year 2025. And this one, OEM includes cost centers related to groundwater production, system operations, district personnel, customer service, administration, and future pure water soquel operating costs. So you're going to collect revenue for the cost of a service that will not be provided until sometime fiscal year 2025. The district is not delivering APWS supplemental water supply nor a basic wide benefit. So how can you allocate PWS costs now into the proposed rates when PWS doesn't exist? This is a violation of Prop 218, in my mind, it's my mind. I'm not an expert. No fee or charge may be imposed for a service unless that service is actually used or immediately available to the owner of the property. These are charges based on potential of future use of a service are not permitted. Thank you, John. You need to seriously consider that. Yeah. Any other public comments? Thank you, Becky Steinbruner. First of all, I think that this item should have been a noticed public hearing because the way it is described in the agenda does not really allow the public to know that the discussion and subtle the approval of a rate increase is even part of that agenda item. So it has not been, in my opinion, properly described to pique the public's interest incoming and it should have been a public hearing that was noticed. Prop 218 requires for rate increases that the need be clear, clearly relayed, be justified that it is needed and what the expense is and the proportional cost of the service is spread to those who are going to be paying for it. Proportionally, I don't see that explanation made very clearly here. For example, what do you mean by base and sustainability? That is not a clear term in dollars and cents. How much money are we talking about? We have heard in the past an $11 million shortfall but I don't hear that now. So it has to be more clearly described and justified to the public. I also want to point out that at the Mid-County Groundwater Agency meeting last week, Georgina King said the basin's doing pretty well. I just want to leave you with that. I want an explanation of the 55% base and wide benefit and the 45% water reliability. How was that determined? These seem like numbers that were just kind of thrown out. And then at the end, there was something mentioned, 60% of it would come from the big users. I'm not hearing any justification for these figures. Thank you. Thank you for your comments. Any other members of the public would like to comment? Steve Raff, resident and household of six people who's been bearing the brunt of these higher rates for higher users. And I want to say, I see this as a promising adjustment creating some equity I felt for some time now that having parents live with me and young children that I was bearing a brunt for something that we all should have equal access to. So, I like where you've gone with this three tier. It looks like there may be some relief that I'm hoping for because I could not take any more in the other direction being a household of six. And I don't think my situation is unique given the need to have higher density living. So, thank you for the effort that was put on this. Thank you for the presentation. It was informative and helpful. Thank you. Any other members of the public? Merry Christmas. My name is Michael Guterres, resident here of Aptos for 20 years. I have just one in my household, but I've got a big one. I took notes and stuff like, yeah, I'm not gonna read it. I'm part of the water rate advisory committee and the privilege of working with a lot of people. It was well thought out. I'm a water drinker, but I'm not a water expert. I feel that it was based off of transparency, equity, and sustainability. I'm gonna fix income, fighting cancer. But as I look forward to the future for my son, my grandchildren, I want preservation of water. As Ron said, it's about value and I value water. And I value the team that was assembled. I learned a lot. I'm an executive from a previous life. I don't know anything about water pricing. I know how to price financial products or investment products, but it's amazing. I have 47 seconds and how you price water is amazing. Water is an asset and we all need water. And I wanna thank you for the recognition from the board. I enjoyed being part of the committee, learned a lot and respect how we price water. Thank you. Merry Christmas. Thank you. And thanks again for being a part of that committee. Any other public comment? Okay. So do we have to, do we have to move to close the public comment or just do it? No, it wasn't an official public hearing. So we just now bring it back to the board for any actual actions this evening. All right. Anybody, any board member wanted to address any of the comments that were made or staff, do you wanna address any of the comments that were made? We're glad to answer any questions if you wanna direct us to any, otherwise we're fine. Thank you. I think for the, to help the public, you can clarify the answer between it. Board meeting and a public hearing. Just one of the criteria just for our people here. Yeah, I think that's an important point on that. So Prop 218 has very specific procedural requirements. And one of those and the most important one is that before the board moves forward with an increased rates, we're required to have a public hearing and for customers to receive notice that public hearing 45 days in advance as well as an opportunity to file written protests. And if we get written protests from a majority of affected parcels, we can't move forward, otherwise we can. That's not what we're here doing here this evening, right? We're just starting that process to approve the executive summary of the rate study and to authorize staff to issue the Prop 218 notices. We spoke at the last meeting about how we are really going above and beyond and doing things that are not legally required. And this is another example of that. So under the law, it would be legal for staff to simply send out the 218 notice and finalize the rate study without bringing it back to this board for adoption. But we know the standards that you've set us to and the importance of making sure that the public understands the need for this rate increase and also all the hard work that went into it. And so that's why this is before you this evening and it does not require a public hearing. Thank you. I wanted to go back to the $11 million that... Sorry, could you get closer? Oh, sorry. I would like to go back to the $11 million shortfall. It wasn't a net loss. It was a lessening of water sales and you can see it in the consent agenda. There's a water production. You can see the year in the year, the last three years, less water was produced to be sold than the actual budget for it was. So there was a shortfall in our budget. It wasn't an actual loss because the water that didn't get pumped is not lost. It's still on the ground. But our water sales were down by a lot of money. And it didn't, you know, in this report, you only see the 22 figures and that is not $11 million worth of water. But it was a progressive year to year decrease in water sales. Board member Christensen, we actually have a slide that we developed a while back that we can illustrate that point if you'd like us to show it. Yeah. Emma, do you have that? Oh, you have it here? Okay, thank you. So just in graphical form, what was said there at the top is trends in water issue. I think you put this together Leslie. Yeah, what this is showing you is the trends in water use over time from 2004 through 2023. And you can see how that water use has decreased. So when we compare the revenue we collected against what the revenue we expected to collect in the last rate studies finance plan, over the five years we've come up with a cumulative shortfall of $11 million. It looks like that's really in the last three years. Yeah, basically a lot in the last three years. Which made it, I mean, the logical thing would be is if it were a long-term trend, you'd have to raise rates to cover that shortfall because the cost as previously discussed in this meeting tonight and other meetings, we have fixed costs and those costs are 95% of the cost of bringing water to the customer. Just to make it clear, the blue bar is projected and the red bar is actual. So we sell a service, but it's priced as a commodity. And that's where water gets so difficult. Okay, any other comments, questions? I would, Tom, you have something? Just, you know, I was, one of the biggest things I wanted to see happen with these next rates was to make it fairer for people who happen to have larger families and just not as big a difference. It really bothered me the big jump in tier two for some people that just had no choice in who was living with them. And so I think, you know, even if I don't like everything about the rates, I do like that. I think it's much more fair across the board. And I feel like, you know, I think everybody contributing to maintaining our base and sustainability is important. And I really wanted only to have 50% of the, you know, fixed costs, but I do understand with 95% fixed costs that it's just gonna make it much more, you know, financially stable. So hopefully we won't have to, I'm still hoping we won't have to raise rates as much as we're setting them now, but I appreciate achieving that one goal that I wanted to see happen. Thank you. Jennifer? Michelle? The whole reason I was supporting 60% is because I want us to be financially stable. We do have to look at water use because at some point, you know, but above a certain level, we shouldn't be allowing it to be cheap and easy at, you know, for really high water users because they're depleting our groundwater if we encourage that. But I didn't want to, I know some people would like it to be 50 for that reason, but, and then the three tiers is what we were looking at because we wanted it to be more equitable for people that have larger families. And there were a lot of discussions about that and I agree with that. Go ahead. I just might contribute that it's been an incredible process and a lot of thought and a lot of work has gone into this and everyone is not going to be happy and rates are going to, you know, go up. But I think that the board and the rate advisory group and the district has done an amazing job. So I'm very happy to have participated. Thank you. Yeah, three tiers gives us more flexibility. I want to point out that one of the previous directors, Don Harnsmeyer, wanted to have an infinite number of tiers which where is actually a curve where you can make it do exactly what you wanted it to. So Becky brought up a question that I have. Thank you for bringing it up, Becky. On the 55%, 45% and could you talk about where in the report you talk about that and how you came up with that? Yeah, I believe we have that in the executive summary, but so what we look at first are, we know our aggregate demands, we know what the Pure Water Project will provide. We also know that in the prior study and we continue to maintain that in this study that when we apportion the basin safe yield per connection, we're at about six HCF. So that's why we have the threshold in the current two tiers that we have for residential. So we take our customer billing data and we aggregate all the demand, every bill for every connection, greater than 16, it's a month, greater than what the safe yield per connection is. And that number is, I believe it's 681 acre feet. 681 acre feet out of a Pure Water Project that delivers 1500 acre feet of water that's 45%. So that's the 45% that goes to the supplemental supply component. The remainder being the basin-wide benefit, it again is recovered across all users on the fixed service targets. Okay, thank you. Josh, here I ask about the future cost issue at this point or is that opening up a can of worms? As far as? Well, the comment was that. Yeah, the comment on, it's absolutely true that Prop 218 requires that these be charged for service that's actually available. That is based on the utility service that's being charged for. So in this case, water, it's not on a, necessarily a source of water or a project basis. I'll leave it for you to talk later about it. Not perfect. In my experience, none of our rates have been perfect. I do wanna say that I do like that larger families have relief. But there's, it's not to say that larger water users don't have relief with, larger water users with smaller families also get relief. That doesn't run me the right way. Like I say, it's not perfect. The, I think what it really signals is that we're having a paradigm shift here. For my first 21 years on the board, the mantra was protect the basin. And it still is. But we're getting closer to it. So what the shift for me is, is that we no longer have to be as, as concerned as we were initially, as I was initially 20 years ago that we really were headed on a path. The way it was described to me, it's like sea water intrusion is, it's like a runaway train coming at you. And you know what's coming at you. You don't know how fast and it's not easy to stop. And I think we have things in place to stop that train. So that, that allows me to support this type of rate structure where larger users are not encouraged as much to decrease their water use. Anyway, anybody else have questions, comments? Anybody want to make motions? I'll make a motion. Okay, there are three to be made. You want to do all three or? Yeah, I'll try it. Okay. Okay. So I'd like to make a motion to accept the draft rate study report executive summary and direct staff to proceed with publication of the full rate study report and to direct staff to proceed with publication and mailing of the required prop 218 notifications and to authorize staff to set a public hearing February 20th, 2024 to consider final adoption of the proposed rates. Is there a second? The Jennifer and Carla. All right. Again, we have the option of a voice or roll call. All in favor? Aye. Aye. All opposed? Passes unanimously. All right. So that moves us on to 7.5. Consider consolidation of the district's three standing committees. Yes, and since Ms. Western wrote this memo, I think she gets the privilege of presenting it. Thank you, Emma. Yeah, so this memo is presented as a followup to an idea that we discussed briefly at the last meeting. And that is to consolidate the district's three standing committees into possibly one or two. So Melanie, if you could scroll down to the next page, it'll show the options that we came up with preliminarily. And this was based on some board feedback that we had gathered. So option one is to consolidate from three to two committees and that would be to combine the Water Resources Committee and the Public Outreach Committee and then leave the Finance Committee as is. You can see the details up there. We came up with a possible title. And we would say to consider meeting bi-monthly for the combined committee and then continue meeting quarterly for finance. Option two is to consolidate from three to one committee. And that frequency would be bi-monthly. The meeting duration would be to increase it to an hour and a half. And there's a possible title that we threw out there, I think, at Tom's Dr. LeHue suggestion. We also discussed Director Balboni's idea about the youth serving on a committee. And we feel like that discussion is really important and kind of stands alone from this one. So we would like to come back at a future meeting to discuss that by itself. So the board can really do what you wanna do with this. And those options were just to kind of generate some discussion for tonight. Any public comment? Seeing them, opening up the board. I have a question for, could you get up to the, it's just they can't hear you on the recording. Having served both on the public awareness outreach and also the water, there is a lot of overlap. And so I like that combination. I also like the idea of youth. Use a lot of water. My idea was that that would be a good place for the to introduce you. There might be more public. If you start to get up, I don't know if you were just changing. Steve Graff, I serve on the public outreach committee. And I would also, I also find it agreeable to consolidate on two committees. Thank you. I was just curious like, I've never served on a financial advisory committee only on the other two, which to me seems like those could combine. But I was wondering like, I think I know Carla and maybe Rochelle, I've served on all three. I just wonder what you think about how that seems like to me, finance would be different, but I have not been there. I've had, I've gone back and forth on this one, you know, reading it. And is the finance meetings, they're not that many. We meet quarterly? Okay. So I guess I just have a lose in my memory here. So all of them meet quarterly, but. No. Five months later. The finance committee meetings are quarterly, the others I believe are monthly. They just feel like they're more often Rochelle. Five monthly. Five monthly. Okay. Quarterly is every three months. So it isn't as often. Exactly. But it is quarterly. Okay. Heads spinning. Yeah. So they don't meet as much, but. And there's not always exciting things happening in the other committees and then we're meeting for an hour. And so I was thinking, no, an hour and a half with all, you know, and it may be a different committee meeting. I mean, it may be different information and not as much of one as the other at every meeting, right? So, oh no. And that's what we quarterly want to be behind quarterly. And, you know, I would go either way. Somebody has to convince me because they both seem like pretty good options. I know when they think that, I mean, I know the agenda on the two, the WRMI and the public outreach committees are similar. They're still, their focuses are different. So I don't know how, if we combine them, how that would add to the, and I say having helped with the selection of the participants of the committees, the last time we had joined the committees, it seemed like there were some specific specialties and specializations in directions and people were more interested in infrastructure. Others were, which did outreach. And then a finance committee has moved, the membership has moved a little bit, but they were focused, they're clearly equipped to discuss financial adjustments. I don't know, I think it's a good idea, but I don't know, we might destroy some given take at this hallmark of the committees. One thing I was thinking, I got an intimation maybe from your comments in here, just that if you did have just one committee, it was met six times a year, you would still have, probably you could focus certain meetings on certain topics so that it's not just the same each time, like you might have two a year that are really focused on finance or whatever. I don't know how that would work, but probably the easiest transition is just combine the two and leave finance separate, but graduation, you know. So is the goal to get more people at a meeting by having it come in the mining of the two groups? I guess that was the original thing because it starts, the groups start off, sorry, the groups start off larger, and then I think because we've had a council meetings and things like that, the scheduling, we've had people drop off. Are you serving cookies? Last week? We did, yeah. Yeah, you missed it. Gales, actually. We're doing it, and that would bring it in, but I would definitely do that every meeting, so I promise that, but. I hear which, you know, there could be some differences. I get with the type of person who would join the outreach and the type of person who would join the water resources management infrastructure, but there might be some people who want both. So as long as the agenda is clear, then people could decide, you know, whether they attend or not, they always can decide. And the inside? Okay. I don't think I've been on the Public Outreach Committee for one, but I have to say that in my job away from here, I think maybe I needed more public outreach education. So for water, you know, for water resources and, you know, and the projects, it may be a good thing to mix them because they are interrelated. And I think sometimes the people that are interested in the water resources side just don't get that you really do need the public outreach to make it a successful project. So maybe. May I make a suggestion as well? I think in terms of the outreach committee, which you can see we have active engagement and it is a, I think a core guiding principle of the board. You could also consider having a standing item related to outreach at both the water resources infrastructure committee and the finance. It does seem that there always is a topic related to outreach that if you wanted to absorb, dissolve or do something with the outreach where it's a component of the other two committees, I think it would be appropriate to do so. The other thing that I think we should just kind of think about is the attendance and the space availability. So by combining meetings, does that impact the number of committee members that we may get or not get? I think sometimes if there's an ebb and flow related to the participation. So we are, we have a small room, which is the learning center at the district. And then we have a larger space at the Rosedale trailer that we could also use. So just kind of put that there. We do have more space in mind all three into that small conference room. I don't think. And perhaps you could also, you could also maybe have periodic meetings where you combine the committees, maybe once a year. Oh, I looked. So Melanie, were you suggesting two groups? One with the water resources and infrastructure slash outreach and the other. Finance, business services and outreach. And outreach, interesting. Okay, so what I think is after giving a careful thought, I think that the public advisory committee, three in one would be really cool going forward. And this is why I think so because it's possible that people really need some extra financial education, even though they might not like really want it. And it would create slightly more well-rounded educated participants. And I think it would be a larger group, which would be more exciting. And it would also be kind of simple. And I think this, we've had such a great experience in the past couple of years. I mean, look at me. I'm a good example. I was on the infrastructure committee and now I'm here. So I think it is kind of a goal to maybe have people join it and step up to bigger things, to more commitments. So the single group, I think public advisory committee would a great name. Thanks, Tom. I would definitely vote for that. Okay. So do we need to do a motion? I mean, I guess the other thing I was gonna just add is that we're clearly not locked in whatever we try. I mean, we didn't even have these 10 years ago. So we can try something and do it for a year and see where we are. Oh, is there a motion? I've heard many different things. Yeah. One thing I'll just add before we do the motion is I think we're the board's leaning towards the first motion. So it's left open ended here, but what staff would need is the directors that would be appointed to serve the committee title, the meeting frequency and the meeting duration. Thank you. We can't be wishy-washy. It's what you're saying. Very clear. I'll defer to the people who've been most involved with the committees to. I think the one and a half hour, that's good. I think we were running over a lot anyway. On one subject. So what if we try? I'll put a motion that we have a single committee, public advisory committee, and that they're six times a year. And that there are, what else did you need to know? How long were the meetings? An hour and a half. And the chair and the vice chair. What? And then we'll have to, well, we'll have a chair and a vice chair when we establish and then we can talk about who wants to serve, right? So that's enough for one motion. There's a second to that motion. I second. All in favor? Aye. Aye. All opposed? Okay, so we've gone from three to one. Okay, so six meetings a year, an hour and a half per meeting. Okay, now for the second part, who from the board is gonna be part of these? I'm a good arm wrestler, so I'm definitely wanting to be the vice chair, if possible, because I really enjoyed doing that. I think this is automatically is because of the nature, it's just two board members attending this. And an alternate. And an alternate. I mean, I'd be interested, but if somebody else wants to do that, I'm willing to be an alternate too. But Carly, you've been most involved with this. Do you want to chair this new committee? Oh, the whole committee? Yeah. No? Sure. Thanks for one year. Yeah. So the second motion is, I'd like to move that the chair, that the new newly formed single committees is Carly Christensen, and the vice chair is Jennifer Barboni. And the alternate? Alternate, we haven't decided yet. I mean, we're all three of us willing. We're all three of the alternates. I guess we could. Yeah, we could. Is it? Right? Yeah. Josh, can we have multiple alternates or does it have to be one alternate? Yeah, just have one. I don't have. So we have to be a little careful with alternates on committees just because you can have an inadvertent serial meeting if you have the alternate stepping in and there's a conversation that's continuing from a prior meeting. Okay, so we don't know alternate. Okay. Well, you can have an alternate, but you have to be careful about when they step in. And so, Tom, you expressed an interest in Rachelle. So it sounds like an all add, Tom is the alternate. So. A second. Vice chair, Jennifer, an alternate, Tom. Second? Second. All in favor? Aye. Aye. All opposed? No, no one. So that passes unanimously as well. Can we meet at the same time as the WR and my committee Tuesdays at four o'clock? Yes. The details to be worked out. We'll work with the chair and vice chair. Thank you. So now we're. It does depend on the availability of the chairperson and also the consensus among the people who have to participate. Sure. Actually. And then why are we. At the end of the day is actually. Ask for, we have to also get public members. So the process for, you know, advertising and talking to people and. Yeah. So the idea is to invite all of the current public members since they've, they're serving through July 2025 at this point. So. That'd be perfect. Yeah. All right. So we have closed session. Correct. Any public comment on closed session? No. All right. Thank you guys. Merry Christmas. Yeah. Welcome to the new committee. Yeah. Yeah. Public advisory.